The Great Devaluation

14Signs

Going back in time to review the early foundation of the Federal Reserve allows for a comparison between then and now. We would all do well to heed the wisdom espoused by Mark Twain, who wrote, “History may not repeat itself, but it sure does rhyme.” We have come full circle and sit exactly where we were 90 years ago. Only by recognizing a problem can we attempt to address it or predict its natural next progression. Everything in life is cyclical, which means that all things have a beginning, a middle, and an end.

The debt crisis that developed during the 1920s was a result of the easy money policies of the young Federal Reserve that ended in a collapse and led to the Great Depression. The debt crisis that has occurred over the last decade looks eerily similar to what the world faced then. The following five signs are an identical replica of the signs leading to that painful economic recession of the 1930s. They serve as a harbinger of what's coming next.

This chapter looks at five signs that we are at the end of the supercycle and are headed for a new beginning. Each section includes its own “28 Trading Days Later” addendum.

#1 The Wealth Gap

The uber-rich at the turn of the nineteenth century, led by the banking cartel of the House of Morgan, included the Carnegies, the Vanderbilts, and the Rockefellers. The families were wealthier than the former monarchs of Europe. Their concentration of wealth should have forewarned the risks. When all of the money is controlled ...