by Tom Franklin
Despite encouraging words from politicians and the establishment media’s talking heads, it is clear to me, and I believe most Americans who do not live in a regime ivory tower, that we are not coming out of the recession. In fact, things appear to be getting worse as unemployment continues to rise and businesses cut salaries or shut down. The fears that this recession could turn into another Great Depression are very real, as we have lost so much of our capacity to create wealth and the federal government seems determined to use up any remaining capital fighting endless wars, funding endless entitlement programs, and spending trillions of dollars on non-wealth-creating “stimulus” programs while handing out even more trillions to their bankster buddies and corporate cronies. However, another 1930s-style depression is not what keeps me up at night with worry.
America could survive another Great Depression if it was like the last one. Sure, it would be extremely painful, but it would be manageable, as it was before, and eventually we would come out of it, despite the fact that the government would most certainly make all the wrong moves along the way. However, what really terrifies me is a hyperinflationary depression.
According to John Williams at ShadowStats.com, in an article titled Hyperinflation Special Report, hyperinflation is not only possible, but inevitable due to the overspending of the federal government, and the printing press of the Federal Reserve, which as Congressman Ron Paul continuously reminds us, prints money out of thin air. Williams’ report is a truly terrifying read that insists that the coming hyperinflation could get so bad that we will have to resort to the barter system as the dollar will become nothing more than very rough toilet paper. He cautions that electronic banking will cease to work and for a time no one will have any money at all, not even inflated currency. You can certainly imagine the type of Hell on earth this will create for the American people.
There is one bright side, however. Since Williams foresees the beginnings of this hyperinflationary nightmare starting this year, the pain from it might be felt in time for the 2012 elections. Since the crash of 2008 and the recession of 2009–10, I cannot leave the house wearing a “Ron Paul ’08” shirt without someone coming up to me and saying that “we sure would have been better off if everyone had listened to him,” or “I sure wish I had voted for him,” etc. The current recession has validated Dr. Paul’s warnings, and thus given him credibility in the eyes of the American people that he lacked when he campaigned for the 2008 election. This sent his book End the Fed to top of the bestseller list. If hyperinflation does occur, the pain that the American people feel will hopefully be enough to awaken them fully to the follies of the establishment politicians and their “spend, spend, spend!” mentality.
Williams predicts this, though he does not mention any candidate by name. What he does say is that “[a] wide variety of possibilities would follow or coincide politically with a hyperinflationary great depression, but the political status quo likely would not continue. Times would be financially painful enough to encourage the development of a third party that could move the Republicans or Democrats to third-party status in the 2012 presidential and congressional elections.”
If Williams is correct, then a hyperinflationary depression could cause the people to elect candidates that would make the necessary corrections, instead of the same old establishment candidates that got us into this mess to begin with. Of course those corrections would be slow in coming, as the previous administrations going back to at least Woodrow Wilson, have done so much damage that undoing it all will be slow and painful. There is also the risk that a third party could move in the other direction, to an even more authoritarian system so that the United States government became openly Socialist or Fascist.
A hyperinflationary depression will be very painful to Americans, but may present those of us who love sound money, free markets, and liberty with an opportunity to get sensible politicians into office. However, we must use the time we have now to continue reminding the people that it is government spending and interference along with central banking and economic planning that led us to the crisis to begin with. Otherwise the crisis may be used by authoritarians to seek even more power and control over the economy and our lives. After all, great crises often bring revolutionary change, but that change is not always for the better.
Tom Franklin [send him mail] lives in Pennsylvania with his wife and children. He blogs at TheEconomicSurvivor.com. Copyright © 2010 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.