Description
Book SynopsisThe coming financial apocalypse and what government and individuals can do to insulate themselves against the worst shocks In this controversial book a noted adherent of Austrian School of Economics theories advances the thesis that the United States is fast approaching the end stage of the biggest asset bubble in history. He describes how the bursting of the bubble will cause a massive interest rate shock that will send the US consumer economy and the US governmentpumped up by massive Treasury debtinto bankruptcy, an event that will send shockwaves throughout the global economy. Michael Pento examines how policies followed by both the Federal Reserve and private industry have contributed to the impending interest rate disaster and highlights the similarities between the US and European debt crisis. But the book isn''t all doom and gloom. Pento also provides well-reasoned solutions that, government, industry and individuals can take to insulate themselves against the coming
Table of Contents
Introduction xi
Acknowledgments xv
Chapter 1: As Good as Gold? 1
The Great American Money Machine 4
“Dad, Where Does Money Come From?” 8
The Implications of a Fiat Currency 11
Notes 14
Chapter 2: The Anatomy of a Bubble 15
The Great Depression—A Historical Comparison 19
Two Decades of a Bubble Economy 25
Does CDO Rhyme with Tulip Bulb? 29
Today’s Bubble in Bonds Rhymes with the
Debt-Fueled Real Estate Crisis 31
Notes 33
Chapter 3: Bernanke’s Hair-of-the-Dog Economy 35
Austrian Trade Cycle Theory versus
Keynesian Toys and Candy 36
“End This Depression Now!”—The Game Show 41
“I’m Not Addicted to Easy Money . . . and I Can Stop at Anytime” 50
No Way Out—Starring Ben Bernanke . . . 56
The Thirty-Year Party in the Bond Market 62
Notes 65
Chapter 4: Deflation Phobia and Inflation Philos 67
Fed Busters 69
Common Fed-lore Myth 1—The Myth of the Deflationary Death Spiral Monster 69
The Truth about Price Deflation 72
Fed-Lore Myth 2: Japan Proves that
Debt and Deflation Go Hand-in-Hand 77
Myth 3: The Keynesian Fed-Lore of the Phillips Curve 86
Myth 4: You Can Rely on Government Statistics 92
Myth 5: The Fed Was Created for Your Benefit 100
Notes 101
Chapter 5: The Bubble Reality Check 103
The Investor Reality Check 104
The Interest Rate Reality Check 110
The Teaser Rate on U.S. Debt—Reality Check 115
Banker Reality Check 119
The China Reality Check 127
Washington’s Addiction to Debt—Reality Check 134
Notes 140
Chapter 6: The End of an Empire 141
The End of a Monetary System 145
The Economic Laws of Debt 152
U.S. Debt—This Time It’s Different 153
Is Austerity a Bad Thing? 157
Where Will All the Money Go? 160
The Bell Is Ringing for the Bubble in the Bond Market 163
Banana Ben to the Rescue 167
The Cost of an Empire 169
Notes 173
Chapter 7: Real World Europe 175
The Creation of the Euro 176
Greece 183
Dr. Hayek vs. Dr. Keynes 190
Dr. Keynes and Dr. Hayek and
America’s Bout with Hyperinflation 195
I’ll Take Currency Debasement for $40 Billion . . . a Month 200
Final Jeopardy 203
The Canary in the Coal Mine 204
Notes 205
Chapter 8: The Debt Crisis 207
From Pioneer to Penurious . . . 207
The Sixteenth Amendment . . . The Beginning of the Slippery Slope 209
Mexican Debt Crisis 215
The Asian Contagion 218
Russian Debt Crisis 220
The Debt Crisis Fallout 223
What Would It Look Like Here? 225
It Can’t Happen Here? 233
I Don’t Want to Be Right 238
Conclusion 247
Notes 248
Chapter 9: What Can the Government Do to Mollify the Debt Collapse? 251
The Principles of a Free Market 252
Solution 1: Allow the Deleveraging Process to Happen 257
Solution 2: Strengthen and Stabilize the U.S. Dollar 260
Solution 3: Allow Interest Rates to Rise to the Supply of Savings versus the Demand for Money 262
Solution 4: Balance the Budget 264
Solution 5: Aggressively Reduce the Amount Of Regulatory Burden 270
Solution 6: Simplify the Tax Code 273
Solution 7: Fair Trade and a Free Trade 276
Solution 8: Overhaul Education 277
Conclusion 278
Notes 283
Chapter 10: How to Invest Your Money Before and After the Bond Bubble Bursts 285
What to Own When U.S. Debt and the Dollar Collapse 289
Notes 294
About the Author 295
Index 297
