In the days after the real estate bust of 2007, scores of pundits came out of the woodwork declaring that they had predicted the crisis. Still others made similar claims after the debt collapse of 2008, and again, following the sovereign debt crisis of 2010.
But how many analysts truly foresaw each of these three crises, wrote about them extensively ahead of time, carefully explained the causes, and clearly spelled out the consequences?
I don’t have a precise answer. But I do know that Claus Vogt and Roland Leuschel, the authors of this book, are definitely among them.
In their 2004 German bestseller, Das Greenspan Dossier, they exposed, in great detail, how the monetary policies pursued by the former Fed chairman were creating an unprecedented real estate bubble. They showed how the bubble would inevitably collapse. And they predicted how that collapse would lead to a series of fi nancial disasters of unthinkable dimensions.
“When the U.S. real estate bubble bursts,” they wrote in Das Greenspan Dossier, “it will not only trigger a recession and a stock market crash, but it will endanger the entire financial system, especially Fannie Mae and Freddie Mac.”
That one sentence alone — plus their constant reminders throughout the book about the enormous magnitude of the expected crisis — gave readers an unambiguous forewarning of the precise sequence of events that followed:
- First, the bursting of the housing bubble.
- Then, the worst recession and stock market crash since the Great Depression.
- Next, a near meltdown in the entire financial system.
- And finally, the near demise of Fannie Mae and Freddie Mac.
Indeed, not only were these two government-sponsored mortgage giants the primary victims during the debt crisis of 2008, they are also the two largest institutions whose troubles have most obviously endured after that crisis. Clearly, Vogt and Leuschel singled them out in their book for the right reasons.
The irony of this story, however is that Das Greenspan Dossier, although a bestseller in Germany, was never translated into English. So unless you happen to be an avid reader of German language treatises on international finance, you missed it.
I didn’t miss it — but mostly by coincidence: I happen to work closely with Claus Vogt because we were co-editing Sicheres Geld, the German edition of our U.S. investment newsletter, The Safe Money Report. So when Claus first brought Das Greenspan Dossier to my attention, my first question was the natural one” This book is about America and should be of intense interest to all American investors. So why wasn’t it translated and published in the United States?”
The answer: Although American books about Germany, Japan, or other countries are almost automatically translated into their languages, the reverse is not true: Foreign books about the United States are rarely translated into English.
It seems few in the United States seek out the opinions of overseas authors — let alone about the United States itself. Indeed, to fi nd a time when American readers were measurably intrigued by the analysis of a foreign observer, you might have to go back to Alexis de Tocqueville and his Democracy in America, first published 175 years ago.
That’s a shame.
Foreign authors can shed fresh light on America’s dilemmas and suggest novel solutions that U.S.-based analysts might miss. Foreign authors do not suffer from the same biases; they rarely have the same academic or political turfs to defend.
Moreover, as I explain in a moment, these two authors, in particular, have talents and insights that help them rise head and shoulders above their peers abroad.
“Clearly,” I said to the authors,” we must not let this happen again! When you write your next book, revealing your forecasts for what’s likely to happen in the next phase of this crisis, we must find a way to get it promptly translated and made available to everyone in the English-speaking world.”
Fortunately, John Wiley & Sons, which has published three of my books, agreed; and the product of that effort is in your hands right now — the fully translated and updated edition of the authors’ original German bestseller published in 2009 — Die Infl ationsfalle.
I was asked to review the translated manuscript, and I was pleased to fi nd that the authors’ track record for prescient forecasts was reconfi rmed. Indeed, in the relatively short time it took to fi nd a U.S. publisher and translate the original, some of the authors’ key new forecasts were already beginning to unfold.
For example, in their 2009 German edition of this book, they wrote that the “cure” for the 2008 debt crisis that many sovereign governments were pursuing — massive bailouts — were worse than the disease. They explained that it would merely lead to a new crisis, this time in the debts of the sovereign governments themselves. In other words, the authors clearly predicted the sovereign debt crisis.
Sure enough, even as I was reading the manuscript, this is precisely what the world was experiencing or fearing — not only in fi nancially vulnerable countries like Greece, Spain, or Portugal, but also in supposedly stronger economies like the United Kingdom, Japan, and even the United States.
The 2009 German edition of this book also predicted that the U.S. Federal Reserve under Chairman Ben Bernanke would embark on an increasingly more aggressive program of “quantitative easing” — outright money printing. This is precisely what the Fed has done. And right now, how much further the Fed travels down this dangerous path has become the defining policy issue of our time.
But the authors’ proven forecasting abilities are not the only unique strengths they bring to this work.
They are former banking industry insiders who never accepted the established economic theories that prevail in their world. Instead, they are eclectic, independent thinkers, drawing heavily from one of the few schools of thought that can logically explain the true causes and consequences of the busts we are now experiencing.
They fully understand — and explain — what money really is, what our governments have done to abuse it, and what the ultimate cost could be to society.
They are also ardent students of one particularly extreme boom-and-bust cycle that most government offi cials would prefer to forget: the rampant abuse of money printing presses in 1920s Germany, the destruction of the German currency and all of its terrifying consequences. More so than most other German authors, they are vividly aware of how that singular episode unfolded and the lessons it can teach us today.
Most important, the authors are major advocates for everything that has made the United States the envy of the world. Mr. Vogt writes weekly to 500,000 American readers to convey his views. And Mr. Leuschel was the co-author — along with Congressman Jack Kemp — of the German bestseller, Die amerikanische Idee [The American Idea]. This book was translated into French and Dutch and became a bestseller in Belgium. An important chapter of this book was dedicated to the idea of sound money. In following Ludwig von Mises’s ideas, the authors tried to convince European readers that a return to growth and full employment was only achievable with sound money and tax cuts (Kemp-Roth Bill in 1981). Both are ardent critics of today’s U.S. policy, particularly under Fed chiefs Greenspan and Bernanke. But both have always been passionate supporters of America.
Looking ahead, no one can predict the future with precision. But Claus Vogt and Roland Leuschel provide a clear vision of what’s possible. If you want to protect and grow your wealth even in the worst of times, heed their warnings and seriously consider their recommendations.
Martin D. Weiss, Ph.D.
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