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economics: university VS real world

Keynesian Economics was invented by John Maynard Keynes a century ago. It is a theory that claims political leaders can spend money far beyond what the economy produces and bankers can print money far beyond assets they have to back their loans … and that it is good for all of us.

The banks love it because printing lots of money makes them incredibly rich. Country leaders love it because it says they can buy votes, pass out favors and live like royalty for the rest of their lives.

Keynesian Economics is the theory taught in colleges and universities because it justifies the world that the leaders want to live in. It is what I learned at Sonoma State University. It is what everyone who wants to work in financial fields must be certified in to get mainstream jobs as “an economist”.Mark chart

Austrian economics is the opposing school. It says money is a medium of exchange for goods and services; that there must always be something tangible backing every currency. This is what I studied after college.

Austrian Economics is not popular with political leaders because it documents that unbridled spending always crashes.

Austrian Economic professors are welcome in very, very few universities – as popular as organic farming in agricultural colleges and holistic medicine in a medical school. That is to say that even when there is one in a public educational institution, he or she is the only one in the entire economics department.

In thousands of years, every currency that was not backed by something tangible has failed.

Austrian economists call them “fiat currencies”, but it simply means paper promises with no foundation. Rome crashed. Zimbabwe crashed. Brazil crashed. Chile crashed. Argentina crashed. I could list 27 crashes in the last hundred years.

In a crash, the bankers who printed the money own everything. The people starve, scrape and claw for anything they can get and work for next to nothing.mark wheelbarrow

When fiat currencies crash people can still trade material goods for other material goods, but money ceases to function. Large transactions are nearly impossible. The economy collapses and has to start over.

In 1913, the bankers took over the US dollar. In 1929 they crashed it – becoming incredibly rich and powerful in the process. War, by the way, helps them make gobs of money and gain incredible power. The USofA has been at war for 124 of the last 130 years.

The Rothschilds are at the top of world banking. They have quite literally owned England since the end of the Napoleonic Wars. They financed Hitler’s rise to power, plus Franklin D. Roosevelt and Joseph Stalin. This is all documented. This is real history.

marks into gutter In the 1920s, the German currency failed spectacularly. Postage stamps went from a quarter of a Mark to millions of Marks in a three year span. Quite literally, wheelbarrows of paper money were used for small financial transactions. The value of money was changing so fast that people who still had jobs got paid twice a day with housewives arriving at work to go spend the money while it had value.

Hitler promised to fix the Mark. Rothschild helped him pull it off. The Germans forgave Hitler for his little eccentricities.

They tolerated a police state because they had lived through something they thought was worse.

Our Federal Reserve Note almost crashed in 1980 and several times after that. Each time, they printed a lot more money, flooded the economy with it and DELAYED the day of reckoning. In so doing, they made the eventual crash that much worse.

In Zimbabwe, the government outlawed gold, silver and all other forms of money, including the US Federal Reserve Note.

It didn’t matter. They couldn’t print their way out of it. Their crash was more complete than the German Mark of the Wiemar Republic. Today Zimbabwe still has no functioning currency of their own.

zim trillionI have three of these Zimbabwe notes.
They were 3 for $42.
Would you look at the number of zeros after the 1.
When something like this happens to a currency,
ALL of the money in the bank turns to dust.

Your half a million dollars in assets ($500,000) is nothing compared to a hundred trillion, or three hundred trillion dollars ($300,000,000,000,000).

Ah, but silver, gold, food and the ability to produce the essentials of life – those have value in an economy that reverts to survival mode. zim armload We go back a couple of centuries and precious metals prove once again why they are precious. Doubloons, pieces of eight – treasure is always the same, and definitely NOT paper… or worse, electronic records of columns of numbers.

I understand what your trusted advisors are telling you. I studied the same Keynesian economics, accounting and finance that they did.

But I didn’t stop studying there. I found a school of thought that explained things a whole lot better. Knowing both enabled me to choose the one that fit world history, logic and human action without having to pretend that some things are just inexplicable.

Where their Keynesian school of thought fails is where every fiat currency the planet has ever seen fails. Eventually the currency creators succumb to their infinite greed, turning their paper notes into nothing more than paper.

Solid money … sound money … food … tools … barter and exchange items. Their prices may fluctuate in terms of exchange for paper dollars in the short run, but in the long view of history, they will always have value.

Don’t let the dollar overstay its usefulness in your portfolio.