NOTES FROM THE PRECIPICE
When I started in the gold and silver business forty years ago nobody thought much about owning these metals. Gold was illegal but we got around it by selling older gold coins called restrikes. Convincing people to buy silver was like pulling teeth. In 1973 I made $3,000, not a lot with a wife and two kids. In 1975 I couldn’t take a paycheck for months and turned to selling wood burning stoves to keep the doors open. (It was the first energy crisis.)
The main thing that kept me going was Austrian economics. Bestselling author Harry Browne, silver guru Jerome Smith and economist Jack Pugsley were hard money guys I knew. They were disciples of a California economic thinker by the name of Andrew Galambos. This fierce libertarian had devised an economic system essentially free of government and he held weekly seminars that were attended by a small band of followers. Here are a couple of examples of his thinking.
“The more prosperity you have, the quicker you…attract the looters and the plunderers…And so when a country becomes richer it falls apart sooner.”
“The cheap but simple human emotion of envy is the driving force of all socialism, of all anti-capitalist philosophy. It is the mark of the intellectual.”
All these early opponents of big government and advocates of sound money were heavily influenced by the great economist and leading thinker of the Austrian School, Ludwig von Mises. In 1974 I purchased a copy of his opus, Human Action. Over the years I’ve referred to it so much the dust jacket has been reduced to small pieces. Mises warned time and again about the economic peril we are rushing towards. I’ve extracted ten quotes from his books that appear especially timely for today.
“If the practice persists of covering government deficits with the issue of notes, then the day will come without fail, sooner or later, when the monetary systems of those nations pursuing this course will break down completely. The purchasing power of the monetary unit will decline more and more, until finally it disappears completely.”
“When the government spends more, the public spends less. Public works are not accomplished by the miraculous power of a magic wand. They are paid for by funds taken away from the citizens.”
“It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.”
“The worship of the state is the worship of force. There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men. The worst evils which mankind ever had to endure were inflicted by bad governments. The state can be and has often been in the course of history the main source of mischief and disaster.”
“Nothing is more calculated to make a demagogue popular than a constantly reiterated demand for heavy taxes on the rich. Capital levies and high income taxes on the larger incomes are extraordinarily popular with the masses, who do not have to pay them.”
“The Welfare State is merely a method for transforming the market economy step by step into socialism.”
“The financial history of the last century shows a steady increase in the amount of public indebtedness. Nobody believes that the state will eternally drag the burden of these interest payments. It is obvious that sooner or later all these debts will be liquidated in some way or other, but certainly not by payment of interest and principal according to the terms of the contract.”
“The advocates of public control cannot do without inflation. They need it in order to finance their policy of reckless spending and of lavishly subsidizing and bribing the voters.”
“Capitalism needs neither propaganda nor apostles. Its achievements speak for themselves. Capitalism delivers the goods.”
“Continued inflation inevitably leads to catastrophe.”
After reading Mises over the years it was easy to conclude that America had embarked on a course that would prove ruinous. Most of the early libertarians and economists who have warned about our coming inflationary disaster are no longer alive. Mises’ brilliant students Hans Sennholz, Murray Rothbard and the Nobel Prize winner Freidrick von Hayek are gone. They did not live to see the destruction of the dollar, the collapse of the economy and the impoverishment of the masses. I have always believed that I would live to see this financial upheaval. I would prefer it not happen but our government’s policies make it inevitable. I’m not young any more so I expect we are closer than anyone believes. The Keynesians, the liberals, the socialists, and the Marxists have brought us to the eve of disaster.