The War That WIll Kill The Dollar

An interesting and insightful  speech by Richard J. Maybury  of the Early Warning Report where he opines his concerns and reasons for the coming decline of the US dollar as the world reserve currency taken from the annals of US history. This was a speech given at the Casey Research/Sprott Summit in Phoemix, Arizona, on October 1, 2011.

The War that will Kill the Dollar
by Richard J. Maybury

I write mainly about two subjects:  economics and geopolitics, or you might call it military affairs.  In recent years I’ve devoted most of my writing to economic topics such as malinvestment and velocity — especially velocity, the speed which money changes hands — because the economy is what’s on most people’s minds.

But at this conference you’re already hearing a lot about economics — about the federal debt, money supply, stimulus, Tarp, QE, gold, silver, raw materials, currencies, and lot of other economic subjects I could talk about — and most or all the analysis will paint a picture of the dollar and other currencies dying.

I haven’t heard all the presentations yet, but I’m sure I will agree with them that the dollar has one foot in the grave and the other on a banana peel.

After all, according to the government’s own Consumer Price Index, since the Federal Reserve began operations in 1914, the dollar has lost 95% of its value.  Once velocity turns sharply upward, I’m sure all hell is going to break loose, and the dollar will lose the final 5%.

But what David Galland asked me to be here for is to call your attention to something other than the economics — something much bigger  —  that’s sneaking up on us unnoticed.

In my opinion, even if all the economic analysis at this conference is wrong — even if none of the forecasted economic events happen — the dollar is still going to die, because it will be killed by geopolitical events, meaning war.

You already know about the government debasing the currency to pay for the bailouts, the stimulus, unemployment insurance, and other things, but you probably haven’t heard much about printing money to pay for new wars.

I don’t know anyone in the mainstream press who’s paying attention to this, so here’s the story.

Writers for thousands of years have observed that political power corrupts the morals and the judgment. This was as true in the days of the Roman warfare/welfare state as it is today for the US warfare/welfare state.

To me, the evidence is overwhelming that civilizations fall because political power corrupts.

The more political power there is, the faster and harder the civilization falls.

The primary purpose of the American Constitution, especially the Bill of Rights, was to limit power, because the founders understood power, and were very much afraid of it.  John Adams referred to “cruel power,” and his colleague John Dickinson referred to “brutal power.”

In his book The Ideological Origins Of The American Revolution, historian Bernard Bailyn wrote about the beliefs of the early Americans regarding power.  One writer during the Revolutionary period said “power is known to be intoxicating.” Another said power “converts a good man in private life to a tyrant in office.”

After the Revolution was over, the primary issue was, what to do about power.  And that question was an obsession of Americans until the Civil War, when Lincoln answered it once and for all.  He said, don’t even think about trying to escape from the federal government, or you will be dead.  And 625,000 Americans ended up dead.

One of the main points I’m focusing on today is power, because I believe that this is the fundamental thing that’s wrong with the world.   All this chaos — the financial problems, the wars, the riots, the declining incomes, the debasement of the currencies — at bottom it’s all caused by political power.

The enemy isn’t the democrats or republicans, the liberals or conservatives, the Chinese, Russians, the EU, or the Federal Reserve.  These are not the enemy.  The enemy is political power.

In the US, practically everyone believes the problem is that the wrong people are in power, and if we put the right people in power, then everything will be okay.

But the problem isn’t people, it’s power.  No matter who gets it, they will be corrupted by it.  The early Americans knew this, which is why they wrote the Bill of Rights.

One of the power holders’ main activities is robbing Peter to subsidize Paul.  No one wants to be Peter and everyone wants to be Paul, so the victims use various forms of bribery and other political games to curry favor with the power holders.  And the whole civilization just rots away.

I remember watching Milton Friedman in an interview once.  He said that as far as he could tell, the collapse of every previous civilization — the Romans, Egyptians, Chinese and on and on — was preceded by the rise of a huge, powerful, ravenous government, which either grew up from within the civilization or was imposed from the outside.

A big government means your days are numbered.

Political power corrupts because it is, itself, corruption.  It is the legalized privilege of using brute force on persons who have not harmed anyone.  Only governments have this privilege.  It’s what sets them apart from all other institutions.  No one in a church, charity or business can use force except in self defense.  Only governments have the legal privilege of initiating the use of brute force.

For our purposes here today, I want to home in on the fact that power corrupts not only the morals, but also the judgment.

You can read the rest of the speech here: