Posted Jan 15, 2014 by Martin Armstrong
QUESTION: Hi Marty,
You truly are the gadfly that Plato described of Socrates who kept pestering Greek government till they executed him but who Socrates commented that you are only killing the government and society more than you are killing me! You talk of the collapse of the American empire sometime in 2032 analogous to the collapse of the British empire after world 1. But even after world 1 to the present, Britain is still fairly relative prosperous country that many immigrants from the commonwealth flock too and enjoys a high standard of living. It is certainly not a third world country by any stretch of the imagination. While the collapse of the roman empire…was a total collapse of the Rome and italy like an Armageddon like existence with the takeover of barbarian kingdoms of the Ostrogoths and Lombards. My question is what do you think the collapse of America will be like? Would it be a mild collapse like the British empire or even that of the japanese of being in a consistent perpetual economic recession? Or would it be like a total collapse of American civilization like that of the destruction of the roman empire in 476 AD?
ANSWER: If you look solely at the island of Britain, yes it is intact with some stress. What collapsed was the “British Empire” so to speak. The various nations from Canada and Australia to India and a host of islands, all became independent. The British island survived in culture just as you see the breakup of the Soviet Union where Russia proper survived and is now coming back.
What else collapsed was the British pound as the reserve currency of the world. That flipped to the US dollar. This part of the collapse was economic caused by massive debt increases. Again you do not see hyperinflation, but the deflationary process of contraction.
How did Britain reduce its massive debt? The debt was devalued by the collapse of the British pound. Government debt is ALWAYS the worst possible investment for it is UNSECURED meaning when the state simply refuses to pay you get nothing in return – absolutely ZERO. You cannot run down to the art gallery and grab paintings. Government understands this. When I was young, naive, and stupid, I met with the Treasury during the early Reagan period. The national debt had hit $1 trillion and Volcker was going nuts with the interest rates. He was raising rate to stop inflation when in fact he was simply moving it forward in time and transferring from the private sector to public. With a simply calculator at 17% the national debt would be many trillion by the end of the decade. I thought they couldn’t possible see the long-term consequences of these actions. They calmly said to me – Marty. We will be paying back with cheaper dollars.
This is why Say took the position that only a madman would hoard cash. The Goldbugs argue for a return to the gold standard that somehow money should be worth something. It never has been and its function is by no means a STORE OF VALUE – it is simply an economic medium of exchange – a language economically. That is it. This is why money has been everything from Utilitarian products such as bronze or cattle and even slave girls in Ireland as St. Patrick reported, to trinkets that are desirable yet have no real use within society such as sea shells and precious metals. Money has NEVER been a store of value even when it was “gold” for the state always debased and even gold coins were still fiat where government simply declares money is worth xyz.
So the collapse of the British Empire resulted in the collapse in purchasing power of the currency, the devaluation of debt, and the loss of territory. It was NOT a MADMAX event such as the fall of Rome. That takes placed when government attacks its citizens, hunts down capital as they are all starting to do now, and keep raising taxes PREVENTING economic growth. That is the substantial difference.
So what are we looking at with the fall of the American Empire? There should be a loss in unification (territory) just as we saw in Britain and the collapse of Russia or even that of Charlemagne. Look at the full history of Britain, you see the tribal Celtic pre-Roman Period, the collapse of Britain back into tribal states post-Rome, this is followed the Anglo-Saxson period of numerous states where we see kings of such places as Kings of Northumbria, Kings of Kent, Archbishops of Canterbury and at York, Kings of Mercia such as Offa who introduces the English Penny, Kings of East Anglia (Viking Coinages), Kings of Wessex, yet it was not until Alfred The Great (871-899) that we begin to see the unification of the island emerging as one nation being England and it took until 1707 to create the United Kingdom with Scotland joining..
The future course of the United States will follow the same pattern. Pre-Revolution, you had separate states. That became the UNITED states in 1789. We will see a breakup of the states most likely banding together in regions because of the difference in cultural views such as the Bible Belt. The fight over Obamacare illustrates the stark differences and this is fundamentally wrong for it is forcing one groups interests upon another. There is no such thing as equal rights but money is the exception. We are all treated the same even in law (no exception for politicians and bankers) or we are not a nation of equal rights. You can’t be just a little be pregnant! The US will break up, but it should not go into a MADMAX event as long as we reach resistance from the people. If the people keep just watching their sports and never notice what the governments are doing to their future until it is too late, then it can go too far and that in the MADMAX event the ended the Roman Empire.
There is a danger of a MADMAX event because of the stubborn insistence upon Marxism and we have a crisis in philosophy that is even infecting Britain to this day. I may be the gadfly. Thankfully, I am not 23 and do not have to live my life under this kind of nasty government. If they want to execute me like Socrates, fine. I do share his view it is either the migration of the soul where I will see all my old friends or it will be a peaceful sleep from which I will never be disturbed again. So as he said – go ahead. Do your best. The future that lies ahead I have no desire to participate in.