Civil Unrest Around the Globe Just a Prelude of Worse To Come
As customer account withdrawals started to rise, Kabul Bank’s board of directors set a daily limit of US $10,000 per person that can be withdrawn. This limit had the opposite effect of scaring even more customers into trying to remove all of their funds held at the bank. Bank officials state that they can rely on the Afghanistan central bank to cover the private bank’s customers, if necessary. Unfortunately, this has done nothing to assure the populace. Customers are now waiting in lines for hours, often to be told to come back the next day.
The food riots in the southern African nation of Mozambique have become so hard to control that the police have shot and killed several protesters.
A week ago, Venezuelan President Hugo Chavez introduced the “Good Life Card.” Domingo Maza Zavala, the former director of Venezuela’s central bank, said that the Good Life Card could become a rationing card that would limit purchases of good with recurring supply problems. According to Chavez, these cards could be used to buy groceries at the government chain of markets.
Jaime Suchlicki, director of the University of Miami’s Institute for Cuban and Cuban-American Studies said that Venezuela’s supply shortages are very similar to those Cuba faced when Fidel Castro introduced the rationing card in Cuba.
Suchlicki said, “The card emerged when goods began to become scarce. The government had seized many companies that did not work because the government managed them poorly. Then they [the Cuban government] decided to distribute groceries through those cards. People depended on the government to eat, and nothing gives you more power than having people depend on you to get their food quota.”
Introduction of the Good Life Card is worrying many Venezuelans. Roberto Leon Parilli, president of the National Association of Users and Consumers stated, “We see that in the short-term this could become a rationing card probably similar to the one used in Cuba.”
Already, there has been civil unrest in other countries such as Greece that have been sparked by their recent financial problems.
I don’t see how America is going to avoid the same kinds of civil unrest. California’s state government is so strapped for cash flow that it has tried to sell government real estate and is paying employees with IOUs. Illinois’ state treasury is in almost as poor a fiscal condition, where vendors are simply not being paid for months.
In my opinion, the coming outbreak of civil unrest will be a direct result of the horrible fiscal policies of American politicians and bureaucrats of all political persuasions. In order to avoid what normally would be a short but sharp economic correction of the misallocation of resources resulting from previous government laws and regulations, the politicians and bureaucrats have tried to push problems farther into the future. Doing so has merely made these problems worse.
A lot of “experts” are arguing whether the US is facing the prospect of inflation or deflation. The answer is—both! The US government is now using almost every trick in the book to inflate the US money supply, which will result in soaring prices—as measured in US dollars. The minutes of the latest meeting of the Federal Open Market Committee were released last week, confirming the likelihood of this scenario.
On the other hand, prices for goods and services as measured in the value of gold or silver are likely to fall sharply. A year ago, a gallon of unleaded gasoline cost about 25 cents face value in US 90% silver coin. Today that gallon of gasoline only costs about 20 cents face value. In the future, I expect it will cost even less.
There are a lot of steps to take to better prepare to handle and survive the inevitable coming civil unrest in the US. Owning physical gold and silver is an important part of that preparation.
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