Our days as the dominant economic power are numbered. The dollar is going to collapse, and Americans are going to experience stagflation on an unprecedented scale in the form of recession and hyperinflation. Those of you who act smartly and quickly by taking measures I outline later in this book not only will avoid loss of wealth but also will have positioned yourselves to prosper while your neighbors suffer a painful period of reconstruction and reform. (p. 6, italics original)
He believes that the US dollar is poised for a significant fall versus other currencies but in particular against real goods and services. Since closing the gold window in 1971, the Fed’s inflation of the money supply has been tempered somewhat by the unique position of the United States; foreigners, especially other governments, were willing to accumulate large reserves of dollar-denominated assets. But once the illusion is broken, the game will be over. The only thing that buoys a fiat currency’s market value is the widespread belief in its future market value. Once that belief is questioned, the green pieces of paper can become worthless. As Schiff puts it in one of his clever analogies:
Remember when Iron Mike Tyson wore the heavyweight crown, was knocking out everybody in sight, and was so fearsome it seemed inconceivable he could lose? Well, as always happens eventually, he finally met his match. Buster Douglas beat him, and after that he just kept getting beaten. It was the same Mike Tyson, but Buster had broken a psychological barrier.
Any reality check that pierces the myth that the American economy is too big to fail could begin the process of unraveling. (pp. 5–6)
For years the United States has been traveling a course the Nobel Prize-winning Austrian economist Friedrich von Hayek set forth in a book self-descriptively titled The Road to Serfdom. The coming economic collapse may finally bring Americans to that grim destination. But it is also possible that the same dire economic conditions will inspire a return to the country’s constitutional traditions of sound money and limited government, the foundation upon which a viable economy can be rebuilt. There is a fork in the road to serfdom. One choice leads back to freedom, and it is my fervent hope that Americans will take it. (p. 259)
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