The Crack-up Boom Cometh

One evening, in early September 1971, I sat in my grandfather’s study after dinner. I listened as he explained to my two uncles what Richard Nixon had just done by taking the country off the gold standard a few weeks earlier. My grandfather, a Republican, was livid. He railed against Nixon, called him a traitor, and said he should be tried for treason.

My grandfather, Sam Hamburger, was the President of Production Steel, a company he founded in 1930 at the onset of the Great Depression. Over the next several decades, he grew his business into a sizable supplier to the auto industry in Detroit. An unassuming tycoon, he was known as a kind man to all who knew him. He possessed a unique blend of dignified simplicity mixed with a refined intelligence. Always a visionary, he sold his company in 1969 to a U.S. defense contractor when he foresaw that he would not be able to compete with the Japanese and Korean producers in the years ahead.

That night in his study my grandfather was as spirited as I had ever seen him. He spoke of the horrific consequences which result when a country’s central bank can print money without limit. He said there would now be nothing to keep the politicians honest. He described the societal evil of having the Federal Reserve Bank control the currency, and that the Fed was not even part of the federal government but rather a private, for-profit banking cartel serving its shareholders as opposed to the American people.

Every dollar in one’s pocket, wallet or purse, and every digit in one’s bank or investment account is a private bank’s note … and it comes with interest due and payable to the bank. Similarly, every dollar that our representatives in Congress borrow and spend in our name comes with interest due and payable to the same bank. The Fed prints its money out of thin air, lends it out, and then gets it back, with interest. Making his point my grandfather quoted fellow Detroit businessman Henry Ford: “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

My two uncles asked lots of questions, I listened intently. My grandfather told the story of how all empires that printed money for the sake of staying afloat inevitably failed. He called the politicians scoundrels for going along with Nixon’s crime. He predicted the national debt would skyrocket. Could he have imagined that the number would be in the tens of trillions of dollars 50 years later? Or that the trend of doubling the national debt would begin with conservative Republican Ronald Reagan?

I was thirteen at the time and though I was wondering what my sister and cousins were doing outside I knew I had stumbled onto a once-in-a-lifetime lesson of the way things really work. That night my grandfather predicted an America where houses would cost millions of dollars and that cars would be in excess of $30,000 (now you can get a decent used one for that amount). He explained how this would be the greatest transfer of wealth ever. He told of a time when Americans would wake to find themselves indebted and poor in their own country. He predicted gold would go to the moon. Yet it was when my grandfather mentioned the crack-up boom theory of Austrian Economics (https://www.investopedia.com/terms/c/crackup-boom.asp) that I made a forever mental note.

For the past fifty years and a couple of months, I have watched my grandfather’s prophecies unfold. The national debt is a disgrace. Debt permeates every single facet of our society - federal, municipal, corporate, household, personal. Inflation soars. The empire recedes. The gap between the rich and 99% of us is obscene. Gold has gone from $35/oz. to a high last year of $2090/oz. for a return of 5900%. And do not even get me started on the politicians.

In this artificially and fraudulently stimulated economy people begin to think everything is worth more. Values appear to go up like private-company, tourist, space rockets. Starting wages at McDonalds’s are as high as $21/hour (we were only debating the minimum wage at $15/hour a year ago.) Those fortunate enough to have stock portfolios see their holdings swell. Many swear by the ballooning equity in their homes just as they did in 2007. Then it was easy money; now it is easy money and AirVRBO’s promise of forever riches at $379 per night.

Yet it is all a trick. A scam. A delusion fabricated by a monetary printing press on steroids that is robbing us blind right before our eyes each and every day. Nothing has gone up in value, it just costs more and more of the depreciating currency units to purchase the same things as the currency units become worth less and less as more and more of them are printed.

The crack-up boom comes as the central bank accelerates attempts to sustain the illusion of an expanding prosperity without regard to consequences. With the passage of time more money is needed and more is created. Inflation surges. Prices of goods, services, housing and labors rise. Eventually this policy triggers a fundamental breakdown in the economy and then, suddenly (over a period of weeks or even less), the money loses its value and becomes exposed for what it is - worthless paper/digits. At that point, nobody will take dollars as payment. Still, people will be liable for the dollars that they owe - for their houses, cars, boats, businesses, educations - even though the dollars have no value.

How will Americans’ pension fund holdings, which are largely invested in debt instruments, hold up if there is credit crisis?

The minds at the Federal Reserve Bank seemingly have a plan in place. Can they finesse their way forth with all that may transpire as the currency and/or economy collapses?

A digital currency is all but a certainty … and such will also serve as a near all-encompassing way to track EVERYTHING that we do.

I suspect their plan will likely have the elites (1%) retaining most of the wealth with the rest of us (99%) being given just enough not to rebel.

The people of America are too busy fighting with one another to even know we are all on the same side.

The fight in our country between blue and red is a nefarious narrative that has been foisted upon us and too many have bought into it.

The real battle is over who our government represents - the people or the corporations?

We need more than two political parties. We need to have our representatives constrained by term limits for the greater good of everyone other than themselves. We need to outlaw corporate money in our Nation’s Capital. We need to banish every last lobbyist from Washington D.C. We need to end the Fed. We need to recapture ownership of the money system. As I write all of this, it seems impossible. Impossible but necessary. Until we do so we are their pieces, using their money, playing on their board, by their rules, they make a profit on this arrangement and every transaction is to the detriment of every human being.

Most importantly we need to end all of the social division or divided we will fall.

Short of a revolt, we need to begin a different type of dialogue – a dialogue not heard in this country since our independence from the British 245 years ago. Our Nation’s Founders rose up against their version of this corrupt machine and now it is our turn.

It will require honest acknowledgement of the fact that our politicians are owned by the corporate/military/industrial/security/taxation/banking complex. More specifically we need a discussion about how we are going to remove these career political operatives from office. We must talk with each other about the forces that are influencing our lives. Why is a private bank the beneficiary of its money creation powers as opposed to The People. What would a better arrangement look like? How can we change the present system?

There will be a tremendous price to pay for what our politicians have done to us. Tough times are right around the corner if not already here. Be prepared. Examine your priorities. Get out of debt. Buy physical precious metals now and before the next price advance.

How will crypto currencies fare in a crack-up boom environment? I get asked about cryptos nearly every day. Always I respond the same: there is no knowing what will happen to something that has never existed before and when living in unprecedented times.

The only thing that is a near certainty is that my grandfather’s money (gold) will outlast their stuff.

I was with the author until he said we need more than 2 parties. Nonsense. Has the author ever looked at his presidential ballot? Tons of candidates from as about as many parties.

What we need is an educated electorate. Not dummies that vote emotionally or because the candidate is attractive.

Prosperity comes from only one source. The conversion of energy and raw materials into useful items of commerce, all the while affording a fair compensation to both the entrepreneur and to the persons who labor on his behalf, with a standard of productivity that is allowed to rise in accordance with market demand.

Money can make money, but only if it is allowed to be exchanged freely between buyer and seller. It is the velocity with which that medium of exchange moves from one party to the other in the transaction, and the volume of the total number of transactions, that constitute wealth. Cut down on any factor in that equation, and wealth simply disappears.

What a find! Absolute truth and said better than any I can think of.

This is the money quote to me:

“Nothing has gone up in value, it just costs more and more”

Nobody is more wealthy, we just have bigger numbers. In fact, wage earners are consistently more poor because, as we saw in the last inflationary binge, wages did not keep up with costs.

I think I was fortunate to see quite some time ago that equities would be the only way, other than gold or silver, to keep up with inflation in retirement. Our numbers grow but our wealth does not. It is just funny money.

If you can pay back present day dollars with cheap future dollars debt does not look so bad. That is until, as the author warns, the scam is seen for what it really is and nobody will take your scam inflated dollars anymore. I don’t see that happening and that is the only thing I differ with the author about. Still, I have no debt and don’t plan to take any on at his late stage of life.

“I was with the author until he said we need more than 2 parties. Nonsense.”

I disagree with him there, too. But, I still plan on voting third party or a write in (Ralph Nader! Snoopy!) when I can’t stomach the current RINO put up by the GOP. *SHUDDER*

I liked the article because I heard the EXACT same advice at my Grandpa’s knee when I was a kid. And he’s been 100% correct, and I planned accordingly, and me & mine will be fine financially no matter what Mother Government throws at us. ;)

I see PMs are ticking back up now. It’s probably not the $3K gold ‘rally’ some are predicting by 2024 yet though. We’ve got a much further way to fall before that happens.

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