Introduction

YOUR GUIDE TO THE SECOND EDITION OF AFTERSHOCK

This second edition of Aftershock contains a number of important updates and clarifications to the previous book. We have been fortunate to have received lots of excellent feedback and suggestions from our readers, much of which we have incorporated into this new book. Some important changes include more information regarding personal finance in Chapter 6 and Chapter 7, applying the broad macroeconomic views of the book to specific real-world concerns, such as retirement, annuities, underwater mortgages, 401Ks, municipal bonds, and the many ways to buy and own gold.

In another important change, we replaced the chapter on STEP Evolution in the original book with a new Chapter 9, discussing where we believe the real trouble lies underlying our current economic dilemma—with the field of economics, itself. The underlying problem goes beyond the actions of the Federal Reserve, or specific government officials, investment bankers, or Wall Street, although all share some blame. Much more fundamentally, our current problems reflect an underlying lack of knowledge in the economics community about our economy, what brought us here, and how to get out of it. At its core, what we are experiencing is a fundamental failure of the economics profession. In the new Chapter 9, we look at why this has happened and where we believe the field of economics should be moving to finally get a full understanding of how our economy really works. In this discussion is the basis for answering questions about how to solve our current economic problems and moving forward to a much brighter, more productive and enjoyable economic world.

In this second edition of Aftershock, we also dropped the old Chapter 10 about life after all the bubbles pop. It really was a bit gloomy. Although we thought it was important to put into print our long-term predictions, there is no need to repeat them now. When one of our readers called it our “Dr. Zhivago chapter,” we knew it was time to move on. However, both the STEP evolution chapter and the chapter on life in the postbubble world are important reading, so if you haven’t already read the first edition of the book, you might want to pick it up or borrow it from a friend. Thanks to you, our readers, there are now a couple hundred thousand copies of the first Aftershock floating around out there, so you have a decent chance of finding one somewhere.

But the biggest difference between the first and second editions of Aftershock is our focus on the importance of the Federal Reserve’s recent actions to massively increase the money supply, and the inflation this will eventually create. So important is this action by the Fed that we have devoted all of Chapter 3 to inflation—where it comes from, how it will hurt us and, most importantly the role it will play in helping to fully pop our multibubble economy. Although the Fed’s actions do not change the final conclusions of the original Aftershock, they do significantly affect the short term path we will take to get there. Our updates regarding the Federal Reserve’s latest actions and anticipated future actions have important implications for the short-term path of both the economy and how you can best protect assets and grow investments in this dangerous environment. The implications of the coming inflation have also been worked into almost every other chapter and are reflected throughout the book.

Finally, we want to take this opportunity to thank our readers for the incredible support they have shown us. We couldn’t have asked for a better response. So many people have told us how much they enjoyed the book, sometimes reading it multiple times, and even giving extra copies to their friends and relatives. Wow—thank you, thank you, thank you!!! It is deeply satisfying to know we are being read, understood, and even appreciated. It’s just fantastic!

It’s also great that so many of you are helping us get the word out to help as many people as possible. That is so important to us. Hence, we give away free books, and we also make free presentations to worthy organizations. We want to get the word out as fast as we can, and as widely as possible. We hope that this second edition will be an important step in our mission to help people better understand what is going on with the economy, so that they can act now to protect themselves and to prosper in these most unusual times. We hope you find this second edition of Aftershock helpful in the months and years ahead.