-- Posted 24 October, 2005 | | Source: SilverSeek.com
Being the owner of a bookstore, I’m blessed to have a continuous stream of old and obscure economics books crossing my desk. Honestly, I prefer the old to the new, and I’d rather read Harry Browne’s “How to Profit During the Coming Devaluation” than Bonner and Wiggins’ “Financial Reckoning Day,” even though I highly recommend them both.
I prefer the older simply because there has been time for the arguments to age, for the highlighted trends to intensify or turn, for the predictions to come true or fail. With the clear vision of hindsight, one can look back over what the author thought would happen and why, where he was right or wrong, and to examine the arguments in the light of real history. Not only should that wizen us, it should humble us – our generation is as likely to be wildly wrong about our future as the prior one was about our present. Everyone sells an opinion. At least half of them will be hopelessly wrong.
I found a pair of such old books recently that shared a title, “Honest Money,” and both were critical of the Federal Reserve. That is where the similarities end. One calls for the reintroduction of the fiat paper “United States Note” to return control of the currency to the Congress; the other calls for the elimination of all governmental control over currency to return control to individuals.
It was obvious to both authors, just like it is obvious today, that something is very wrong with our current monetary system. Each recognized our fiat, debt-based money led to predictable problems. Each proposed a plan to fix it. Each had people who agreed with them (or were at least interested enough to publish and buy the book). But how could two authors who ostensibly share the same goal – and even use the same slogan – be so opposite in their program to reach it?
The answer is, simply, that one of the authors fails to ask the single most important question in any discussion of honest money, and that is “What is money?” Without an understanding of what money is (and how it must be scarce to act as a store of value) any ideas for how to “take it back” are likely to fail. But even with such an understanding, there are no guarantees. The future is not a tame lion.
This can be clearly seen by examining those old ideas in the light of the present, where “conservatives” run half-trillion dollar annual deficits on printed and borrowed money and “liberals” complain incessantly that every item in the budget is still underfunded. Giving this Congress complete control over creation of money would have “returned control” to a body just as dangerous and reckless (if that were possible) as the Fed itself. What looked like a good idea at the time would have turned out, in the present, to be a worthless effort at best.
But as I have not mentioned the authors, obviously my purpose is not to mock one or show what a fool he is. Rather, it’s to use him as a teaching tool. As every measurement of government and personal debt continues to expand at unsustainable rates, as pork projects and special appropriations rise exponentially, it’s obvious that something is going to have to break. They recognized it then; we recognize it every time we visit the gas pump. Dishonest money is leading us down the road to hell, and when you take that road, you’ll eventually get there. What we’ll find upon our arrival - whether inflation or deflation or stagflation or some as yet unnamed “flation” - no one knows. The authors of the best current books don’t know, and the best authors of current books (like Bonner and Wiggins) admit they don’t know but are pretty sure it’s bad. They’re sure it’s bad because it always has been every time someone has done what we are doing. They’ve read the old books.
Many know what’s wrong and plenty of people will sell you the solution to fix it. But no one knows specifically what’s coming any more than they did in the old books. Most new will eventually become spectacularly wrong old books.
So here’s some advice of my own, worth every penny you’re paying for it:
Discover honest money. Learn what it is and get some. Understand why Gresham was right. Learn about voluntary currencies. Save the things worth saving.
Ask the important questions. Walk before you run. Don’t stop asking until you have the answers. Don’t follow anyone’s plan. Instead, understand their arguments.
Read the old books. Many are available through Amazon for literally a penny plus shipping. Look for them in the Goodwill store. Find an author like Harry Browne or Martin Weiss or Doug Casey or Ravi Batra or Paul Sarnoff or Robert Prechter and buy his books. Then go through his footnotes and buy those books. Read inflationists and deflationists. Read insiders and outsiders. Read young and old. Especially read those you disagree with. Especially read those who were gloriously and hopelessly wrong. Figure our how they went wrong.
Explore alternatives. Reduce debt. Manage risk. Take a flier. Watch a sunset. Take your kids out for ice cream.
I don’t know anything about the future, but if the past is any indication, it will contain the kind of surprises that no one foresees. But if you have read the old books and put aside some honest money, you may be surprised at what the future holds, but you will not be unprepared for it.
Bill Hoyt
October 22, 2005
Opinions contained herein are purely those of the author, but he invites you to share them if you wish. Visit his web log, El Borak’s Myopia, for daily commentary and responses to reader email.
-- Posted 24 October, 2005 | |
