In 1927, economist John Maynard Keynes said, “We will not have any more crashes in our time.”[1] In June of 2017, Federal Reserve Chairperson Janet Yellen said:

“Would I say there will never, ever be another financial crisis? You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.”[2]

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On September 5, 1929, leading U.S. economist Irving Fisher said, “There may be a recession in stock prices, but not anything in the nature of a crash.”[1] Testifying before the U.S. House Financial Services Committee, Alan Greenspan said, “I don’t expect that we will run into anything resembling a collapsing (housing) bubble, though it is conceivable that we will get some reduction in overall prices as we’ve had in the past, but that is not a particular problem,” February 2005.[3]

In July of 2007, Ben Bernanke said, “The pace of home sales seems likely to remain sluggish for a time, partly as a result of some tightening in lending standards, and the recent increase in mortgage interest rates. Sales should ultimately be supported by growth in income and employment, as well as by mortgage rates that, despite the recent increase, remain fairly low relative to historical norms…”[4]

If your teenage driver wrecked the car the last three times she drove it, would you hand her the keys for the fourth time? Why do we give the keys to the economy to people who have consistently been wrong?

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The financial service industry wants people to think “no one saw this coming.” When this next collapse occurs, financial advisors and TV talking heads will be shocked. “On March 14, 2008, Robert Rubin spoke at a session of the Brookings Institution in Washington, stating that ‘few, if any people anticipated the sort of meltdown that we are seeing in the credit markets at present’. Rubin is a former US Treasury Secretary, member of the top management team at Citigroup bank, and one of the top Democratic Party policy advisors. On 9 December of that year Glenn Stevens, Governor of the Reserve Bank of Australia commented on the ‘international financial turmoil through which we have lived over the past almost year and a half, and the intensity of the events since mid-September this year’. He went on to assert: ‘I do not know anyone who predicted this course of events…’ And in an April 9, 2009, lecture Nout Wellink—chairman of the Basel Committee that formulates banking stability rules and president of the Dutch branch of the European Central Bank—told his audience that ‘[n]o one foresaw the volume of the current avalanche’.”[5]

That last quote is from a university paper written in the Netherlands. It demonstrated, globally, many public figures warned of the coming 2008-2009 market collapse, only to be followed by more prestigious people who said, “no one saw it coming.” Subscribers to Harper’s Magazine should have known the housing crisis was coming:  [The new road to serfdom: An illustrated guide to the coming real estate collapse, by Michael Hudson, May 2006, Harper’s Magazine.]

Did the last collapse catch you by surprise? It did me. In 2009, I figured out I was listening to the wrong people—the people my industry wanted me to follow for advice. (If you haven’t seen it, watch [Peter Schiff Was Right] to see the contrast of views presented prior to the collapse.)

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1. It begins with economic thought. If you believe going deeper into debt gets one out of debt, your forecasting ability will be impaired. If you believe printing money creates wealth, you’ll see permanent wealth where others see bubbles. 

In an interview, Peter Schiff was asked if he was born with special prognostication powers, referring to his successful anticipation of the technology bubble, the housing bubble, and last stock market bubble. Schiff laughed and said, “I wasn’t born with any kind of special knowledge or foresight. I was born with the same common sense that we are all born with. The problem is that so many other people lost that over the years because they got brainwashed in the universities, with Keynesian (economics) and through government propaganda and so they lost that common sense that I’ve managed to hang on to. And so the gift for me…is that I’ve managed to see clearly and not be caught up in all that nonsense.”[6]

In that same interview, Schiff said, “Hopefully, one day we won’t say, ‘Austrian Economics,’ we’ll just say ‘economics’…because Austrian Economics is economics. Keynesian (economics)…is almost like a religion. They just somehow believe in a mystical power that exists in the hands of the government; if the government borrows money it can create prosperity. If…they create money they can create purchasing power. None of it works. If an individual can’t do it…we can’t do it collectively. The principles that apply to families also apply to the government.”

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 2. The financial industry needs buyers. This isn’t rocket science. Some of America’s oldest and largest companies are financial. Pick your favorite mutual fund company. What is the likelihood they will tell investors to sell their fund and move into cash or gold? It rarely happens. Most companies have an incentive to retain investors and attract new ones. Most investment companies need capital to stay in business.

3. Many financial advisors are compensated through the system. In his article, [Breaking Down The Bull Market Thesis], Lance Roberts presents these three realities as the reason it is difficult to get good investment advice:

  • The bulk of financial advice only tells you to “buy”
  • The vast majority of analysts ratings are “buy”
  • And Wall Street needs you to “buy” so they have someone to sell their products to.

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1. It begins with economic thought. Economics is a social science, not a physical science. The “social” part means it is subjective, largely dependent on human behavior. Keynesian economics (the predominant economic thought of our day) wants to treat this subject as if it was a physical science. They assume economic decisions can be quantified and then projected. They think math is money and money is math. It is not uncommon for an economist to obtain a Ph.D. and have more math classes than classes on classical economic thought. In the early days of economics, as a discipline, it was based on logic, not math.

The oldest continuous school of economic thought is the Austrian School [information found here]. Whereas most of the opening embarrassing quotes where from Keynesian economists, the Austrian School has a [100-year track record] of correctly calling America’s economic bubbles. If we are to put our faith in an expert, it makes sense to favor those who have been right for the last 100 years.

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2. The history of money and markets validate the current bearish predictions. This goes far deeper than just predicting the stock market. Historian William Graham Sumner wrote, “There is nothing new to be discovered about the operation of paper money. There is no new invention possible for making it ‘as good as gold,’ no new device conceivable for making it elastic…Each new issue will produce, only for a time, ease and apparent prosperity, to be followed in a few years by a new crisis and new distress, then a new issue, and so on over again. Reform will then be no longer possible, and we must run the course to its end, in which the paper disappears as ignominiously as the continental notes.” His conclusion has stood the test of time; it was written in 1874. [7] If you need a refresher course on the history of money, click here: [Hidden Secrets of Money, When Money Is Corrupted].

3. Track records are another tool for determining whom to trust. The year before Ben Bernanke explained to Congress there would not be a housing crisis, Bill Fleckenstein wrote, “…the housing bubble has been more a lending bubble…unfortunately, a lot of people around the country are going to be badly hurt as this bubble unwinds. And after they have taken their losses, the financial institutions that were the engine behind this folly will take their own hits. ‘Easy Al’ Greenspan at the Fed tried to bail out one bubble with another bubble. While it bought time, it will end in far-worse pain.” [8]

In his October 5, 2001, market commentary, Eric Sprott wrote: “By now, it will be clear to our readers that we believe we are in the throes of what could be a long, secular bear market for financial instruments. In such an environment, those with savings to invest will be hard pressed to find worthy investments where they can expect to earn reasonable rates of return.

“So what’s an investor to do? You can twiddle your thumbs and wait out the bear market, you can trade on anticipated peaks and troughs on the way down and, with luck, make some money that way, or you can invest in one financial instrument for which the fundamentals (and technicals) are actually quite positive in the short to medium term: gold

“We at Sprott have been bullish on gold for quite some time.” [9]

On October 5, 2001, the DOW Jones Industrial Average was 10,940. Today, at 21,580, it has increased 97%. Over this same time period, Eric Sprott’s recommendation has yielded a 331% return. Sprott anticipates more debt and money printing. He is still urging precious metals as a method of protecting purchasing power or creating wealth.

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Today, it’s easy to think past geniuses are fools. The gold bugs I have been following have the appearance of being wrong since gold peaked in 2011. For the last six years, we have been hearing forecasts of doom and target dates for a new gold breakout which have past. The fools in the original [Peter Schiff Was Right] video now look like geniuses while Schiff seems like a fool. This is a common pattern. The cycle for those who have been correct: sound like a fool, be proven to be a genius, then sound like a fool, and be proven to be a genius. The cycle for people like those laughing in the Peter Schiff video: sound like a genius, be proven to be a fool, then sound like a genius, and be proven to be a fool. Which group is more credible?

Most Americans do not understand the extreme measures which have been taken, behind the scenes, to keep the system afloat. [10, 11, 12, 13] When these current bubbles pop, it will have been important you figured out which experts to trust.

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Here is a short list of whom I’m following: [click here]. If you want to see economic, political and financial news I’m reading, [click here].

We are entering [a time of the year when bad things often happen], financially. It is important to figure out whom to listen to.

“Dollar” Bill is a real guy, with real knowledge on our nation’s financial calamity, and real solutions for what must be done to dig ourselves out of the hole we are in. Due to his career, Bill must remain “disguised” to protect his position. “Bill” loves America, sees the impending cliff we are all headed towards, and hopes that by sharing his inside knowledge of the failed monetary policy in our nation, that a fiscal “nuclear” event can be minimized.