James Turk, founder of GoldMoney, and John Rubino who runs the popular DollarCollapse website got together for the second time in writing The Money Bubble.
The authors claim the current financial bubble is even bigger than the one in 2007.
I agree. But how does it end?
No one knows and importantly, Turk and Rubino don’t claim to know either. Rather they outline a number of possible scenarios including a “Debt Jubilee”, “Crypto-Currencies”, a flight to tangible assets in general and gold in particular, currency wars, capital controls, wealth taxes, and bank bail-ins.
The book makes for interesting reading with historical references on fraction reserve lending, goldsmiths, and the evolution of the “Paper Money Experiment”.
The authors intersperse a number of excellent quotes in each chapter, starting off with an important one: “The secret of freedom lies in educating people, whereas the secret of tyranny is in keeping them ignorant.” – Maximilien de Robespierre
I have a number of minor quibbles with the book regarding some inflation stats, and also an alleged short-squeeze in gold or silver that I see as unlikely.
Also, I do expect at least one more asset-bubble deflationary collapse is coming up. Whether that happens before, after, or in conjunction with a huge global currency crisis is not knowable.
If that collapse happens before a crack-up-boom, as I strongly believe, debt-free is the way to be.
Actually, I was very pleased the book was not a huge hyperinflation rant from front-to-back that one might have expected.
Indeed, Turk and Rubino explicitly state in chapter 27 …
“After reading the preceding 26 chapters of this book, a very reasonable conclusion might be to borrow as much fiat currency as possible and use the proceeds to buy hard assets … This is a seductive thought, but it rests on a flawed assumption that powers-that-be will simply let debtors walk away from their obligations… It becomes easy to envision bankers arranging to have debt contracts rewritten to have debt paid back at fair value, not depreciated currency“.
That’s a good point, even if my expected deflation collapse does not happen. Moreover, it was one heck of a good call.
I noted yesterday that Spain modified laws in exactly that direction. See Spain Modifies Bankruptcy Laws to Prevent Corporate Liquidations. That step is just a down payment on the bank bail-out and bail-in ideas that will come.
All-in-all, I wholeheartedly endorse the book’s main thesis, that a major currency crisis is coming and you need to protect yourself from it. Even as a deflationist, I give the book two thumbs up.
Do yourself a favor and read the book.
Disclosure: I do have an affiliate relationship with GoldMoney. However, it’s equally fair to point out that I have been a fan of gold, even as a staunch deflationist, long before that relationship began.
Mike “Mish” Shedlock