by Steve Forbes
100 undermined by currency debasements Dylan Grice, “The Loss of Trust and the Great Disorder,” Edelweiss Journal, no. 9, October 2012, p. 1, http://www.edelweissjournal.com/pdfs/EdelweissJournal-009.pdf.
100 the situation becomes unbearable Paul Hein, “The Root of All Evil,” LewRockwell.com, March 4, 2009, http://www.lewrockwell.com/2009/03/paul-hein/the-root-of-all-evil/.
102 followed by Argentina, South Africa, Egypt, India, and Turkey Ciaran Ryan, “Riot Alert: Look Out Argentina, South Africa, Turkey, and India,” Economic Policy Journal, February 27, 2013, http://www.economicpolicyjournal.com/2013/02/riot-alert-look-out-argentina-south.html.
102 the ultimate flare-up of unrest and violence Chris Becker, “A Response to a Criticism of My Inflation-Social Unrest Research,” ChrisLBecker.com (blog), February 13, 2013, http://chrislbecker.com/2013/02/13/response-to-a-criticism-of-my-inflation-social-unrest-research/.
102 during the presidencies of George W. Bush and Barack Obama “Partisan Polarization Surges in Bush, Obama Years,” Pew Research Center for the People & the Press, June 4, 2012, http://www.people-press.org/2012/06/04/partisan-polarization-surges-in-bush-obama-years/.
102 few question the ideas behind government or central banks Grice, op. cit., p. 5.
102 money printing exercise is to turn society against itself Michael Skocpol, “Dylan Grice: Witch Hunts, Inflation Fears, and Why I’m Bearish in 2013,” Advisor Perspectives, January 22, 2013, http://advisorperspectives.com/newsletters13/pdfs/Dylan_Grice-Witch_Hunts_Inflation_Fears_and_Why_Im_Bearish_in_2013.pdf.
103 the marketplace is infused with trust Bruce Yandle, “Lost Trust: The Real Cause of the Financial Meltdown,” Independent Review, Winter 2010, pp. 343–344, http://www.independent.org/pdf/tir/tir_14_03_02_yandle.pdf.
103 shared norms, on the part of other members of that community Francis Fukuyama, Trust: Human Nature and the Reconstitution of Social Order, Kindle Ed. (New York: Free Press, 2008), p. 26.
104 have relied more heavily on smaller family businesses Ibid., p. 30.
104 such as Norway (1.5%) and Australia (2.5%) Trading Economics, Interest Rate, Country List, www.tradingeconomics.com/country-list/interest-rate.
104 that prevailed in the nineteenth century Nathan Lewis, “The 1870–1914 Gold Standard: The Most Perfect One Ever Created,” Forbes.com, January 3, 2013, http://www.forbes.com/sites/nathanlewis/2013/01/03/the-1870-1914-gold-standard-the-most-perfect-one-ever-created/.
104 decline of faith in the system since the early to mid-1960s “Public Trust in Government: 1958–2013,” Pew Research Center for the People & the Press, October 18, 2013, http://www.people-press.org/2013/10/18/trust-in-government-interactive/; “Lack of Trust—Caused by Institutional Corruption—Is Killing the Economy,” Washington’s Blog, May 4, 2012 (citing the Chicago Booth/Kellogg School Financial Trust Index), http://www.washingtonsblog.com/2012/05/trust.html; Ron Fournier and Sophie Quinton, “In Nothing We Trust,” National Journal, April 19, 2012, http://www.nationaljournal.com/features/restoration-calls/in-nothing-we-trust-20120419.
104 sharp dives during the double-digit inflation Public Trust in Government (Pew), op. cit.
105 the market’s “trust technology” Yandle, op. cit., pp. 345–346.
105 setting off a wave of foreclosures Ibid., p. 358.
106 people lose confidence in you Mark Landler, “The U.S. Financial Crisis Is Spreading to Europe,” New York Times, October 1, 2008, p. C1, http://www.nytimes.com/2008/10/01/business/worldbusiness/01global.html?pagewanted=print.
107 nearly 49% at the height of the crisis in March 2012 “Greece Government Bond 10Y,” Trading Economics, accessed March 6, 2014, http://www.tradingeconomics.com/greece/government-bond-yield.
107 stiffing its bondholders for 50% of their loans “Greece’s Default: The Wait Is Over,” The Economist, March 17, 2012, http://www.economist.com/node/21550271.
107 was feared by everybody “Most Popular Scapegoats for Europe’s Crisis,” CNBC.com, May 24, 2011, http://www.cnbc.com/id/43106681.
108 Food Price Index reported a 25% surge in prices “FAO Food Price Index,” Food and Agriculture Organization of the United Nations, http://www.fao.org/worldfoodsituation/foodpricesindex/en/; “World Food Prices Reach New Historic Peak,” Food and Agriculture Organization of the United Nations, February 3, 2011, http://www.fao.org/news/story/en/item/50519/icode/.
108 Arab Spring protests were largely over food prices Alaa Shahine, “Tunisia Revolt Threatens Rulers Sharing Ben Ali’s Regime Model,” Bloomberg News, January 17, 2011, http://www.bloomberg.com/news/2011-01-16/tunisian-uprising-may-threaten-arab-rulers-sharing-ben-ali-s-regime-model.html.
108 jumped 18% in 2009, compared with 5% in 2006 George Melloan, “The Federal Reserve Is Causing Turmoil Abroad,” Wall Street Journal, February 23, 2011, http://online.wsj.com/news/articles/SB10001424052748704657704576150202567815380.
108 U.S.-driven global inflation was threatening global stability Ibid.
109 Those to whom the system brings windfalls Keynes, op. cit.
109 during its hyperinflation, Germany blamed the Jews Grice, op. cit., pp. 2–3.
109 driving down the value of his country’s bonds Sewell Chan and Jack Ewing, “Greek Leader Wants to Restrict Speculative Trades,” New York Times, March 8, 2010, http://www.nytimes.com/2010/03/09/business/global/09drachma.html?_r=0.
109 a symbol of banker incompetence and greed Rod Mills and Martin Brown, “Sir Fred’s £3m Mansion Hit by Bank Protesters,” Daily Express, March 26, 2009, http://www.express.co.uk/news/uk/91106/Sir-Fred-s-3m-mansion-hit-by-bank-protesters.
109 while ordinary people are made unemployed, destitute, and homeless Aislinn Simpson, “Sir Fred Goodwin Attack: Bank Bosses Are Criminals Group Claims Responsibility,” Telegraph, March 25, 2009, http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5048091/Sir-Fred-Goodwin-attack-Bank-Bosses-Are-Criminals-group-claims-responsbility.html.
110 as the unit of money did during the inflation Grice, op. cit., p. 4.
110 this system is rigged for a very few Shannon Jones, “Detroit: ‘This System Is Rigged for a Very Few,’” World Socialist Website, October 19, 2011, http://www.wsws.org/en/articles/2011/10/occd-o19.html.
111 lend the same money back to the government at two or three percent Matt Taibbi, “Wall Street Isn’t Winning—It’s Cheating,” Rolling Stone, October 25, 2011, http://www.rollingstone.com/politics/blogs/taibblog/owss-beef-wall-street-isnt-winning-its-cheating-20111025.
112 the great majority of Americans are still living in a depressed economy Paul Krugman, “Rich Man’s Recovery,” New York Times, September 12, 2013, p. A25, http://www.nytimes.com/2013/09/13/opinion/krugman-rich-mans-recovery.html.
112 those super-high incomes come from the financial industry Ibid.
112 and he received taunts and threats Landon Thomas Jr., “What’s Broken in Greece? Ask an Entrepreneur,” New York Times, January 29, 2011, http://www.nytimes.com/2011/01/30/business/30greek.html?pagewanted=all.
112 unemployment in Greece is nearly 28% Ian Silvera, “Greek Unemployment Rate Climbs to Record High as Eurozone Jobless Holds,” International Business Times, January 9, 2014, http://www.ibtimes.co.uk/greek-unemployment-rate-climbs-record-high-eurozone-jobless-holds-1431636.
112 empresario, the word for businessman, has come to mean criminal Max Chafkin, “A Constant Feeling of Crisis,” Inc., June 2011, http://www.inc.com/magazine/201106/doing-business-in-argentina.html.
113 “macroprudential” strategies in monetary and financial regulation International Monetary Fund, “New Policies to Fend Off Financial Crises,” IMF Survey Magazine, September 16, 2013, http://www.imf.org/external/pubs/ft/survey/so/2013/POL091613A.htm; Bianca De Paoli and Matthias Paustian, “Coordinating Monetary and Macroprudential Policies,” Federal Reserve Bank of New York Staff Reports, no. 653, November 2013, http://www.newyorkfed.org/research/staff_reports/sr653.pdf.
113 decrees their actions a “systemic” threat John H. Cochrane, “The Da
nger of an All-Powerful Federal Reserve,” Wall Street Journal, August 26, 2013, http://online.wsj.com/news/articles/SB10001424127887323906804579036571835323800.
114 avert a lawsuit over its sale of mortgage securities Ben Protess and Jessica Silver-Greenberg, “In Extracting Deal from JPMorgan, U.S. Aimed for Bottom Line,” New York Times, DealBook (blog), November 13, 2013, http://dealbook.nytimes.com/2013/11/19/13-billion-settlement-with-jpmorgan-is-announced/.
114 doubling its risk and compliance team “Robbery at J.P. Morgan,” Wall Street Journal, September 29, 2013, http://online.wsj.com/news/articles/SB10001424127887324619504579026860113942236.
115 has fallen below that of all other people in the Western world Jimmy Carter, “Crisis of Confidence,” The Carter Center, July 15, 1979, http://www.cartercenter.org/news/editorials_speeches/crisis_of_confidence.html.
115 the rupee, which reached a record low in 2013 Mike Obel, “Why India’s Currency, the Rupee, Has Plummeted to a Record Low Against the Dollar,” International Business Times, August 28, 2013, http://www.ibtimes.com/why-indias-currency-rupee-has-plummeted-record-low-against-dollar-1401400.
115 ban the import of duty-free flat screens by airline passengers “Government Targets TV Imports by Passengers as Rupee Plummets,” Reuters, August 19, 2013, http://in.reuters.com/article/2013/08/19/india-economy-imports-idINDEE97I09Z20130819.
115 was now “focused on simply surviving” Annie Gowen, “In India, Economic Slowdown and Inflation Cause Middle Class to Defer Dreams,” Washington Post, November 5, 2013, http://www.washingtonpost.com/world/economic-slowdown-inflation-cause-indias-middle-class-to-defer-dreams/2013/11/05/ace864ba-4189-11e3-b028-de922d7a3f47_story.html.
116 their kids won’t be better off than they were “Remarks by the President on Economic Mobility,” The White House, Office of the Press Secretary, December 4, 2013, http://www.whitehouse.gov/the-press-office/2013/12/04/remarks-president-economic-mobility.
117 force almost everyone to join in the dance Theodore Dalrymple, “Inflation’s Moral Hazard,” City Journal 19 (3), Summer 2009, http://www.city-journal.org/2009/19_3_otbie-inflation.html.
117 other standards will fade away as well Hein, op. cit.
117 annual Corruption Perceptions Index “Corruption Perceptions Index 2013,” Transparency International, http://cpi.transparency.org/cpi2013/results/.
117 increased a lot over the last two years Deborah Hardoon and Finn Heinrich, “Global Corruption Barometer 2013,” Transparency International, July 19, 2013, p. 6, http://www.transparency.org/whatwedo/pub/global_corruption_barometer_2013.
117 to replace 10 ministers in his cabinet The Times of Israel staff and the Associated Press, “Erdogan Replaces 10 Ministers Amid Corruption scandal,” Times of Israel, December 26, 2013, http://www.timesofisrael.com/erdogan-replaces-10-government-ministers-amid-corruption-scandal/.
117 degrees in fields such as law and medicine Olga Yatskevich, “Corruption in Education in Belarus,” 10th International Anti-Corruption Conference, October 2001, http://www.10iacc.org/content-ns.phtmlPdocuments=300&art=20.
118 cost of a bribe in that country “more than tripled” “Bribery Affected by Inflation Too,” RT.com, January 27, 2012, http://rt.com/business/corruption-russia-849/.
118 had to pay fines totaling more than $6 billion Christopher Alessi and Mohammed Aly Sergie, “Understanding the Libor Scandal,” Council on Foreign Relations Backgrounder, December 5, 2013, http://www.cfr.org/united-kingdom/understanding-libor-scandal/p28729.
118 100,000 euros of customers at the Bank of Cyprus Andrew Higgins, “Cyprus Bank’s Bailout Hands Ownership to Russian Plutocrats,” New York Times, August 21, 2013, http://www.nytimes.com/2013/08/22/world/europe/russians-still-ride-high-in-cyprus-after-bailout.html/.
119 What more do you need to know? Paul Toscano, “‘Run for the Hills’ Now, I’m Doing It: Jim Rogers,” CNBC, March 28, 2013, http://www.cnbc.com/id/100600824.
119 abandon their mortgages in the wake of the financial crisis Tess Vigeland, “They Walked Away, and They’re Glad They Did,” New York Times, November 8, 2011, http://www.nytimes.com/2011/11/09/your-money/life-goes-on-some-find-after-leaving-an-underwater-mortgage.html?pagewanted=all.
119 charges clients an enrollment fee of $199 to $395 Ibid.
120 financially rational to walk away, that’s what you do Ibid.
120 default rates are at their highest levels since 1995 Shahien Nasiripour and Chris Kirkham, “Student Loan Defaults Surge to Highest Level in Nearly Two Decades,” Huffington Post, September 30, 2013, http://www.huffingtonpost.com/2013/09/30/student-loans-default_n_4019806.html.
121 loan payments that were double his rent Kelsey Sheehy, “Undergrads Blow It with Student Loan Refunds,” U.S. News & World Report, July 24, 2013, http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/07/24/undergrads-blow-it-with-student-loan-refunds.
121 from 12% to around 17.5% in 2013 “Consumer Credit Outstanding as a Percent of GPD,” Economagic.com, http://www.economagic.com/gif/g6902500252094140863646814564824.gif; Neal Irwin, “Consumer Debt Is Soaring: That’s Good News (for Now),” Washington Post Wonkblog, July 8, 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/08/consumer-debt-is-soaring-thats-good-news-for-now/.
121 from 13% to under 5% today “Personal Saving Rate (PSAVERT),” FRED Economic Data, Federal Reserve Bank of St. Louis, updated December 23, 2013, http://research.stlouisfed.org/fred2/series/PSAVERT/.
121 to depend less and less on effort and production Henry Hazlitt, “Inflation vs. Immorality,” Freeman, January 1, 1977, http://www.fee.org/the_freeman/detail/inflation-vs-immorality#axzz2r24trZUK.
122 resulting in a rash of home invasion robberies Ryan Villarreal, “Protests Mount Against Argentina’s President over Currency, Crime and Corruption,” International Business Times, November 9, 2012, http://www.ibtimes.com/protests-mount-against-argentinas-president-over-currency-crime-corruption-868860.
122 first rise in violent and property crime in two decades Terry Frieden, “U.S. Violent Crime up for First Time in Years,” CNN.com, October 17, 2012, http://www.cnn.com/2012/10/17/us/violent-crime/.
122 U.S. crime rate and the Misery Index Chor Foon Tang and Hooi Hooi Lean, “New Evidence from the Misery in the Index in the Crime Function,” Economics Letters 102 (2), 2009.
122 falls on the inflation rate John M. Nunley, Richard Alan Seals Jr., and Joachim Zietz, “The Impact of Macroeconomic Conditions on Property Crime,” Auburn Economics Working Paper (Auburn University, 2011), p. 18, http://johnnunley.org/prop_crime_4_3_2013_final.pdf.
122 the first serious deflation in 50 years Miguel Llanos, “Crime in Decline, but Why? Low Inflation Among Theories,” MSNBC.com, September 20, 2011, http://www.nbcnews.com/id/44578241/ns/us_news-crime_and_courts/t/crime-decline-why-low-inflation-among-theories/#.Ut57GGQo7wc.
122 doubled from 1.6% to 3.2% “Consumer Price Index, 1913–,” The Federal Reserve Bank of Minneapolis, accessed March 6, 2013, http://www.minneapolisfed.org/community_education/teacher/calc/hist1913.cfm.
123 increase in crime categories Bureau of Justice Statistics Press Release, op. cit.
123 quickly followed by an increase in crime rates Chor Foon Tang and Hooi Hooi Lean, “Will Inflation Increase Crime Rate? New Evidence from Bounds and Modified Wald Tests,” Global Crime 8 (4), November 2007, pp. 311–323, https://www.ncjrs.gov/App/publications/abstract.aspx?ID=243186.
123 no longer pays income taxes David B. Muhlhausen and Patrick Tyrrell, “The 2013 Index of Dependence on Government,” The Heritage Foundation, Special Report 142, Chart 1, November 21, 2013, http://www. heritage.org/research/reports/2013/11/the-2013-index-of-dependence-on-government.
123 from $37.6 billion to $78.4 billion in fiscal year 2012 Ibid.; “Supplemental Nutrition Assistance Program Participation and Costs,” U.S. Department of Agriculture, accessed March 6, 2014, http://www.fns.usda.gov/pd/snapsummary.htm.
124 a withering of civil society Muhlhausen and Tyrell, op. cit.
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124 relentlessly consuming the life of the nation J. P. Cooper, The New Cambridge Modern History, vol. 4: The Decline of Spain and the Thirty Years War, 1609-48/59 (Cambridge University Press, 1970), p. 477; available online at http://bit.ly/KKa9gn.
125 little more than a piece of junk Lawrence W. Reed, Are We Rome?, Foundation for Economic Education (2013), pp. 5—8, http://www.fee.org/files/doclib/20130620_FEEAreWeRomeCover1V5.pdf.
125 ultimately their civilization Ibid., p. 9.
Chapter 6: The Gold Standard
127 making the results public “74% Want to Audit the Federal Reserve,” Rasmussen Reports, November 8, 2013, http://www.rasmussenreports.com/public_content/business/general_business/november_2013/74_want_to_audit_the_federal_reserve.
128 accepted legal tender in the state of Utah Charles Riley, “Utah: Forget Dollars. How About Gold?” CNNMoney.com, March 29. 2011, http://money.cnn.com/2011/03/29/news/economy/utah_gold_currency/index.htm?iid=EL.
128 allow the use of gold as payment “Utah House Passes Bill Recognizing Gold, Silver as Legal Tender,” FoxNews.com, March 4, 2011, http://www.foxnews.com/politics/2011/03/04/utah-house-passes-recognizing-gold-silver-legal-tender/.
128 with a proposal for a new gold standard Louis Woodhill, “Gold Isn’t Money, But It Should Be Used to Define the Value of the Dollar,” Forbes.com, April 18, 2013, http://www.forbes.com/sites/louiswoodhill/2013/04/18/gold-isnt-money-but-it-should-be-used-to-define-the-value-of-the-dollar/2/.
128 seen as the gold standard’s Woodstock Ralph Benko, “Gold Defined Money and Monetary History at the Cato Institute: A Velvet Underground Event?” Forbes.com, July 29, 2013, http://www.forbes.com/sites/ralphbenko/2013/07/29/gold-defined-money-and-monetary-history-at-the-cato-institute-a-velvet-underground-event/.
129 remained unmatched for the next 100 years Nathan Lewis, “The 1870–1914 Gold Standard: The Most Perfect One Ever Created,” Forbes.com, January 3, 2013, http://www.forbes.com/sites/nathanlewis/2013/01/03/the-1870-1914-gold-standard-the-most-perfect-one-ever-created/.
