Financial Literacy - How to prosper
Stephen Leeb
How to deal with the coming economic crisis

q_v2.gifYou did mention in the book that it's easier for the Chinese to get things done quickly in some cases.

a_v2.gifThey're not as encumbered as we are. We have a wonderful society here. We are free. And one reason we can stay a wonderful society and one reason we have been able to remain free is that during times of war, we've been able to grant the president emergency powers and come together as a nation. But right now, we're not anywhere near it.

Everything is being passed along party votes. No one is even talking about resource scarcity and resource shortages. Someone has to wake us up, and if they do, I hope we'll be able to recover.

I'm certainly not rooting for any of this to be happening. I hope I'm wrong, but I'm just trying to be a messenger.

q_v2.gifYou talk about "absolute peaks" in regard to natural resources. Can you explain this?

a_v2.gifPeak anything is when you are unable to produce more of it. I wanted to get across that it is very unlikely that you're going to reach peak energy or peak oil or anything like it without reaching peak lots of everything else.

That is because you need oil to produce iron ore; you need oil to produce copper; you need copper to produce oil. You need all these commodities to make more water. So when one critical commodity reaches peak, that might be peak for a lot of commodities and you might get to the point that the world can't produce any more commodities. And everything stops. You stop growing at that point or you find technological solutions.

We're not really at that point, we're trying to fund -- to some extent -- energy technologies, but we're not placing priorities on that at the moment.

This to me is the equivalent of a war. The Chinese are winning and we don't even know that we're in a race. Basically war may be too strong a word, but I don't think it is.

We are in the race for our lives and we don't know it. And they are running full steam ahead.

q_v2.gifYou're also predicting that inflation will reach 30 percent to 40 percent. Why will that happen and what will be the result?

a_v2.gifIn 2008 when we got into high oil prices the Fed decided to -- I can't say they got stingier -- but they kept interest rates high. They kept the economy in check because they were worried about high commodity prices.

Well it was easy then because there was no unemployment problem then.

But now here come high commodity prices again and you can't really expect the Fed to try and restrain the economy in the face of high commodity prices. Unemployment is already 10 percent. What are they going to aim for -- 20 percent?

If anything, they have to get looser. High commodity prices like high oil when you pay more to fill up your tank, that's like a tax. I think the Fed will have to get looser not tighter with high commodity prices and that is the making of an inflationary cycle.

q_v2.gifWhat should people do to prepare themselves? What investments should they hold?

a_v2.gifCanned goods, head for the hills?

I consider precious metals as an asset group. That doesn't mean you put 100 percent in precious metals, but I would certainly consider gold, silver and platinum as strong candidates for my portfolio. That is the least I would do.

Or perhaps investing in resource-rich countries.

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