In Jim Cook's Archive


I wish my old friend Kurt Richebächer was still alive. He could analyze financial data like no other. His warnings about the future would resonate today. Kurt was born in Germany in 1918. He grew up in the Hitler era. Kurt came to Minneapolis in 1994 and stayed at my home for a few days. I questioned him about the war years in Germany. He was in the Wehrmacht. He completed basic training in 1941 and his unit was sent to the Russian front. A few days before they left he came down with a virus that paralyzed his legs. It might have been polio. He was hospitalized for months. His unit went to Russia and they were decimated. Most of his friends were killed. He told me that had he gone he never would have made it back to Germany.

After the war he returned to Berlin and earned a doctorate in economics. In 1964, he became chief economist and managing director of the Dresdner Bank. His rock ribbed stance on money and credit excess earned him the plaudits of Paul Volcker and John Exter. Sometime in the 1980’s he moved to the south of France and began a monthly report called the Richebächer Letter. He was interviewed in a newsletter and when I read it I thought this guy thinks just like me. Believe me, at the time, kindred spirits were hard to find. I called him and introduced myself. Thereafter, we talked once or twice a month until he died in 2007 at age 89.

What would Kurt have to say about today’s monetary shenanigans? In 1999 he wrote, “The U.S. financial system today hangs in an increasingly precarious position, a house of cards literally built on nothing but financial leverage, speculation and derivatives.” Today he would be apoplectic. He would shout over the phone to me that our financial engineering and Federal Reserve debt monetization are economic sins that dwarf anything in the past.

In 2000 he had written, “The U.S. credit and debt excesses of the past years are beyond past experience in history.” Kurt Richebächer would be sure that we are going to suffer through a financial plague of epic proportions. He insisted that the bond market would collapse, the stock market would crash and the dollar’s primacy would erode. He said events would destroy the dreams of analysts and investors who expect a perpetual stock market boom.

Was Kurt right in his predictions? In 2006, he warned about an impending bust in the housing market and predicted a major recession. No economic forecaster was more accurate. I’ve studied carefully much of what he wrote and he acted as an economic mentor to me. Today, he would say our finances are insane and our economy is doomed to a vicious downturn. He would say that we are all in serious danger of suffering major losses to our assets. He would say that monetary madness has gone into overdrive and the whole world is at risk.

Kurt would agree with me that we are sitting on the edge of a volcano. Nevertheless, most people are firm in the belief that nothing serious will happen. If you give our economic scenario a 20% chance of unfolding then you should put 20% of your net worth into silver. Kurt would have agreed that there’s more like an 80% chance of a collapse. This coming crisis can destroy conventional wealth. Buy silver as an insurance policy. If silver analyst Theodore Butler is right it will pay huge dividends good times or bad.

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