[...]... memoryimpaired grandkids – let-it-all-hang-out financial excess A horrendous debt-driven economic crash (or its geopolitical/military equivalent) then resets the cycle The fascinating thing about these theories is that while each employs a unique set of indicators to trace society’s progress through these recurring cultural/psychological/financial cycles, they’ve all reached the same conclusion: The modern world... popped rather than deflated gradually And the Money Bubble, as the biggest of them all, will put its predecessors to shame in that regard PART I: HOW WE GOT HERE CHAPTER 1 THE PAPER MONEY EXPERIMENT “Paper money has had the effect in your State that it ever will have, to ruin commerce, oppress the honest, and open a door to every species of fraud and injustice.” – George Washington, 1787 Money matters,... experiments with unsound money: Rome Floods the Empire with Copper The Roman Empire, which two millennia ago ruled its world in much the same way that the US recently ruled this one, used three metals as money: copper for small change, and relatively-scarce gold and silver for larger denominations The denarius, the most commonly used coin of the time, was pure silver in the first century AD But the pressures... doing the same thing over and over again and expecting different results.” – Albert Einstein Now let’s jump to the near-present, with an overview of how the US brought the global financial system to the brink of dissolution in 2008 To state the theme up front: When armed with a printing press, a nation tends to respond to every problem in the same, politically-expedient way by throwing newly-created money. .. financial instruments, they could generate massive fees in the short run, which would translate into gigantic year-end bonuses and soaring stock prices And if they failed the government would bail them out with taxpayers’ money, allow them to keep their jobs and remain, for the most part, rich and powerful This government guarantee came to be known as the “Greenspan put,” after the Federal Reserve chairman... terrify consumers into becoming savers, thus depressing the economy even further And the Fed, as if the past few crises were just warm-ups, opened the floodgates It cut interest rates dramatically and made it clear to all concerned that it was there to backstop the economy with easy money The government ramped up spending, especially on the military, and the federal deficit, so recently in a relative decline,... effect, the US combined strategies 2 and 3 mentioned at the beginning of this chapter, with the government both borrowing record amounts of money and encouraging the private sector to do the same It took a while, but the massive infusion of credit set off yet another bubble, this one in housing Home prices soared, banks offered mortgages to virtually anyone and then packaged the increasingly low-quality... rich, free, clean world In the meantime, as the old saying goes, crisis equals opportunity The Chinese symbol for crisis…is actually a combination of two symbols: the symbol for danger and the symbol for opportunity The danger is what everybody sees; the opportunity is never quite so obvious as the danger, but it’s always there.” – Doug Casey INTRODUCTION THE LONG WAVE VERSUS THE PRINTING PRESS Today’s... of the money at risk was owed to large US banks, and the response was swift The International Monetary Fund (using mostly American capital) began a multi-billion dollar bailout of the Asian economies, while the US Federal Reserve reversed course and cut interest rates to lower the value of the dollar and reduce bank borrowing costs The panic subsided within a few months 1998: LTCM Implodes Long-Term... currencies as the root cause of the financial world’s many problems, we see the failure of these currencies and their replacement with something better as both inevitable and imminent Because gold was humanity’s money of choice for the 3,000 years prior to 1971 – during which time it worked very well – we think it will be central to the coming transition Society will simply go back to tried-and-true money, . the prior consent of the authors. Copyright © 2013 James Turk and John Rubino All rights reserved. eISBN (Kindle): 97 8-1 -6 221 7-0 3 6-4 The secret of freedom lies in educating people, whereas the. by its memory- impaired grandkids – let-it-all-hang-out financial excess. A horrendous debt-driven economic crash (or its geopolitical/military equivalent) then resets the cycle. The fascinating. collapse but to prolong the Money Bubble that has been inflating for the past four decades. Think of it as a “meta -bubble, ” a framework within which other, smaller financial bubbles (junk bonds,