For example, two thousand years ago, Italy (Rome specifically) was the pinnacle of civilization, at the forefront of medicine, art, technology, commerce, and military tactics.
In its later Empire years, totalitarian control of everything-- the military, finances, money supply, commercial code, and the like fell to a very tiny elite... and in most cases, one man.
And as one Emperor (or President) after another, bankrupted the treasury through foreign wars, palatial opulence, and unaffordable social welfare programs, Rome gradually changed for the worse.
Desperate to keep the party going, later Emperors debased the currency to the point of hyperinflation. They imposed wage and price controls under penalty of death. They raised taxes so punitively that people simply quit working altogether.
With each successive emperor, Romans would foolishly believe that the 'new guy will be different' and that things change for the better; it was change they could believe in. Apart from the occasional leader with wisdom and calm judgment, Rome's political leadership became more destructive.
By the time foreign barbarians began invading Italian territory, the citizens of Rome were so fed up that many of them welcomed the marauding hordes with open arms.
What was left of Rome officially fell in 476. But by that time, wealth and power had already shifted.
For more than 1,000 years, other kingdoms and empires assumed the role of the world's economic and political superpower-- from China's Tang Dynasty to the Mongolians to the Ottoman Empire.
Eventually, though, wealth and power shifted back West... to Italy once again. Venice flourished during the Renaissance and became the leading power center in Europe.
Its recipe for success was quite simple: at a time when the vast majority of human beings barely eked out an existence under the feudal system, Venice enshrined economic freedom.
In Venice, people who were born with absolutely nothing could become fabulously wealthy with enough hard work, risk taking, and a little bit of luck.
It sounds a bit like the American Dream... nearly 1,000 years ago.
It was during this time period that modern banking was invented. This included foreign exchange contracts and the bond market. All of these instruments of finance came from Venice. (A great book to read about these developments is Double Entry: How the Merchants of Venice Created Modern Finance by Jane Gleeson-White.)
And just as with Rome, the monuments and buildings erected during this period still stand, a testament to the strength of their civilization.
However, they eventually screwed it up.
The ruling elite eliminated the economic freedom that had made enriched so many people.
The government also began charging exorbitant taxes and nationalizing trade routes.
A police force was introduced in 1310 for the first time ever... not to protect the people from criminals, but to protect the government from the people (like today’s National Security Agency and the Dept of Homeland Security). And Venice soon faded into obscurity.
Other cities in Italy like Florence, Genoa, and a few others soon had their time in the sun as well. But power and wealth eventually shifted from Italy to the Habsburg Empire, then the French Bourbon monarchy, the British Empire, and ultimately to the United States.
This is a very familiar and inevitable cycle that has repeated throughout history... and at least twice in Italy.
Wealth and power always shifts.
This is happening right now in the West. The US and Western Europe are getting progressively weaker-- more indebted, and less free.
This isn't something that happens overnight... it's a long, gradual shift that has already been unfolding for decades. However let’s make it clear … it is Venice and Rome all over again and the rate of decline is accelerating.
At the root of this decline are politicians and government leaders who are spending more than they have, making commitments they can’t keep, misusing economics, and enabling a fiat currency to be controlled by a central bank… that in the U.S. is the Federal Reserve Bank.
These forces are conducting a war against the laws of economics and the battlefield is inside the wallet of you, the citizen and taxpayer in the U.S. This battle is attacking you from two fronts. The success of this two pronged attack will determine not only how much of the money in your wallet will you pay in taxes but also what is the purchasing power of the remaining currency, or U.S. Dollars, that you carry in your wallet. This battle, and its impact on each of us, will likely be the biggest story in modern history.
Do you dismiss this scenario as pie in the sky? Do you think the financial crisis in Greece, Ireland, and Cyprus could not happen here? Well… it can and here is a related scenario facing the U.S. right now and it is our ongoing Currency War, also known as the war in your wallet.
On the global stage, the United States is fighting a currency war in order to keep the U.S. Dollar as the world’s reserve currency so there is a chance that all the promises of the U.S. government can be met and its bills paid. Battles in this currency war include bouts of inflation, recession, retaliation, and sometimes actual violence. If the U.S. loses this war, there will be even more economic calamity and the U.S. Dollar as a paper currency will collapse; capital controls will be imposed; and physical assets, precious metals, and gold will be frozen and likely confiscated,
We have been here before. Time and time again, paper currencies have collapsed and the U.S. has not been immune to these acts of devaluation. In fact the U.S. has been a leading advocate of debasement of the U.S. Dollar currency. From the 1770s to the 1970s … from the American Revolution, the Civil War, the Great Depression, to the Carter-era hyperinflation, the currency of the day has lost its value.
It hasn’t happened in a generation so the next crash is due. Since our personal economies hang in the balance, it is best to learn from history so we will not repeat the mistakes of the past. We need to learn how to be savvy with our money so our personal wealth will not collapse like it will for many others that are not informed.
Currency War I erupted from the ashes of World War I in 1921 when Germany began its epic devaluation of the Mark and this has been memorialized in pictures of wheelbarrows full of paper money that were not enough to buy a loaf of bread. Currency War I ended in 1936 with a three-way deal between the U.S., Britain, and France. France devalued the Franc; Britain abandoned the gold standard; and the U.S. devalued the Dollar against gold by declaring it would take $35, instead of $20.67 to buy an ounce of gold. By this time, Germany was goose-stepping to its own drummer and a real shooting war, where millions of lives would be lost, was to begin in three short years.
Currency War II began in 1967 when Great Britain devalued the Pound against the Dollar. As such, the U.S. Dollar was under pressure because it was still tied to gold in international trade. This allowed the French to lead the parade of countries that were turning in U.S. Dollars, they collected during their global business activities, for America’s gold. As a result, the U.S. Treasury’s gold supply dwindled from 20,000 metric tons to barely 9,000 tons resulting in President Nixon “closing the gold window” in August of 1971. The entire world was now on a floating fiat currency standard with the U.S. Dollar as the world’s reserve currency.
The dollar sank in the 70s but soared in the 80s. The world’s other principle currencies, the Japanese Yen and the West German Mark were on a roller-coaster ride the entire time period creating exhaustion in international monetary matters. The Plaza Accord of 1985 and the Louvre Accord of 1987 resulted in a sort of equilibrium. This monetary stability was derived from the world’s economic community having full faith and credit in the U.S. Dollar as a store of value based on a growing U.S. economy and a stable monetary policy by the Federal Reserve Bank in the U.S. This established, for the time being, the U.S. Dollar as the world’s reserve currency.
Currency War III started in January 2010 when President Obama in his State of the Union speech announded his aim to double U.S. exports in five years. The traditional way to make that happen is to cheapen the currency and the Federal Reserve stepped in with QE (Quantitative Easing) or money printing.
By generating inflation abroad, U.S. was increasing the cost structure of almost every major exporting nation and the fast growing emerging economies in the world, all at once. In order to compete, other nations in the world felt the need to devalue their currency and so began another race to the bottom.
We are now in an international currency war and an overall general weakening of the economies of the world.
However, due to internal structural changes, China has been modernizing and expanding. As the economy in China has grown, the trade deficit between the U.S. and China has increased; meaning the U.S. buys more from China than China buys from the U.S. As a result, China has a surplus of U.S. Dollars. In order to maintain global harmony, China has invested their surplus U.S. Dollars in the U.S by buying U.S. Treasuries. When the Federal Reserve Bank introduced QE and devalued the U.S. Dollar, the value of the U.S. Treasuries decreased dramatically. And, as you would expect, the Chinese do not appreciate the value of their investment being decreased through debasement of the U.S. Dollar by the Federal Reserve Bank.
How will this battle for the value of the currency in your wallet, known as Currency War III, end?
Here is one scenario of how it might end … and it is based on the Chinese retaliating to get back their investment made in U.S. Treasuries.
Imagine for a moment that China decides it has lost faith in the full faith and credit of the U.S. Dollar. They want to dump their Treasury holdings and exchange them for gold being held by the U.S. at West Point.
In order to prevent a military showdown, a heavily armed U.S. Army convoy moves down the Palisades Interstate Parkway from West Point to meet Chinese naval vessels that are arriving in New York Harbor. The gold is transferred onto the naval vessels for shipment to newly constructed vaults in Shanghai.
Once this transfer occurs, just watch how many U.S. Dollars it will take to buy an ounce of gold or a barrel of oil.
This scenario is not only plausible; it is likely and the message is clear.
Due to the dramatic decrease in the value of the U.S. Dollar, all Dollar based commodities like gold, oil, and food will skyrocket and the U.S. will be on the road to hyper-inflation. What will it be like? Just remember the images from Germany where a wheelbarrow full of money would not be enough to buy a loaf of bread.
What should you do to avoid becoming a casualty in this war being conducted on the battlefield inside your wallet?
Do what those who are savvy, like the insiders, do with their money in order to protect their hard earned wealth.
Obtain more financial education and learn how to protect yourself during these trying times of massive money printing, fiat currency, and soon-to-be runaway inflation. Purchase precious metals, including gold, to hedge or protect your net worth against the decreasing value of the US Dollar, which is just paper money.
With this in mind, it is a good idea to learn how to be an entrepreneur, become self employed and get self sufficient. Before I leave this topic, I want you to know that at the end of this post, I will introduce you to a top-tier income generating business opportunity where you can earn while you learn. This opportunity will provide access to education, tools, and best practices as well as a community that will provide support to you as you take action. Once you get traction, a whole new world will open up and you will see all kinds of business ideas and opportunities.
In addition, it is a good idea to protect the purchasing power of your money in gold; and there are several ways that may be appropriate to obtain this protection. These include direct ownership in minted coins, use of gold exchange traded funds, gold mutual funds, and junior gold stocks. Many are investigating having part of their IRAs in gold, silver, precious metals, and non-dollar denominated currencies.
For those that truly believe default of sovereign debt is the greatest risk we all face, it is wise to learn how to implement a multiple flag strategy to diversify this risk or provide protection against higher taxes, capital controls, hyperinflation, civil unrest, erosion of personal liberty, and the rise of a police state. With a multiple flag system, you consider taking preparations like, but not limited to, establishing a foreign bank account, purchasing some real estate overseas, seeking alternate sources of income, dual citizenship, and carrying multiple passports.
I will continue to provide examples of things we need to learn, the secrets of the insiders, as part of being savvy with our money, and introduce alternative wealth creating strategies, in future articles and updates at my blog over the next few weeks.
If you are like-minded, be sure and join me here at this top-tier business opportunity as a way to be savvy with your money and get back in the game … Passionate Professionals ... Rebuilding Careers in order to generate top-tier income.
Finally, I want to thank Simon Black, of Sovereign Man, as he was the source of some of the material mentioned in this post. Also, a great book to read on this topic is Currency Wars by James Rickards.
In closing, be sure to Meet Me at my website, WhoIsMikeFarrell; Learn How to Get Self-Employed, at my HomeBizSocial website; Read about my Internet Marketing Business, at myaspenIbiz site; Obtain Some Tips About Being No 1 on Google, at aspenIbiz My Go-To-Market Partners website; and Learn How to Live Longer, at aspenIbiz My Life’s Advantage Today site.
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