Our Money Is Dying: Don’t Let Your Wealth Die With It
by Chris Martenson - Peak Prosperity
Published : July 16th, 2012
3343 words - Reading time : 8 - 13 minutes
Keywords : Austria - Collapse - CORN - Currency collapse - Germany - headlines - Hyperinflation - Iran - Ludwig von Mises - Middle East - Money Supply - Purchasing Power - Real estate - Reserve Currency - Weimar -
Editor’s Note: Chris Martenson of Peak Prosperity explains the mechanics of a hyperinflationary scenario that could wipe out the savings and wealth of anyone holding a doomed currency. In this case, Martenson focuses his efforts on the US dollar by detailing specific historical and modern day instances of currencies that have either lost favor and been shunned, or were destroyed by their respective government. Without giving away too much of Chris’ analysis, what this boils down to is that you want to trade out of the dying currency and hold assets that will not lose value as the currency collapses – physical goods. Once hyperinflation takes hold it becomes unstoppable, even though there are moments of hope (as evidenced by the timeline of Weimar hyperinflation chart provided in the article below.) The key is to own goods and assets that will preserve wealth or can be traded for the currency as it becomes necessary (to pay bills or transact locally). The article below not only provides historic precedent for why hyperinflation could occur in the United States and to the world’s reserve currency, but how to identify it when it takes hold.
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A question on the minds of many people today (increasingly those who manage or invest money professionally) is this: How do I preserve wealth during a period of intense official intervention in and manipulation of money supply, price, and asset markets?
As every effort to re-inflate and perpetuate the credit bubble is made, the words of Austrian economist Ludwig Von Mises lurk ominously nearby:
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner, as the result of a voluntary abandonment of further credit expansion, or later, as a final and total catastrophe of the currency system involved.
(Source)
Because every effort is being made to avoid abandoning the credit expansion process — with central banks and governments lending and borrowing furiously to make up for private shortfalls — we are left with the growing prospect that the outcome will involve some form of “final catastrophe of the currency system”(s).
This report explores what the dimensions of that risk are. It draws upon both historical and modern examples to try to shed some light on how the currency collapse process will likely unfold this time around. Plus, we’ll address how best to avoid its pernicious wealth destroying effects.
When Money Dies
In the book When Money Dies by Adam Fergusson, which details Weimar Germany’s inflation over the period from 1918 to 1923, the most riveting parts for me were the first-hand accounts from the people caught in the storm.
So many people left their wealth in the system only to watch it get eroded and utterly destroyed over time. The reasons were many: patriotism, inertia, disbelief, and denial cruelly fed by hope every time prices moderated or even retreated momentarily.
The simple observation is that many people had a blind belief in the money system. They lost their wealth because they were unable or unwilling to allow reality to challenge their beliefs. It’s not that there weren’t numerous warning signs to heed — in fact, they could be seen everywhere — but most willfully ignored them.
Most mysterious is the fact that in Austria and Germany, where the inflation struck most severely, there were numerous borders and currencies into which people could have dodged to protect their wealth. That is, protecting one’s wealth was a relatively straightforward and simple manner. And yet…it did not happen.
The Many Types of Inflation
As always, the landscape of inflation needs to be carefully mapped before we can begin to hope to have a conversation with a destination. Where the symptom of inflation is rising prices – in fact, rising prices are the only things tracked by the Consumer Price Index, or CPI – the causes of rising prices are many, but they always boil down to the overexpansion of money and/or credit. Knowing the cause is essential to knowing what to do next.
Here are the main flavors of rising prices that we need to keep in mind:
Non-inflationary price increases – These are caused by demand exceeding supply. It happens all the time. A poor harvest driving up the price of corn is not inflationary, but it will show up in the Consumer Price Index (CPI). These sorts of price movements reverse themselves as markets respond by chasing the price and delivering more of whatever was in short supply. The only exception is when there is some essential, non-renewable natural resource in sustained depletion — which means that demand will always exceed supply and prices will rise and then rise some more. Excessive speculation can also lead to price rises and, as long as the speculation centers on the item(s) involved and not on excessive money/credit expansion, it, too, can be (and eventually will be) reversed.
Simple inflation – This is the ‘textbook’ case of inflation where too much money and/or credit is created relative to goods and services. Print too much money or make credit too cheap/easy and prices will rise roughly in proportion to the excess. Simple inflation operates in the low single digit percentages. Central banks openly target simple inflation in the 2%-3% range as that level of expansion allows banks to have healthy profits, prevents past loan errors from swamping the system, and generally keeps the exponential money system operating well.
Loss of confidence in money – A more severe stage of simple inflation takes over when enough people lose faith in the money and seek to actively spend their money on something, anything, before that money loses value. This type of inflation operates in the high single digits to low double digits, somewhere between 8% and 15%. This is just simple inflation on steroids. Not everybody participates in this game yet, as the loss of confidence has not yet reached criticality, but enough people do to keep this process locked in a self-reinforcing spiral that requires aggressive money tightening to halt. Think ‘Paul Volcker’ and ’21% interest rates’ and you get the picture.
Hyperinflation – Further along the inflationary spectrum is what happens when a critical mass of people within a society lose faith in their money and the monetary authorities are incapable of reducing the money/credit supply, either because there’s already too much of it out there to ‘call in,’ or because they lack the political will to do anything but print more money in response (i.e., there are no Volckers around). Once this critical mass is reached, every corner of society is participating, and it is no longer socially taboo to talk about the hyperinflation or how to escape its effects. Everyone is wheeling and dealing, speculation runs rampant in everything from stocks to pineapples, and you cannot possibly spend your money fast enough to avoid the ravages of inflation. The annual percentage rates for hyperinflation range from medium double-digits into the hundreds of millions.
Currency destruction – There is another type of inflation that happens when your state currency is shunned by the rest of the world. While there may be no additional money creation and credit may even be dropping, inflation is still a very serious problem as everything imported goes up in price. There are many reasons that a currency may be shunned. It could be that other countries lose faith in the currency due to mismanagement and overprinting. It could be due to acts of war. Or it could happen at the end of a very long period of excessive credit and money expansion, when that bubble finally bursts and confidence in the associated currency unit(s) is lost. There is really very little that local authorities can do to fix things unless the country imports nothing, a condition that applies to exactly nobody. Prime candidates to experience this form of inflation are the US and Japan; the former because of massive imbalances fostered by its several decades of reserve currency status, and the latter because of persistent and massive over-printing enabled by domestic savings and a once-robust export surplus. The dynamic of currency destruction is for imported items to rise sharply in price first, with everything else soon following in upward price spirals. Policy responses are quite limited and are usually ineffectual at preventing a massive amount of economic destruction and wealth loss for the holders of the stricken currency.
It is this last type of inflation – currency destruction – that we’ll explore here, because it represents a severe risk and is very rarely talked about or analyzed.
Spinning in the Water
A modern case study of a shunned currency is Iran.
For a variety of reasons, Iran finds itself the subject of a sustained effort by the US to subjugate its nuclear program to international inspection and curtailment. Already the target of many overt and covert efforts to bring it to heel — ranging from two highly destructive and invasive computer worms (Stuxnet and Flame), to stealth drone overflights, to an international ban on oil exports — Iran now finds that its currency is being internationally shunned.
The impacts are obvious and the lessons instructive.
Already Plagued by Inflation, Iran Is Bracing for Worse
Jul 1, 2012
TEHRAN — Bedeviled by government mismanagement of the economy and international sanctions over its nuclear program, Iran is in the grip of spiraling inflation. Just ask Ali, a fruit vendor in the capital whose business has been slow for months.
People hurried by his lavish displays of red grapes, dark blue figs and ginger last week, with few stopping to make a purchase. “Who in Iran can afford to buy a pineapple costing $15?” he asked. “Nobody.”
But Ali is not complaining, because he is making a killing in his other line of work: currency speculation. “At least the dollars I bought are making a profit for me,” he said.
The imposition on Sunday of new international measures aimed at cutting Iran’s oil exports, its main source of income, threatens to make the distortion in the economy even worse. With the local currency, the rial, having lost 50 percent of its value in the last year against other currencies, consumer prices here are rising fast — officially by 25 percent annually, but even more than that, economists say.
(Source)
There are several factors feeding into the current Iranian currency crisis, including mismanagement of the economy that has left Iran even more exposed to imports than it otherwise could or should be, and Iran’s currency is on the cusp of tipping over into outright hyperinflation. Ever since the Revolutionary War, when the British printed and distributed cartloads of Continental scrip, currency debasement has been a useful tool of war. All is fair in love and war, and whatever corrodes your opponent’s strength is a potentially useful tool.
Note that in the above quotes, we find that both the speculation already in evidence plus the 25%+ price increases support the idea that Iran has already tipped past simple inflation. Whether it can prevent a worsening condition is unclear at this point, regardless of whether or not international sanctions are soon lifted.
More from the same article:
Increasingly, the economy centers on speculation. In this evolving casino, the winners seize opportunities to make quick money on currency plays, while the losers watch their wealth and savings evaporate almost overnight.
At first glance, Tehran, the political and economical engine of Iran, is the same thriving metropolis it has long been, the city where Porsche sold more cars in 2011 than anywhere else in the Middle East. City parks are immaculately maintained, and streetlights are rarely broken. Supermarkets and stores brim with imported products, and homeless people are a rare sight on its streets.
But Iran’s diminishing ability to sell oil under sanctions, falling foreign currency reserves and President Mahmoud Ahmadinejad’s erratic economic policies have combined to create an atmosphere in which citizens, banks, businesses and state institutions have started fending for themselves.
“The fact that all those Porsches are sold here is an indicator that some people are profiting from the bad economy,” said Hossein Raghfar, an economist at Al Zahra University here. “Everybody has started hustling on the side, in order to generate extra income,” he said. “Everybody is speculating.”
Some, like Ali the fruit seller, who would not give his full name, exchange their rials for dollars and other foreign currencies as fast as they can. More sophisticated investors invest their cash in land, apartments, art, cars and other assets that will rise in value as the rial plunges.
For those on the losing end, however, every day brings more bad news. The steep price rises are turning visits by Tehran homemakers to their neighborhood supermarkets into nerve-racking experiences, with the price of bread, for example, increasing 16-fold since the withdrawal of state subsidies in 2010.
“My life feels like I’m trying to swim up a waterfall,” said Dariush Namazi, 50, the manager of a bookstore. Having saved for years to buy a small apartment, he has found the value of his savings cut in half by the inflation, and still falling.
“I had moved some strokes up the waterfall, but now I fell down and am spinning in the water.”
(Source)
All of the important lessons you need to avoid a currency destruction are contained in those passages above.
Savings are for losers.
The more exposure you have to food and fuel price hikes, the worse off you are.
First movers have the advantage. Get your wealth out of the afflicted currency as fast as possible and then trade back in when needed to make purchases.
Paralysis is a wealth destroyer.
Fending for oneself is a wealth saver, so faith in authority is best shucked as fast as possible.
Be prepared to follow those rules and you will do better than most.
Barter, speculation, and prices that gyrate wildly as formerly expensive things are traded for basic necessities are all typical features of the end stages of a currency. Crime, social unrest, and sometimes war are handmaidens that accompany the death throes of money.
The basic strategies to protect one’s wealth are deceptively simple. As soon as the process of money destruction has begun, if not before, all savings have to be moved out of the afflicted currency and into things, especially things that others with wealth or barter items are most likely to want.
Turning our attention back to the Weimar episode for a moment, the Amazon summary for When Money Dies reads:
When Money Dies is the classic history of what happens when a nation’s currency depreciates beyond recovery. In 1923, with its currency effectively worthless (the exchange rate in December of that year was one dollar to 4,200,000,000,000 marks), the German republic was all but reduced to a barter economy.
Expensive cigars, artworks, and jewels were routinely exchanged for staples such as bread; a cinema ticket could be bought for a lump of coal; and a bottle of paraffin for a silk shirt. People watched helplessly as their life savings disappeared and their loved ones starved. Germany’s finances descended into chaos, with severe social unrest in its wake.
The parallels to the Iranian situation are obvious.
Those without the gift of foresight to identify what is coming, coupled with an inability to take decisive action that cuts against the social grain (at least early on), will simply lose their wealth and not be in a position to buy or exchange anything but their own time and labor in the future. This leads to the assessment that owning or producing things that people need or want is a good strategy.
Food is always a good play. In the early stages, we’d also lean towards highly socially desirable real estate and away from middle- and lower-income housing, as ability to pay always get shredded from the bottom up. Gold performs well in terms of protecting purchasing power. According to the article above, Porsches work too. In other words, owning things that wealthy people will desire is a very good idea.
I know this sounds harsh, elitist, and not terribly egalitarian, but it also happens to be how things tend to work out. Since I have a desire to be in a position to be helpful and of assistance in the future, protecting my wealth is a matter of both self and selfless interest. So I study what works and begin there, while also seeking a better future.
The cruelest part of a currency destruction is that it will sneak up on most people, their baselines will shift, and they will be confused by false hopes along the way. This is completely understandable and to be expected. There’s a good chance you’re well acquainted with the chart of the value of German Marks against gold during the Weimar hyperinflation. I want to take a closer look at it by focusing on the wiggles instead of the rise:
Imagine yourself there at that time, getting all of your information from the newspapers and your personal rumor network. Note that from the early part of 1920, prices fell by a lot over the next six months (note that this is a log chart, so even a little downward movement in the line represents a big price drop).
Headlines reported that the corner had been turned and that the government programs had been successful in bringing inflation under control. People wanted to believe that story and so they did.
It wasn’t until the end of 1921 that prices began to rise again, spiking into early 1922 before stabilizing again for approximately eight months. Again people were calmed by the apparent success of the authorities in controlling the inflation.
Because there were three pauses and rescues along the way, the price spike from late 1922 and into 1923 caught many off guard. It was truly shocking. This is when the critical loss of faith finally happened. Yet far too many remained paralyzed, certain the government would again get things under control soon. After all, three times before there had been a recovery, why not this time too? One must have hope, after all…
In the middle of 1923, with very aggressive government intervention, there was a three-month dip in prices and a pause in the hyper-inflationary process. Again, another hopeful moment, but it was the final trap for the unwary.
To put this in context, imagine if next month (August) gasoline prices shot up by 300% to roughly $10/gal. But then, between August 2012 and May of 2013 the price of gasoline fell back to $5/gal. I’d be willing to wager that many of your friends would be telling you that everything was fine and that “they” have everything under control. Perhaps your continued concern would be ridiculed or dismissed.
Then, when prices finally did again breach the old $10/gal highs, some 19 months after the first price spike (in February 2014, in this example), many would have been habituated to the new prices, routines would have been altered, and many would have already inserted a rationalization process into their thinking that would have all of this make perfect sense, albeit uncomfortably.
While not tracking the percentages closely, this example tracks the time frame.
An important insight here is that baselines will shift, rationalizations will be formed, and explanations adopted, principally by those unable to accept that their money is in the process of dying. Avoiding this yourself will require tuning those people out and trusting yourself.
In Part II: Positioning Yourself for When Our Money Dies, we identify the most probable markers for identifying when a full-blown currency collapse is imminent.
What indicators should you watch for? Where should you place your capital to best preserve its purchasing power? What will a collapse of the US dollar look like and what will the likely aftermath be? These and other implications are explored.
Click here to access Part II of this report (free executive summary; paid enrollment required for full access)
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Chris Martenson
Buy his book Dr. Chris Martenson is an independent economist and author of a popular website, ChrisMartenson.com. His Crash Course video series explores the intertwining significance of the “three E’s”—the economy, energy, and environment and offers articulate, dynamic insight into the workings of our monetary system. Chris earned a PhD in neurotoxicology from Duke University, and an MBA from Cornell University. A fellow of the Post Carbon Institute, Chris’s work has appeared on PBS and been cited by the Washington Post. He is a contributor to SeekingAlpha.com. Chris is an accomplished presenter who has offered the Crash Course seminar all over the United States. The online course has been translated into several languages, and been viewed over 1.5 million times. His website offers both daily free content as well as a newsletter service for enrolled members. His goal is to help as many people understand that we are in the midst of a profound economic shift and that equally profound risks and opportunities lie in our future. For those that can see them coming, tremendous advantages exist.
Chris Martenson
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Dr. Doom: “The 2013 Perfect Storm Scenario Is Unfolding”
by Mac Slavo - SHTFPlan
Published : July 14th, 2012
510 words - Reading time : 1 - 2 minutes
Also by Mac Slavo
Keywords : B-Wave - China - Consumer Confidence - Europe - Global Economy - Iran - lead - Meltdown - Recession -
There is no hiding the fact that the global economy is now teetering on the real possibility of a complete meltdown – one that promises to be far worse than the financial crisis of 2008.
Dr. Doom Nouriel Roubini, often cited by mainstream and alternative analysts alike, says that we are now in the midst of the “perfect storm” he detailed at the 2012 Skybridge Alternative Conference in Las Vegas in which he forecast a world-wide economic “train wreck”. Among other things, Roubini warned that the United States would fall back into recession, stock markets would go into a tailspin, Europe would begin to break up, emerging markets – namely China – would experience major slowdowns, and military conflict in Iran would lead to further geo-political turbulence.
According to Roubini, that ‘Perfect Storm” scenario has now taken hold:
“The 2013 perfect storm scenario I wrote on months ago is unfolding,” Roubini said…
Roubini said that unlike in 2008 when central banks had “policy bullets” to stimulate the global economy, this time around policymakers are “running out of rabbits to pull out of the hat.”
“Levitational force of policy easing can only temporarily lift asset prices as gravitational forces of weaker fundamentals dominate over time,” he said.
Source: CNBC
It should be markedly clear that those green shoots which reportedly appeared to be sprouting in the summer of 2009 were nothing but conjecture promoted by governments and financial institutions in an attempt to maintain confidence and stability in the system.
That perceived stability will soon be overcome with a whirlwind of panic that could very well lead to a total destabilization of the economic, financial and geo-political systems as they exist today.
In the United States the signs are readily apparent.
Retail sales for the month of June have collapsed, with fully two-thirds of retailers in America reporting lower than expected sales numbers – the WORST sales numbers in three years.
Although there are no simple answers for the retail downturn,a lack of consumer confidence is widely believed to have been the driving force behind June’s dismal sales figures. “Consumers are holding back, cautious and losing confidence,” said IHS Global Insight economist Chris Christopher.
Employment isn’t fairing any better, with the US having created just 80,000 jobs last month, a far cry from the millions predicted by Vice President Joe Biden after President Obama took office in early 2009.
Americans and Europeans – the driving force behind global consumption – have no jobs, are out of money, and their credit cards are maxed out.
Record breaking numbers of Americans are on food stamps, prices for essential goods and services are continuously rising as inflation takes hold, and the only arrow left in the governments’s quiver seems to be to borrow trillions upon trillions of dollars just to make ends meet and pay the interest on our previous loans.
By all accounts, the entire system from top to bottom is completely broke and on the verge of insolvency.
Prepare for the next wave. It’s coming and it can’t be stopped.
"Food is always a good play. In the early stages, we’d also lean towards highly socially desirable real estate and away from middle- and lower-income housing, as ability to pay always get shredded from the bottom up. Gold performs well in terms of protecting purchasing power. According to the article above, Porsches work too. In other words, owning things that wealthy people will desire is a very good idea."
How Close Are We to New Great Depression?
Staff Writer, CNBC.com
The risk of a new depression — a sustained, severe recession — has struck fear into the heart of markets and driven monetary policy in developed economies since the current financial crisis began.
“We’re in a very unfortunate position to be here,” Richard Duncan, author of The New Depression, warned on CNBC’s “Squawk Box Europe” Monday.
“When we broke the link between money and gold, this removed all constraints on credit creation. This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it has already, and if credit begins to contract, there’s a very real danger that we will collapse into a new Great Depression,” he argued.
“If this credit bubble pops, the depression could be so severe that I don’t think our civilization could survive it.”
The explosion in cheap credit has been widely blamed for the global financial crisis, but the debate about how to fix the problem continues.
In the past few years, central banks including the U.S. Federal Reserve
“We could keep deferring the depression, but that could just encourage the bad guys. If you do this, you possibly do more harm than good,” Roger Nightingale, economist and strategist at RND Associates, told CNBC Monday.
“You can defer, but not prevent.”
Nightingale argued that previous credit booms, for example in Japan in the 1980s, have led to sustained recessions.
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“When you throw money into the system at a rate much in excess of the requirements of the real economy, you’re trying to get people to borrow and spend, but the good guys out there won’t because they’re too cautious. It’s the bad guys who come in, the malefactors,” he said.
“When the central banks realize what is going on and raise interest rates, it flings the world economy into depression.”
The ideas of Milton Friedman, the Nobel Prize-winning economist who argued that monetary policy should constantly expand, informed some of the Fed’s response to the crisis.
“Policymakers really believe that if we allow credit to contract, we will reach a new Depression,” Duncan said.
“The increase in government debt is making total debt grow, otherwise we would already have collapsed in to a debt-deflation death spiral. This creates great perils, but also tremendous opportunities.”
Duncan argues that governments in the developed world should borrow “massive” amounts of money at the current low interest rates to invest in new technologies like renewable energy and genetic engineering.
“Even if this is wasted, at least we could enjoy this civilization for another ten years before it collapses,” he said.
His views counter those of economists who believe that governments should focus on cutting their debt, particularly where repayments on that debt are threatening to reach unsustainable levels, like in Greece.
The word lamppost is popping up lately with alarming frequency in connection with the word banker in all kinds of respectable places, and I don't think this refers to, say, men in Armani suits searching for their car keys where the light is shining on the sidewalk after quaffing a few rare cuvee jeroboams of Louis Roederer Cristal. Rather, it seems to suggest a certain unease with the levers of jurisprudence in this republic of grifters, stooges, and bought-off lackeys.
Also of late come rumblings from the most august newspaper in the land that certain questions concerning LIBOR-fixing among American bank officials might soon be entertained in a federal courtroom. But isn't it a fact that the US Department of Justice has its hands full - not to mention its dockets - with cases of alleged performance-doping by star athletes? Just think: all that effort (and expense!) at repeated prosecutions and Roger Clemens remains at large! His fastball might yet shred the constitution and dishonor all the combined sacrifices of our men in uniform in countless heroic wars.
Meanwhile, has The New York Times sent a reporter to chat up the elusive John Corzine? It must be an easier job than, say, trekking to a cave in Tora Bora to interview the late Mr. Osama bin Laden - which a few plucky reporters actually accomplished back when - yet Mr. Corzine is now better hidden than the Orang-pendek of Sumatra. And higher-functioning, too, considering his current role as Uncle Scrooge McDuck to the Obama reelection campaign. In what 5th sub-basement of a Robert A. M. Stern-designed luxury high-rise does Mr. Corzine sit with his moneybags of purloined MF Global customer funds writing checks to the Democratic National Committee?
All this is to say that when a few lame rumors of prosecutorial zeal appear in old gray mouthpiece for the status quo, you can bet that the true tipping point of public impatience has probably been breeched and the fall of the elites is closer than you think. In the sizzling sauna that the US has become under the regime of climate change denial, the black swans of political turmoil are moistly hatching. Who knows what form the mischief might take and how the trouble starts. Perhaps a hostage crisis at the Maidstone Club where families of a dozen hedge fund chiefs are held in the pool house by an out-of-work pipefitter from Wantagh high on bath salts. Or a swindled soybean farmer in an Semtex-rigged vest pays a call on the PFG-Best futures trading headquarters in Cedar Falls, Iowa, just as the lawyers and their financier clients sit down in the conference room to an ordered-in lunch of sloppy joes, fries, and slurpees. Or maybe a part-time evangelist off his Zoloft in some broiling strip-mall in a bankrupt California shit-hole sees the numbers 666 resolve among the remnants of his half-eaten enchilada on a Mitt Romney for President commemorative plate and packs up an arsenal of legally-acquired small arms for his journey to the Republican Convention in Tampa....
This is, after all, the country where the Kardashians reign. Anything might happen.
This is also the fruit of utterly failed moral leadership in a rudderless society adrift on a sea of delusion and untruth in an age of accounts unsettled. The battle over which empty suit gets elected president is a preface to the discovery that the national government only pretends to be in charge of anything. As the reality of total, comprehensive bankruptcy simmers up, perhaps a critical number of citizens stop forking over their quarterly taxes - since it would be the same thing as pounding sand down a rat-hole. Then, things really go south governance-wise. The next revolution in North America could make 1793 Paris look like an Ace of Cakes episode. Lamppost lynchings will seem too merciful. Rather, look for a new realty TV launch: Kardashian Kangaroo Kourt, in which every week a score of obscenely wealthy celebrities plucked from the realms of banking, showbiz and politics are dragged over three miles of barrel cactus in the Cabeza Prieta National Wildlife Refuge behind a Dodge Mopar-loaded Ram Runner (mostly American-made).
In the meantime, let's just all kick back these hot summer nights on the front porch with a few vodka and Red Bulls and enjoy Jack Abramoff's new radio show on Clear Channel in which the re-branded "lobbying reformer" offers advice on improving the transaction of public business in our nation's capital. This is Mr. Abramoff's first job since completing his prison work-release gig in a kosher Baltimore pizza store. God bless you, Jack.
"Contrary to popular belief, current statistics show that the earth produces enough food to easily support its entire population. Yet greed and exploitation force over twenty-five per cent of the world's people to be underfed and undernourished. Srila Prabhupada condemns unnecessary industrialization for contributing to the problem of hunger and for creating unemployment, pollution, and a host of other problems. In the following speech, recorded on May 2, 1973, in Los Angeles, he advocates a simpler, more natural, God-centered lifestyle.
supakvausadhi-virudhah
vanadri-nady-udanvanto
hy edhante tava viksitaih
[Queen Kunti said:] "All these cities and villages are flourishing in all respects because the herbs and grains are in abundance, the trees are full of fruits, the rivers are flowing, the hills are full of minerals, and the oceans are full of wealth. And this is all due to Your glancing over them." (Srimad-Bhagavatam 1.8.40)
Human prosperity flourishes by natural gifts and not by gigantic industrial enterprises. The gigantic industrial enterprises are products of a godless civilization, and they cause the destruction of the noble aims of human life. The more we increase such troublesome industries to squeeze out the vital energy of the human being, the more there will be dissatisfaction of the people in general, although a select few can live lavishly by exploitation.
The natural gifts such as grains and vegetables, fruits, rivers, the hills of jewels and minerals, and the seas full of pearls are supplied by the order of the Supreme, and as He desires, material nature produces them in abundance or restricts them at times. The natural law is that the human being may take advantage of these godly gifts of nature and thus satisfactorily flourish without being captivated by the exploitative motive of lording it over material nature.
The more we attempt to exploit material nature according to our whims, the more we shall become entrapped by the reaction of such exploitative attempts. If we have sufficient grains, fruits, vegetables, and herbs, then what is the necessity of running a slaughterhouse and killing poor animals?
A man need not kill an animal if he has sufficient grains and vegetables to eat. The flow of river waters fertilizes the fields, and there is more than what we need. Minerals are produced in the hills, and the jewels in the ocean. If the human civilization has sufficient grains, minerals, jewels, water, milk, etc., then why should we hanker after terrible industrial enterprises at the cost of the labor of some unfortunate men?
But all these natural gifts are dependent on the mercy of the Lord. What we need, therefore, is to be obedient to the laws of the Lord and achieve the perfection of human life by devotional service. The indications by Kunti-devi are just to the point. She desires that God's mercy be bestowed upon her and her sons so that natural prosperity will be maintained by His grace.
Kunti-devi mentions that the grains are abundant, the trees full of fruits, the rivers flowing nicely, the hills full of minerals, and the oceans full of wealth, but she never mentions that industry and slaughterhouses are flourishing, for such things are nonsense that men have developed to create problems.
If we depend on God's creation, there will be no scarcity, but simply ananda, bliss. God's creation provides sufficient grains and grass, and while we eat the grains and fruits, the animals like the cows will eat the grass. The bulls will help us produce grains, and they will take only a little, being satisfied with what we throw away. If we take fruit and throw away the skin, the animal will be satisfied with the skin. In this way, with Krsna in the center, there can be full cooperation between the trees, animals, human beings, and all living entities. This is Vedic civilization, a civilization of Krsna consciousness.
Kunti-devi prays to the Lord, "This prosperity is due to Your glance." When we sit in the temple of Krsna, Krsna glances over us, and everything is nice. When sincere souls try to become Krsna's devotees, Krsna very kindly comes before them in His full opulence and glances upon them, and they become happy and beautiful.
Similarly, the whole material creation is due to Krsna's glance (sa aiksata). In the Vedas it is said that He glanced over matter, thus agitating it. A woman in touch with a man becomes agitated and becomes pregnant and then gives birth to children. The whole creation follows a similar process. Simply by Krsna's glance, matter becomes agitated and then becomes pregnant and gives birth to the living entities. It is simply by His glance that plants, trees, animals, and all other living beings come forth. How is this possible? None of us can say, "Simply by glancing over my wife, I can make her pregnant." But although this is impossible for us, it is not impossible for Krsna. The Brahma-samhita (5.32) says, angani yasya sakalendriya-vrttimanti: Every part of Krsna's body has all the capabilities of the other parts. With our eyes we can only see, but Krsna can make others pregnant merely by looking at them. There is no need of sex, for simply by glancing Krsna can create pregnancy.
In Bhagavad-gita (9.10) Lord Krsna says, mayadhyaksena prakrtih suyate sa-caracaram: "By My supervision, material nature gives birth to all moving and nonmoving beings." The word aksa means "eyes," so aksena indicates that all living entities take birth because of the Lord's glance. There are two kinds of living entities--the moving beings, like insects, animals, and human beings, and the nonmoving beings, like trees and plants. In Sanskrit these two kinds of living entities are called sthavara-jangama, and they both come forth from material nature.
Of course, what comes from material nature is not the life, but the body. The living entities accept particular types of bodies from material nature, just as a child takes its body from its mother. For ten months the child's body develops from the blood and nutrients of the mother's body, but the child is a living entity, not matter. It is the living entity that has taken shelter in the womb of the mother, who then supplies the ingredients for that living entity's body. This is nature's way. The mother may not know how from her body another body has been created, but when the body of the child is fit, the child takes birth.
It is not that the living entity takes birth. As stated in Bhagavad-gita (2.20), na jayate mriyate va: The living entity neither takes birth nor dies. That which does not take birth does not die; death is meant for that which has been created, and that which is not created has no death. The Gita says, na jayate mriyate va kadacit. The word kadacit means "at any time." At no time does the living entity actually take birth. Although we may see that a child is born, actually it is not born. Nityah sasvato 'yam puranah. The living entity is eternal (sasvata), always existing, and very, very old (purana). Na hanyate hanyamane sarire: Don't think that when the body is destroyed the living entity will be destroyed; no, the living entity will continue to exist.
A scientist friend once asked me, "What is the proof of the soul's eternality?" Krsna says, na hanyate hanyamane sarire: "The soul is not killed when the body is killed." This statement in itself is proof. This type of proof is called sruti, the proof established by that which is heard through the disciplic succession from the Supreme. One form of proof is proof by logic (nyaya-prasthana). One can get knowledge by logic, arguments, and philosophical research. But another form of proof is sruti, proof established by hearing from authorities. A third form of proof is smrti, proof established by statements derived from the sruti. The Puranas are smrti, the Upanisads are sruti, and the Vedanta is nyaya. Of these three the sruti-prasthana, or the evidence from the sruti, is especially important.Pratyaksa, the process of receiving knowledge through direct perception, has no value, because our senses are all imperfect. For example, to us the sun looks like a small disk, but in fact it is many times larger than the earth. So what is the value of our direct perception through our eyes? We have so many senses through which we can experience knowledge--the eyes, the ears, the nose, and so on--but because these senses are imperfect, whatever knowledge we get by exercising these senses is also imperfect. Because scientists try to understand things by exercising their imperfect senses, their conclusions are always imperfect. Svarupa Damodara, a scientist among our disciples, inquired from a fellow scientist who says that life comes from matter, "If I give you the chemicals with which to produce life, will you be able to produce it?" The scientist replied, "That I do not know." This is imperfect knowledge. If you do not know, then your knowledge is imperfect. Why then have you become a teacher? That is cheating. Our contention is that to become perfect one must take lessons from the perfect teacher.
Krsna is perfect, so we take knowledge from Him. Krsna says, na hanyate hanyamane sarire: "The soul does not die when the body dies." Therefore this understanding that the soul is eternal and the body is temporary is perfect.
Kunti-devi says, ime jana-padah svrddhah supakvausadhi-virudhah: "The grains are abundant, the trees are full of fruits, the rivers are flowing, the hills are full of minerals, and the oceans are full of wealth." What more could one want? The oyster produces pearls, and formerly people decorated their bodies with pearls, valuable stones, silk, gold, and silver. But where are those things now? Now, with the advancement of civilization, there are so many beautiful girls who have no ornaments of gold, pearls, or jewels, but only plastic bangles. So what is the use of industry and slaughterhouses?
By God's arrangement one can have enough food grains, enough milk, enough fruits and vegetables, and nice clear river water. But now I have seen, while traveling in Europe, that all the rivers there have become nasty. In Germany, in France, and also in Russia and America I have seen that the rivers are nasty. By nature's way the water in the ocean is kept clear like crystal, and the same water is transferred to the rivers, but without salt, so that one may take nice water from the river. This is nature's way, and nature's way means Krsna's way. So what is the use of constructing huge waterworks to supply water?
Nature has already given us everything. If we want wealth we may collect pearls and become rich; there is no need to become rich by starting some huge factory to produce auto bodies. By such industrial enterprises we have simply created troubles. Otherwise, we need only depend on Krsna and Krsna's mercy, because by Krsna's glance (tava viksitaih), everything is set right. So if we simply plead for Krsna's glance, there will be no question of scarcity or need. Everything will be complete. The idea of the Krsna consciousness movement, therefore, is to depend on nature's gifts and the grace of Krsna.
People say that the population is increasing, and therefore they are checking this by artificial means. Why? The birds and beasts are increasing their populations and have no contraceptives, but are they in need of food? Do we ever see birds or animals dying for want of food? Perhaps in the city, although not very often. But if we go to the jungle we shall see that all the elephants, lions, tigers, and other animals are very stout and strong. Who is supplying them with food? Some of them are vegetarians and some of them are nonvegetarians, but none of them are in want of food.
Of course, by nature's way the tiger, being a nonvegetarian, does not get food every day. After all, who will face a tiger to become its food? Who will say to the tiger, "Sir, I am an altruist and have come to you to give you food, so take my body"? No one. Therefore the tiger has difficulty finding food. And as soon as the tiger is out, there is an animal that follows it and makes a sound like "fayo, fayo," so that the other animals will know, "Now the tiger is out." So by nature's way the tiger has difficulty. But still Krsna supplies it food. After about a week, the tiger will get the chance to catch an animal, and because it does not get fresh food daily, it will keep the carcass in some bush and eat a little at a time. Since the tiger is very powerful, people want to become like a lion or a tiger. But that is not a very good proposition, because if one actually becomes like a tiger one won't get food daily, but will have to search for food with great labor. If one becomes a vegetarian, however, one will get food every day. The food for a vegetarian is available everywhere.
Now in every city there are slaughterhouses, but does this mean that the slaughterhouses can supply enough so that one can live by eating only meat? No, there will not be an adequate supply. Even meat-eaters have to eat grains, fruits, and vegetables along with their slice of meat. Still, for that daily slice of meat they kill so many poor animals. How sinful this is! If people commit such sinful activities, how can they be happy? This killing should not be done, but because it is being done people are unhappy. However, if one becomes Krsna conscious and simply depends on Krsna's glance (tava viksitaih), Krsna will supply everything and there will be no question of scarcity.
Sometimes there appears to be scarcity, and sometimes we find that grains and fruits are produced in such a huge quantity that people cannot finish eating them. So this is a question of Krsna's glance. If Krsna likes, He can produce a huge quantity of grains, fruits, and vegetables, but if Krsna desires to restrict the supply, what good will meat do? You may eat me, or I may eat you, but that will not solve the problem.
For real peace and tranquillity and a sufficient supply of milk, water, and everything else we need, we simply have to depend on Krsna. This is what Bhaktivinoda Thakura teaches us when he says, marabi rakhabi--yo iccha tohara: "My dear Lord, I simply surrender unto You and depend on You. Now if You like You may kill me, or else You may give me protection." And Krsna says in reply, "Yes. Sarva-dharman parityajya mam ekam saranam vraja: Simply surrender exclusively unto Me." He does not say, "Yes, depend on Me, and also depend on your slaughterhouses and factories." No. He says, "Depend only on Me. Aham tvam sarva-papebhyo moksayisyami: I will rescue you from the results of your sinful activities."
Because we have lived so many years without being Krsna conscious, we have lived only a sinful life, but Krsna assures us that as soon as one surrenders to Him, He immediately squares all accounts and puts an end to all one's sinful activities so that one may begin a new life. When we initiate disciples we therefore tell them, "Now the account is squared. Now don't commit sinful activities any more."
One should not think that because the holy name of Krsna can nullify sinful activities, one may commit a little sinful activity and chant Hare Krsna to nullify it. That is the greatest offense (namno balad yasya hi papa-buddhih). The members of some religious orders go to church and confess their sins, but then they again commit the same sinful activities. What, then, is the value of their confession? One may confess, "My Lord, out of my ignorance I committed this sin." But one should not plan, "I shall commit sinful activities and then go to church and confess them, and then the sins will be nullified and I can begin a new chapter of sinful life." Similarly, one should not knowingly take advantage of the chanting of the Hare Krsna mantra to nullify sinful activities so that one may then begin sinful acts again. We should be very careful. Before taking initiation, one promises to have no illicit sex, no intoxicants, no gambling, and no meat-eating, and this vow one should strictly follow. Then one will be clean. If one keeps oneself clean in this way and always engages in devotional service, his life will be a success, and there will be no scarcity of anything he wants."
Journey of Self-Discovery, 6-1