Farewell the Euro. I've been saying for a while now that the Euro is finished, the reason being that it is a paper currency backed by absolutely nothing, with a monopolist central bank that can print as much money as it wants and with several money thirsty governments begging for the booze. The theory behind this is quite simple. Having read Rothbard's book The Case Against the Fed, Bagus's book The Tragedy of the Euro, Hoppe's essay Why the State Demands Control of Money and having watched Hoppe's video on money and banking it was a no-brainer for me and if you go through them, you will see it the same way. It is predictable as much as it is inevitable.
I actually made a bet for an ounce of silver this summer with a friend of mine that the Euro would either not exist or be in hyperinflation within 5 years. Going into autumn with the sovereign debt crisis developing as it did, I felt comfortable enough to shorten that period to 3 years. But based on this interview with Ann Barnhardt (Barnhardt Capital Management, Inc.)... well, you draw your own conclusions:
"If anybody out there understands fourth grade arithmetic, you know for a metaphysical certitude that Europe is done, Europe is mathematically impossible, it cannot be saved. I mean, you wanna make a start, you even make a start at trying to bail out Europe, we're talking $25 trillion just to start, and it would then, if you were gonna bail out the entirety of Europe, you would now be talking into the hundreds of trillions of dollars. People, there isn't that much wealth or money on the surface of the Earth, the total gross domestic product of the entire planet Earth I think is just under $70 trillion and we're talking about in excess of 100 trillion to bail out Europe. This is now mathematically impossible. These people have so leveraged themselves and so leveraged these governments and these countries, giving their brain dead citizenry free handouts and entitlements that it is now mathematically impossible to save the paradigm. It's not a matter of if the global financial system is going to collapse, oh, it's going to collapse, you better trust and understand that, it's just a matter of when and these tittling little maneuvers these people are making, that the Fed is doing, oh, we're gonna give Europe some money - OK, what I saw this morning, what the Fed is getting ready to do in terms of Europe, it's gonna keep Europe going for another 7 days. Well, fantastic, thanks for that. And that's literally the brain dead mindset of these politicians. All they're doing is looking to kick the can down the road. At first it was kick the can another 10, 12 years, then it's kick the can down the road for another year, and then it was, well, let's kick the can down the road for another few months, now we're literally to the point where all we can do is kick the can down the road for a matter of a few days. It's not gonna make it, I'll be very surprised if we make it to Christmas."
Wow.
And the lessons?
1. Buy gold and silver, they cannot be printed.
2. The government isn't there to help you. It's there to steal from you.
3. (and this one has become a kind of a mantra now) Lear Austrian economics.
(I encourage you to listen to the entire interview, it's not very long but very informative)
