Addison Wiggin's The Demise of the Dollar

Addison Wiggin co-authored two good books, I.O.U.S.A. and Empire of Debt. As a result, I was looking forward to reading The Demise of the Dollar (and why it's even better for your investments). I should not have been so eager. Unless you are a gold bug, skip this book, or get I.O.U.S.A. instead.

First, the title, "The Demise of the Dollar, and why it's even better for your investments," is misleading. Readers don't get any tips or insight on why the dollar's fall would be good for investments until page 157. (My paperback edition has only 181 pages). If you do buy this book, and you agree the U.S. dollar will collapse, you may want to save yourself time and skip to the end if you're looking for investment ideas.

Predictably, the author likes gold and commodities and dislikes the Federal Reserve: "As the value of the dollar begins to fall, a corresponding and offsetting rise in the value of commodities, raw materials, and tangible goods will rise." [p. 157] Gold is mentioned several times as an "ultimate dollar hedge." [p. 175] Wiggin says that America's "decision to go off the gold standard was devastating," [p. 8] and "[n]o fiat money system has ever succeeded." [p. 71] As for the Fed, Wiggin calls it a "banking cartel" and "not part of Congress," making it unconstitutional. [p. 22]

The entire gist of Wiggin's book can be found on page 152:

The consequences [of a declining dollar] will be huge declines in the stock market, savings becoming worthless, and the bond market completely falling apart. As the value of the dollar falls, that dollar will no longer be worth a dollar; it will be worth only pennies on the dollar. It will be a rude awakening for everyone who has become complacent about America's invulnerability.

When Wiggin isn't repeating the same anti-dollar ideas, he makes some good points. For example, he laments the loss of domestic manufacturing: "We've given up making things to sell elsewhere, closed the store, and gone shopping. But we're not spending money we have; we're borrowing money to spend it." [p. 10] Those are good lines, but The Wire said it better:

You know what the trouble is? We used to make sh*t in this country, build sh*t. Now we just put our hand in the next guy's pocket.

A much better way to get the information in Wiggin's books is to watch his movie, I.O.U.S.A. More information, including an excellent 30 minute film, after the jump:

I.O.U.S.A. the Movie

While I recommend the I.O.U.S.A. movie and book, I cannot recommend Demise of the Dollar. It reads like the author finished it in one day and then handed it to students to add the citations. Demise contains nothing that hasn't been said before, by someone else, with more eloquence. That's one reason I.O.U.S.A. is so much better than Demise--it contains interviews with Warren Buffett and other investors who explain the economic times much better than Wiggin, and without the hysterics. (Read my take on the situation here and here.) Readers should skip Demise of the Dollar and watch/read I.O.U.S.A. instead if they're into economic horror stories.

As for me, I agree the U.S. dollar is in for a bumpy ride. That's why I've already bought a commodities ETF (DBC) and some Swiss francs (FXF).

Some stats from Demise:

At the end of 2006, foreign holdings of U.S. dollars had a market value of $16.295 trillion. [p. 43]

U.S. borrowing has expanded to the point that foreign central banks own major portions of the U.S. debt. The Bank of Japan held $668 billion of Treasury securities in 2004, compared to the Federal Reserve holdings of $675 billion. In other words, the Bank of Japan nearly matched the Fed in ownership of U.S. debt...If you just add in China, South Korea, and India, central banks own a lot more debt than the Fed does. [p. 153]

[O]ur actual inflation rates are understated by around two percentage points per year. [p. 30] For more on this phenomenon, click here.

Famous Speeches

Here is a website with transcripts and some audio/video of famous speeches:

http://www.americanrhetoric.com/speechbank.htm

Here is a speech by Barbara Jordan--before Obama, Barbara Jordan spoke of change:

http://www.americanrhetoric.com/speeches/barbarajordan1992dnc.html

And here is the text of one of my favorite speeches, by Barry Goldwater:

http://www.americanrhetoric.com/speeches/barrygoldwater1964rnc.htm

We see in private property and in economy based upon and fostering private property, the one way to make government a durable ally of the whole man, rather than his determined enemy. We see in the sanctity of private property the only durable foundation for constitutional government in a free society. And -- And beyond that, we see, in cherished diversity of ways, diversity of thoughts, of motives and accomplishments. We don't seek to lead anyone's life for him. We only seek -- only seek to secure his rights, guarantee him opportunity -- guarantee him opportunity to strive, with government performing only those needed and constitutionally sanctioned tasks which cannot otherwise be performed...

Balance, diversity, creative difference: These are the elements of the Republican equation. Republicans agree -- Republicans agree heartily to disagree on many, many of their applications, but we have never disagreed on the basic fundamental issues of why you and I are Republicans.

This is a Party. This Republican Party is a Party for free men, not for blind followers, and not for conformists.

That's from 1964, back when Republicans knew what they stood for. How will the GOP recover from its 2008 defeat? All they have to do is look at the not-too-distant past for answers.

________________

Here's a link for the lawyers--speeches by U.S. Supreme Court Justices:

http://www.supremecourtus.gov/publicinfo/speeches/speeches.html

Margaret and Helen on Goldwater

Apparently, Margaret and Helen have taken the blogging world by storm:

I’m old enough to remember the Republican party of Barry Goldwater - when the party stood for fiscal responsibility, small government and personal freedoms. I remember when I could talk with friends about politics and just agree to disagree. And then religious nut cases decided that if you didn’t agree with them you were immoral. So they went and elected George Bush President so he could take the Republican Party from being a party full of respectable people to a party filled with asses, jackasses and yes - [people] like Sarah Palin.

Margaret and Helen

It's nice to have people who remember what real Republicans used to stand for.

Barry Goldwater: Political Campaign Buttons

I ordered my first campaign buttons from Legacy Americana (www.legacyamericana.com). I finally understand why people collect the buttons--some of them are a beaut. I really like the gold-colored button above, despite its obvious symbolism (Gold = Goldwater).

Barry Goldwater

Earlier, I quoted Barry Goldwater's most famous quote, about vice and virtue. What follows is an excerpt from Barry Goldwater's 1964 speech at the 28th Republican National Convention, where he accepted the nomination for president and made the famous statement. Even back then, Senator Goldwater was dismissed as a loony, much like Ron Paul is being dismissed today. But his words ring true and make me wistful about how far we've fallen since the 1960's:

Now, my fellow Americans, the tide has been running against freedom. Our people have followed false prophets. We must, and we shall, return to proven ways-- not because they are old, but because they are true. We must, and we shall, set the tide running again in the cause of freedom. And this party, with its every action, every word, every breath, and every heartbeat, has but a single resolve, and that is freedom - freedom made orderly for this nation by our constitutional government; freedom under a government limited by laws of nature and of nature's God; freedom - balanced so that liberty lacking order will not become the slavery of the prison cell; balanced so that liberty lacking order will not become the license of the mob and of the jungle.

Now, we Americans understand freedom. We have earned it, we have lived for it, and we have died for it. This Nation and its people are freedom's model in a searching world. We can be freedom's missionaries in a doubting world. But, ladies and gentlemen, first we must renew freedom's mission in our own hearts and in our own homes.

During four futile years, the administration which we shall replace has distorted and lost that faith... [Oh what I would give to hear the new 2008 president say those words...]

Those who seek absolute power, even though they seek it to do what they regard as good, are simply demanding the right to enforce their own version of heaven on earth. And let me remind you, they are the very ones who always create the most hellish tyrannies. Absolute power does corrupt, and those who seek it must be suspect and must be opposed. Their mistaken course stems from false notions of equality, ladies and gentlemen. Equality, rightly understood, as our founding fathers understood it, leads to liberty and to the emancipation of creative differences. Wrongly understood, as it has been so tragically in our time, it leads first to conformity and then to despotism.

Fellow Republicans, it is the cause of Republicanism to resist concentrations of power, private or public, which enforce such conformity and inflict such despotism. It is the cause of Republicanism to ensure that power remains in the hands of the people. And, so help us God, that is exactly what a Republican president will do with the help of a Republican Congress... [As we can see, the Republican Party is a mere chimera of its former self in the new millennium.]

The beauty of the very system we Republicans are pledged to restore and revitalize, the beauty of this Federal system of ours is in its reconciliation of diversity with unity. We must not see malice in honest differences of opinion, and no matter how great, so long as they are not inconsistent with the pledges we have given to each other in and through our Constitution. Our Republican cause is not to level out the world or make its people conform in computer regimented sameness. Our Republican cause is to free our people and light the way for liberty throughout the world. [This key issue--diversity--will become more important as the U.S. becomes more diverse, and the Democrats have taken away this issue from the Republicans, which has led to their success. Senator Obama's speeches show that it is his Democratic platform that seeks to "unite diversity with unity," which should be the first goal of any politician.]

Ours is a very human cause for very humane goals.

[Sigh. One day, I hope we all wake up and remember again what America stands for.]

Barry Goldwater

Mr. Goldwater is known as a true conservative. Here is one of his famous quotes:

I would remind you that extremism in the defense of liberty is no vice. And let me remind you also that moderation in the pursuit of justice is no virtue.

It's a sad day when the Democrats appear to be pro-war, while the Republicans appear to be against fiscal responsibility. The two-party system is failing America.