Chapter 1. Let's Do the Time Warp Again: What Happened to Our Purchasing Power?

The New York Times "Week in Review" section over Memorial Day weekend 2008 reprinted a cartoon from the Atlanta Journal-Constitution showing a single-family house roped to the roof of an SUV. In the image, the hapless driver explains to a puzzled passerby, "I couldn't afford a fill-up so I bought a house instead."

It's comical because of its incongruity, but the realities that inspired it are anything but laughable. I'd call it gallows humor, and the dark side is dark indeed.

Unless I'm terribly wrong—and my predictions have been uncannily accurate in the past—skyrocketing gasoline and food prices and plummeting home sales are among the early symptoms of fundamental economic problems that are too advanced to be reversible and grave enough to profoundly impact the living standards of most Americans for years to come.

In the chapters that follow, my focus will be on where to put your money at a time when the American economy is flat broke and the wealth creation is happening elsewhere. To appreciate the urgency and cogency of my advice, however, you've got to understand what went wrong and how much worse it's going to get. That's what this chapter is about.

In my book Crash Proof: How to Profit from the Coming Economic Collapse (John Wiley & Sons, 2007), which was published when all seemed quiet on the economic front, I set forth in detail my contrary position that "The economy of the United States, long the ...

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