Last call

January 31, 2008

It’s early morning and the bar is about to close, but until it does, all the booze you need to wipe away your pain will continue to flow. There’s no need to worry, Ben “the bartender” Bernanke will hook you up.

I can’t help but feel I‘m in a race against time. All the idiots running our world, deliberately or not, are leading the economy to ruin. Nobody knows when the system will finally collapse, but it seems inevitable that current economic conditions can not be sustained forever.

It’s easy to blame others, perhaps OPEC for oil prices or China for trade deficits, but the unfortunate reality is that America brought this disaster upon itself. Nobody in Arabia forced any American to build large secluded suburbs and gas guzzling automobiles. Nobody in China forced any American to outsource manufacturing or shop at Wal-Mart. Nobody anywhere forced any American to maintain 700 military bases around the world and run monstrous budget deficits.

Living a certain standard involves a certain cost that, in this case, has not been paid with income or savings, but with debt. There may have been a time when foreigners were willing to accumulate US debt in exchange for their labor, but those days are long gone. Americans should be satisfied they were able to fool the world for so long. Instead, the Federal Reserve is attempting the impossible — to sustain the current standard of living with unlimited credit. They want you to believe that a business running out of cash is not the inevitable result of incompetent management, it’s a liquidity problem. Open bar.

Artificially propping up the American economy for a few more years will not resolve any of the fundamental problems that caused this crisis in the first place, if anything it will make matters worse by increasing complacency. If the global economy was free from manipulation the market would resolve this problem on its own, but I have grown tired of sitting around waiting for someone to do something, instead I have concluded the best action is to accumulate as much wealth as possible and prepare for the hangover.

I am convinced Bernanke’s primary goal is to restore solvency to American banks and that can only be accomplished by massively expanding the money supply. Infusions of cash can create wealth in the short term, but over time inflation eats away at living standards. The problems we face today are much more severe than at any time in the past, and that can only mean the consequences will be as well. The next few years may turn out to be the last few years in the current chapter of our history.

The world is not coming to an end, but you must take the initiative to protect yourself from future uncertainty. It’s a race and time is running out.

AGEA: Asia, gold, energy, agriculture.