Monday, August 29, 2011

The redemption will not be monetized

Liberty? (Source: Flickr)
Porter Stansberry of Stansberry's Investments has created a new video presentation on the gloomy future of the dollar and the US economic system as we know it. Stansberry is credited with predicting the crash of many companies in the 2008 economic crisis, yet he claims that the worst is yet to come. According to his predictions, many Americans could soon face skyrocketing prices of basic commodities such as milk, bread and gas, coupled with closed banks, failing credit card companies, and bans on buying gold and foreign currencies.

America's consumption-led way of life led the country to borrow frivolously using short-term loans on which they were unable to pay interest. When major banks collapsed in 2008, debts were absorbed by the U.S. government and other world governments from which it borrows. The reason Americans don't feel these debts to their fullest is because the response of the US monetary system for the past decade has been to print dollars whenever it's in a bind. The US is the only debtor that can print more of the world's reserve currency -- US dollars -- anytime it wants. Because it can always print more dollars, the US can never go broke, since its currency forms the foundation of the world's economic system since World War 2.

The danger of this strategy comes when other countries realize what's going on and start to discount the value of the US dollar. Ever since the US has become accustomed to consuming more than producing, the real value of the dollar has sunk. According to Stansberry, this consumption-led way of life will become impossible to maintain. If other countries begin to price basic commodities in a currency other than dollars, those commodities will become much more expensive to Americans, and the frivolity of US monetary policy of the last decade will be felt rapidly. Rising oil prices would cripple the US economy and way of life, affecting the cost of transporting food, farming, commuting to work, air travel  prices.

Stansberry claims the world's preference for currencies other than the dollar has already begun, even if most Americans find it hard to believe. Robert Fisk recently wrote that Europe and Gulf states are conspiring to end dollar dealings for oil and instead move to a combination of Asian and new currencies to govern the oil market. China has recently been reported as investing more in the Yen than in the dollar. Americans are used to being able to use dollars wherever they travel, but Stansberry claims a major bank in Mexico has refused to accept dollars on the grounds of the weakening of the currency.

You can watch Stansberry's video presentation here. The presentation is long, and there's no way to rewind, fast-forward or pause (as far as I know), but there's a lot of good information in there, the gist of which I've summarized here. Stansberry's warning is intended for investors and those seeking to avoid the hit to their investments and retirement funds. Beyond this, these warnings also serve to herald the decline not only of the dollar, but of the consumption-led lifestyle which has become the universal currency of life in the last several decades. In this week's Haftorah (weekly reading of the Prophets), we read the following:

 חנם נמכרתם ולא בכסף תגאלו

You were sold for nothing, and without money will you be redeemed (Isaiah 52:3)

Today the values of consumerism seem so fundamental to life itself, so much as we can not even accept the basic human rights of a person who does not "work"--a view completely foreign to Torah, in which a poor person is a representation of a loan which God owes that person which we can pay for Him. After spending a week on Rothschild Boulevard, I believe one of the major achievements of Israel's latest protest movement is the introduction of a way of life which aspires to exist outside of the economic system which the government has imported from America. No one knows where it is heading--not even those who are considered its "leaders".

The tyranny of a life led by consumption is crumbling, and in its midst the ground is clearing for the reemergence of the values and dreams that have laid dormant for our two thousand years of exile. We need not rely on the empty promises of anarchy, socialism, or secular democratic utopias imported from states fallen, nor on doctrines of asceticism, minimalism or other dogmas that champion the Greek split between body and soul. After all, our people left Egypt not hungry and miserable, but laden with its stashes of gold and silver. The answers the times seek are ever-bubbling in the overflowing spring of the soul of our people, who throughout two thousand years of exile awaited the pure soil and air of the Land of Israel like a child waiting for its mother to return home, for the place where it can rekindle the spirit of prophecy and the bond between humanity and God for the sake of all of creation.

Friday is Gimmel Elul, the Yartzeit of Rav Kook, who saw these days.

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