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SyndicateA Little Game of Old Maid, Part I
By Robert Ringer - Wednesday, February 25, 2009
By Robert Ringer
(The content of this series of articles has been taken from my 1982 book “Civilization.” As you will see, I pretty much could have written the exact same articles today. While I was a bit off on a few things-particularly with regard to my belief that the economic chaos we are now witnessing would happen much sooner than it did-my take on the big picture was, unfortunately, pretty accurate. Here it was I said back then …)
Notwithstanding Ronald Reagan’s tough talk, and contrary to daily media reports about how the plight of “the poor” has worsened under his administration, there have been no meaningful cutbacks in federal handouts since Reagan took office. Quite the opposite, in fact: Today, the federal deficit is expanding almost exponentially.
Never-not even once-has any liberal economist, politician, or media expert suggested how this deficit problem is to be resolved. Short of some new welfare state “miracle,” the federal government will have no choice but to stick with the old reliable pseudo miracle of creating money out of thin air-via the Bureau of Engraving and Printing.
There’s only one problem with this “solution”: The “money” that comes rolling off the printing presses isn’t really money at all. It’s only paper, which creates yet another problem: As more and more people begin to figure that out, they want more and more of the paper-in the form of higher prices for their goods and services-to compensate for its perceived lack of value.
Which leads to the ultimate problem: People finally figure out that the paper really has zero value, and that’s when they refuse to accept it at all in exchange for their goods and services. It is at this point that the currency, with the swiftness of a wastebasket full of paper going up in flames, rushes to its deserving demise.
Of course, different people catch on to the paper money scheme at different times and to different degrees, and each person reacts in a different ways. And if a person reacts too late … well, he who hesitates always has the option of repapering his living room in a nice, gray/green color.
Some pundits have likened it to a game of Old Maid: Whoever ends up with the Old Maid (paper currency) has, in effect, given away his products and labor for nothing. If you don’t believe this, just ask the millions of people who have given theirs away in the numerous countries that have experienced runaway inflation.
Though the subtle destruction of our paper currency is taking place daily, its official burial is probably still several years off. I cannot say whether it will be three or four years, or ten or twelve years, because there are far too many unknowns to be certain.
One of the knowns, however, is that the government, through the use of force, will continue to artificially repress the natural and unpleasant consequences of its debasement policy-as it has been doing for decades. But, to its dismay, it will not be able to stave off those consequences indefinitely.
Therefore, the wise approach for you to take is to begin to abandon paper currency now, at a pace that is practical with your own living and business needs. This means exchanging paper for “hard assets,” things that have intrinsic (utility) value.
The most obvious indication that it’s time to start getting serious about shifting into hard assets is that the government and, of course, paper money institutions have of late been exhorting the public to do the opposite.
People are being admonished to “save”-to hold onto their paper money by lending it to (i.e., depositing it in) financial institutions. In point of fact, what the government and the financial industry are really doing is urging people to commit financial suicide.
In deciding what to convert your paper money into-while it can still be converted into something-your personal circumstances and objectives are of paramount importance. Depending on those circumstances and objectives, you may want to speculate with your capital, invest it, try to preserve it, or do a little of each.
By speculating, I mean putting your money into risky ventures in the hopes of making large profits. By investing, I mean putting money into ventures or instruments that you believe will bring you a “reasonable” return. By preserving, I mean safeguarding your capital without worrying about making a profit.
The safest approach, long term, is to bet against government. Which means betting on political expediency … which means betting on more and more government handouts … which means betting on larger and larger deficits … which means betting on government to print more and more paper money … which means betting on paper money ultimately becoming worthless.
But be careful. Keep an eye out for changing conditions. Though you may be right in your long term assessment of various options for speculating with, investing, or preserving your capital, you can go broke in the short run.
As an example, it is possible (remotely) that we could experience a temporary period of deflation prior to entering the homestretch of politically inevitable runaway inflation. Therefore, no matter how certain you feel about the long term, unless you are prepared to tough it out until the truth rises up and takes control of the financial markets, you would be wise to proceed with the utmost caution.
With that caveat understood, I am going to break down the alternatives for getting out of paper money in a way that accurately reflects the realities of our brave new world.
Part II to follow.
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Today’s Reflections:
I believe there are at least five major reasons why it has taken twenty-six years for the U.S. economy to arrive at a point I thought it would reach in no more than twelve years.
First, though Ronald Reagan allowed welfare payments to expand under his watch, he did drastically cut taxes.
Second, Reagan’s pro-liberty, pro-capitalistic messages gave both consumers and the business community optimism.
Third, the explosion of technology in the eighties and nineties provided the masses with an incredible array of goodies at affordable prices, which kept everyone happy-and buying.
Fourth, China, along with scores of smaller nations, provided the cheap labor needed to manufacture cheap “stuff”-and that made it possible for people to buy lots of things they didn’t need. This gave consumers more dollars to spend on still more things they didn’t need or couldn’t really afford.
Fifth, the explosion of the fraudulent credit card industry took out-of-control consumer spending to a new level. Most of the banks that issued those credit cards are now broke, and, in an ironic twist, the people they are chasing for unpaid balances have actually loaned them money (through government force, a.k.a. “bailouts”).
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Copyright © 2012 Robert Ringer
ROBERT RINGER is a New York Times #1 bestselling author and host of the highly acclaimed Liberty Education Interview Series, which features interviews with top political, economic, and social leaders. He has appeared on Fox News, Fox Business, The Tonight Show, Today, The Dennis Miller Show, Good Morning America, The Lars Larson Show, ABC Nightline, and The Charlie Rose Show, and has been the subject of feature articles in such major publications as Time, People, The Wall Street Journal, Fortune, Barron's, and The New York Times.
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6 Responses to “A Little Game of Old Maid, Part I”
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While reading your article I received an email from a site called, “Vital Smarts”. This article by Kerry Patterson talks about our selfish society and is a perfect explanation for what is happening to us. You two could be brothers
Where Are You Mr. Capra?
Kerry Patterson is coauthor of the New York Times bestseller, Crucial Conversations: Tools for Talking When Stakes Are High. MP3 | Podcast | More about podcasts
Yesterday my neighbor told me an interesting story. She noticed that a girl in the grade-school class that she teaches wasn’t bringing a sack lunch to school. The hungry child explained that they didn’t have a refrigerator, so her parents didn’t keep ingredients for a sack lunch. The teacher immediately started a fund-raising campaign that culminated when the school gave the needy family its very own refrigerator. The girl brought a sack lunch to school for two days, and then missed an entire week of school—after which she returned to class, but without a lunch. When asked why she was no longer brown-bagging it, she explained that her parents had sold the refrigerator and with the proceeds had taken the family to Disneyland!
When you hear stories like this you want to climb on your high horse and lecture anyone who would trade off their children’s health for a couple of days of fun, but the more helpful response is to ask: Why would someone do that? Why would a rational human being trade off the conveniences and utility of owning their very own refrigerator for one week’s pleasure?
As I thought about living a life almost as if there is no future (even if the future is merely a few days away), I turned to my own upbringing. As a child I was exposed to dozens of stories that taught the same message: How you act today affects how you’ll live tomorrow and into the distant future. As one of those messages, I was instructed to be the hard-working and frugal ant, not the silly grasshopper who partied during the harvest only to suffer through winter. Popular movies of my parents’ era (which were shown on TV to my generation) were made by directors such as Frank Capra, who told us in his award-winning movie It’s a Wonderful Life that true happiness comes from prudent living. Heroes go without in order to secure their future. Heroes worry about how today’s actions might affect the person they become. I watched dozens of such Capra-esque morality plays and they all sang the same tune—behave wisely today so you don’t have to suffer tomorrow.
But there are more forces at work here. A changing economy, a growing interest in being “cool,” and massive changes in technology have transformed each successive generation into a very different populace from those of Frank Capra’s era—one that cared deeply about the future in general and financial security in specific. For instance, in today’s society, homes are plugged into TVs that pump 20,000 half-minute commercials into every TV-watching child’s head every single year. These ads don’t teach frugality or temperance or anything long-term. Instead they argue that you need whatever they’re selling and you need it now.
Couple this rampant live-for-the-moment consumerism with a social movement that suggests that being snide, hip, and cool is far more sophisticated than preaching what is right, or helpful, or prudent—and it’s easy to see why so many people today live as if there is no tomorrow. In contemporary movies, writers frequently decouple behavior from consequence—because cool people live for the moment. For instance, if you commit crime—but against a nasty person—and if you’re handsome, and glib, and hip while you’re doing it, it’s okay to be a criminal. Don’t worry, a life of crime won’t ruin your life or have a negative influence on the person you become. Capra’s movies may have been corny by today’s standards because they dared to teach something by linking behavior to consequence, but they didn’t lead to a people who live so much for the moment that they routinely put their future at risk.
TV is no better. It often teaches us that the good life consists of sitting around with friends, flirting and playing—and nobody has to work very much in order to afford outlandishly upscale New York apartments. Plus by using their magical clocks, the main characters are able to spend all of their perceivable time goofing off with their friends, yet somehow still have time to meet people and have amazingly active and glamorous dating lives as well as successful careers. How does that work? It’s all part of decoupling action from consequence. Selfish and unrealistic lifestyles lead to fun—not the heartache and deprivation that would likely ensue.
I suppose airing a show or two that creates a fantasy world isn’t all that harmful, but when you combine the unrelenting and selfish messages of commercialism with the TV and Movie mantra of “what you do today won’t affect tomorrow” across dozens of ads and countless shows, it creates a very different view from the common doctrine espoused by “The Greatest Generation.” Given the massive changes in what we read and view, it’s little surprise that you can readily find people who have no sense of their role in their own history—or of history at all for that matter. If you repeatedly tell people to live for the moment and refuse to link behavior with consequence, you create a people who one day are going to have to pay the piper, and it’s not going to be pretty.
My generation of boomers suffers from a case of short-term-ism just as much as the generations that are dutifully following. Only a third of my peers (who are just now turning 63) say they have set aside enough money to continue their lifestyle into retirement. Two-thirds are going to have to make uncomfortable adjustments. Many are clueless as to what they’re going to do. It’s as if my classmates expected that one day (way off in the distant future) when they gave up their salaries, the retirement fairy would step in and take care of them. With tens of thousands of people stepping up to these circumstances every single day, the retirement fairy is going to get a hernia trying to carry their load, and their children are going to feel the pain.
And it’s not merely individuals who are taking this careless tactic. Congress has been writing rubber checks for years and voters have not risen up en masse to throw out the scoundrels for selling out their personal savings or dooming their children to who knows what. The business world has been equally culpable. For years American executives have been stereotyped as having a precariously short-term orientation. And it’s largely true. Numerous executives have done whatever they can to maximize short-term profits in order to bolster their own bonuses and retirement accounts—only to put their companies in grave peril. One company located just up the street from me promised the president a million dollar bonus if he hit a certain sales number. He cut pricing, sold thousands of units at a loss, had customers warehouse the product, banked his fat bonus, retired, and nearly took his company into bankruptcy.
As we continue to fan the flames of a buy-it-now culture, mock all things value based, and lose our sense of history in the process, it’s little surprise that our national savings rate has dropped from 7 percent in the 50s (behind Germany at 12 percent and Japan at 17 percent) to an embarrassing low of 1 percent. And it’s not simply because we don’t have the money. We had the money, but we spent it. The third of my generation that is financially prepared for retirement didn’t earn more than others, they simply spent less. They went without, set aside money, invested well, and became “The Millionaire Next Door.”
I hope today’s harsh financial and social circumstances will help us take a long, hard look at what’s been going on for the last half century. And as we do, we need to acknowledge any role we’ve played in causing both our economic and our social woes. Some can look back with pride. We have plenty of “ants” living among us and I applaud them for their self-discipline and integrity. But the grasshoppers have to come to terms with what they really want.
Parents, business executives, and community leaders alike are going to have to find a way to say “no” to buying everything today. They’re also going to have to get used to teaching the long-term values of self-restraint and making choices with tomorrow in mind. The future desperately needs advocates, cheerleaders, and spokespeople—and we’re all going to have to take a turn. That means we’re going to have to act and feel corny once in a while. We can’t remain critical, glib, cool, and above the fray, and hope to turn things around. Like it or not, if we want a wonderful life (all the way to the end), we’re going to have to embrace Frank Capra.
Robert -
I am on record, here and elsewhere, as being bullish on gold bullion and in particular, on accumulating Aussie Dollars and Euro Dollars, as the ultimate hedges against a “collapse” of the U.S. Dollar, or, as is more likely, a devaluation of the U.S. Dollar, wherein government gets to liquidate its debt at a ratio of 1 new dollar = 100 old dollars, or thereabouts. How many nations have NOT devalued their currency, one or more times in their history, to compensate for reckless, irresponsible, corrupt government fiscal policies, spanning previous decades? The answer is FEW. Look at Germany, look at France, look at the Latin-American countries and, well one need look no further.
But the BEST defense against the coming demise of the U.S. Dollar, and it sickko economy, is RELOCATION. See you boys in Sweden, Norway, Australia, and other lesser-distressed locales around the globe. Who the hell in his right mind wants to be here in the USA, when the devaluation hits the fan, especially knowing how Liberals will be jumping up and down for joy at our demise as a world power / global entity? Anyone got a better idea or game plan? Let’s have it.
Robert,
You listed five major reasons why it has taken the U.S economy 26 years to reach the point you thought would only take a few years. Pinpointing the occurrence of a future event is quite difficult—which is why entrepreneurs who anticipate future change successfully deserve to earn high profits.
Let me ask you. Do you think we would be better off today if:
1. Fed chairman, Paul Volker’s anti-inflationary policies hadn’t prevented the dollar from collapsing? Gee—it is obvious there is no Paul Volker currently running the show.
2. Jimmy Carter had won the election and continued his anti-capitalistic policies?
It is possible that the economic catastrophe would be past history—only a bad memory that is quietly fading away. Also, we might be enjoying a social system of unhampered capitalism instead of the destructive government interventionism that our political and financial “leaders” have foisted on our fragile economy.
Robert A. Meyer
I remember first reading Mr. Ringers book “How You Can Find Happiness During the Collapse of Western Civilization” in 1983; after-which, I traded in some more of my paper money and enlarged my intrinsic stockpile of supplies just in case western civilization did collapse. Believe it or not, I still have a few of those items left over in my current stockpile.
I still maintain my own personal “safety-net” of supplies, investments, precious metals, real estate, and firearms. Having said that, experience has taught me that western governments seem to find a way to “muddle through” and grow socialism. Just when you think socialism is on the verge of collapse, a new scheme is formulated to prop it up or some new technological advancement is developed and exploited that consequently prolongs the inevitable demise of socialized government.
Therefore, please be careful and don’t do anything impulsively rash, like use your entire life-savings to buy gold. Gold is good in reasonable amounts, so don’t get me wrong, I like it, but remember, FDR confiscated gold during the New Deal and if western civilization does indeed collapse, than it is highly likely that the government will, at the very least, take control of the commodities markets and perhaps ruin your investment.
My humble advice is: if you really want to be prepared, than read Robert Ringers books and stay current on his blog, tune in to Glenn Beck on the Fox News Channel, pay close attention to economist Mark Faber (GloomBoomDoom.com), read and analyze closely what Jon Markman and Bill Fleckenstein have to say on MSN Money, take note of Mr. Gerald Celente of the Trends Research Institute, and research the old classics written by Ayn Rand, Ludwig von Mises, F.A. Hayek, Milton Friedman etc. etc, —– there are many other individuals out there whom I could recommend, but time and space does not permit me to list them all. Educate yourself and stay informed if you want to find a measure of happiness before, during, and after the “collapse.”
What a coincidence, that, following my nightmares last night after watching Our President’s address to Congress on Tuesday, after realizing I would need a goal of retiring a BILLIONAIRE in thirty years to outpace the coming inflation and live comfortably, I went down to the storage locker and dug out my copy of “… … … … Civilization” to read again. And this was the article that was waiting for me in my inbox. Weird…
-p
Will you be making a guide on how to keep the tangible assets we put our money into hidden from Big Brother? After all, FDR didn’t hesitate to confiscate privately-owned gold during the depression, and in today’s “Do whatever it takes” mindset, I can see Obama going after it and more.