Panics and Crashes and How You Can Make Money Out of Them

Panics and Crashes makes the frightening prediction that, within the next several years, the United States will experience a major financial crisis of 1929 dimensions. In anticipation of the disaster which he considers inevitable, Harry D. Schultz, a world-famous financial consultant, has written a supremely readable and enormously informative guide to surviving the consequences of America’s progressively irrational economic policies. No extensive background in economics is necessary to understand and profit from this book: the author speaks explicitly to the layman and provides any essential theoretical groundwork himself—in simple, illuminating terms.

Schultz offers vital intellectual ammunition against the economists who shudder at the mention of “Business Cycle” and who propose to “correct” it by ever-tightening the stranglehold of government on the economy. He demonstrates that periodic mild recessions serve as a necessary pressure valve, a means of regaining an economic balance after flurries of unwarranted investment. It is only when this overspeculation is aggravated out of all proportion by rampant credit and galloping inflation that the periods of economic readjustments prove increasingly painful and become genuine cause for alarm. “The money becomes a narcotic which is needed in ever-increasing amounts to keep up the expansion; and then one day things collapse.”

Concise histories of American and various foreign recessions, panics and crashes are presented; and, in every instance, an explicit causal relationship is shown between government meddling (either directly, through insane monetary policies, or indirectly, by protecting monopolies in crucial industries from competition) and the ensuing financial disasters.

The parallels between the “booms” enjoyed before each of the crashes Schultz describes and America’s present false “prosperity” (brought to an end by wage and price controls and the ensuing “energy crisis”) becomes alarmingly self-evident. He states that the warning signals of imminent financial catastrophe are quite clear to those who know what to watch for and who have the courage to act upon what they see. Schultz lists these crucial signs for the reader and outlines the preventive measures he can take immediately to protect his pocketbook and perhaps even realize a profit while others are being wiped out. He discusses in detail the vital topics of gold, liquidity, foreign currency, criteria for judging a bank’s stability and the expected reactions of the rest of the world when the crisis hits even harder than it has during recent international fluctuations and turmoil.

Schultz reiterates, “knowledge itself is power.” Panics and Crashes offers a powerful arsenal of information necessary to judge the world economic situation and to act on this judgment—frequently in direct violation of the standard recommendations of conventional financial authorities. (But, as Schultz points out, the last people to be trusted in such matters are “bankers, brokers and bureaucrats.” A “panic,” as the word implies, is as much a psychological state as it is a financial crisis. The knowledge with which this book arms the reader will enable him to act calmly and rationally in a situation which the majority of his contemporaries will find terrifying and incomprehensible—and with which they will be totally unable to cope.

Harry Schultz is one of the most knowledgeable and influential financial consultants in the world—and, as a welcome surprise (in contrast to the majority of his professional fellows) is explicitly pro-free-enterprise. He charges what is one of the world’s highest consultant fees—$700 an hour. At that rate, Panics and Crashes is a bargain you can’t afford to pass up! Speaking very seriously, it is an essential addition to everyone’s economic survival kit.

Reviewed by CAMILLE IBBOTSON / Economics (249 pages, indexed) / BFL Price $7.95