Exclusive Interviews
Addison Wiggin on the Founding of Agora, the Empire of Debt and the Agora Outlook: Deflation Now, Inflation Later
By Anthony Wile - September 13, 2009

Introduction: Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm based in Baltimore, Md. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of Agora's flagship publication "The Daily Reckoning." Wiggin is the founder of Agora Entertainment, and executive producer and co-writer of the highly acclaimed documentary film "I.O.U.S.A.," which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival and the 2009 Critics Choice Award for Best Documentary Feature and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A. and a three-time New York Times best-selling author. The film "I.O.U.S.A." was inspired by the international best-sellers Financial Reckoning Day and Empire of Debt, which Mr. Wiggin co-authored with William Bonner in 2003 and 2005, respectively. Wiggin also authored the international best-seller The Demise of the Dollar… and Why It's Even Better for Your Investments, which was revised, updated and re-released in January 2008.

Daily Bell: Thanks for sitting down with us. Tell us a bit about your background. Were you economically oriented as a child?

Addison Wiggin: Economically oriented? Well, my parents bought, renovated and sold old colonials in New England while I was growing up. I lived in nine different houses in the same town before leaving for college. I can remember one winter moving into a farmhouse that didn't have running water. We had to use an outhouse in the middle of February.

For a time, too, they tried to live off the land in one of the old farms we'd purchased. We grew all our own food, raised chickens and rented some land to a local dairy farmer. My dad had a building supply company, but was forced to shut it down during the oil shock of 1973. He was an early believer in sustainable living… to say the least.

During one episode of my misspent youth, I followed the rock band, The Grateful Dead, around the country, earning my way in the black-market economy that had grown up around this curious collection of derelict hippies. All of these early life experiences helped me gain respect for "economics" in the real human sense – saving, investing and speculating. At the same time, I became suspicious of the data-crunching econometric theory that passes for intelligent analysis and forecasting on TV and in government today.

Daily Bell: What did you do in college?

Addison Wiggin: In college, I studied the classics – languages, history, philosophy and religion. I never believed any of it would give me the skills I needed to get a job one day, but those were the subjects that interested me. Ironically, today, I don't believe I could do the writing or publishing of ideas that we do at Agora without the language skills or the increasingly unique perspective a classical education brings.

Daily Bell: Where did you go after college? Tell us how you got to Agora.

Addison Wiggin: I got to Agora, purely by chance. I was studying for a Masters degree at St. John's College in Annapolis, MD. As most graduate students are, we were dead broke. I responded to a 3X5 card on the "jobs bulletin board" in the student union. Some guy named Bill Bonner in Baltimore was looking for new writers to train for his publishing company. I knew then I was interested in a career in publishing, but had no idea what a fortuitous occasion finding that card would turn out to be. That was about 17 years ago. I've worked odd jobs on golf courses, as a carpenter and a painter, in liquor stores, drove a supply snow cat one winter in Telluride Colorado, even worked in the private kitchen of Prince Bendar of Saudi Arabia, but the only "real" job I've ever had is with Agora.

Daily Bell: What are your responsibilities now?

Addison Wiggin: Today, I'm the executive publisher of Agora Financial, one of the subsidiaries of Agora Inc. We publish, among other letters, The Daily Reckoning, and some of the leading financial newsletters in the business, including Outstanding Investments, which has earned a #1 ranking by Hulbert's Financial Digest for its coverage of natural resources, energy and precious metals markets; and Capital & Crisis, one of my favorites, covering deep value and long-term investments from a top-down macro perspective. We've also just founded the Richebacher Society in an effort to continue the work of the late Dr. Kurt Richebacher, a classical European economist. And this fall we're assembling a new service with partners in Mumbai covering the BRIC – Brazil, Russia, India and China – economies from the ground up, offering opportunities to investors who are increasingly worried about the deficit spending and recklessness of government policy here in the West.

Daily Bell: What inspired you to become a writer and publisher?

Addison Wiggin: Human relationships… and passion. All great drama is derived from the passions of men (and women) and how they interact with one another. Fear, greed, mob mentality, insanity are just a few of the very interesting human emotions. The study of economics and markets, to me, is an exploration of human passion writ large across history. I was an avid reader first… then I couldn't help myself.

Daily Bell: How did the books come about?

Addison Wiggin: During the tech boom and bust (1999-2001), Bill Bonner and I were writing The Daily Reckoning from an office in Paris. Early in 2002, we noticed that many of the forecasts we'd made – based on the ludicrous ideas people had come up with to justify their investment decisions – were coming true. We consolidated many of the essays from those early years into an outline for a book. After many edits and some additional research, that book became Financial Reckoning Day.

When released in the fall of 2003, Financial Reckoning reached #1 on the New York Times business list, which in retrospect probably wasn't a good thing… Books are hard to write. They take a lot of time and effort. And in the end of the day don't produce much revenue. But we were hooked. In 2005, we got the crazy idea to follow that up with another book, Empire of Debt, which in turn inspired the documentary, "I.O.U.S.A."

This year we released second editions of Financial Reckoning Day and Empire of Debt, both of which are available in bookstores now. Demise of the Dollar, a book derived from the Empire of Debt project became a bestseller, too, and is itself in its second edition. We have been fortunate, in one respect, that many of our forecasts have been accurate.

Daily Bell: How about your award-winning movie?

Addison Wiggin: The movie was an interesting project in its own right. When we first sat down with David Walker, then comptroller general for the federal government, we had no idea what his reaction to our project would be. As we began describing the outline of the film, David blurted out "does this have anything to do with Empire of Debt!?"

"Loosely," Patrick Creadon, the director of the film, replied sheepishly. "… because, I loved that book!" David finished.

With a huge sigh of relief from the film crew, we embarked on an 18-month experiment traveling around the US, while David and Bob Bixby, executive director of the Concord Coalition, headlined their Fiscal Wake Up Tour, trying to educate ordinary Americans about the perilous condition of their nation's economy. Along the way we interviewed Warren Buffet, Alan Greenspan, Paul Volcker, Ron Paul, Paul O'Neill and a host of other luminaries from all political and economic persuasions. The film was eventually purchased from Agora by the Peter G. Peterson foundation, which David Walker is now the founding president and CEO.

"I.O.U.S.A." won a number of accolades… it was one of 16 films accepted (out of 953 submitted) for competition at the Sundance Film Festival in 2008. It was nominated for a Critics Choice Award in 2009 and short-listed for an Academy Award that year, too. It was featured at both the national political party conventions during the presidential campaign of 2008. Its premier in August of 2008 was seen by nearly 50,000 nationwide by satellite hookup to over 400 theatres followed by a live town hall meeting with Buffett, Pete Peterson, David Walker and a few others.

But at the time it's message was already dated. The depths of the credit crisis were reached three months later. The first government stimulus package far exceeded our base line projections. The record deficits run by the Bush administration, which made" .I.O.U.S.A." seem like a horror film for the uninitiated, have been smashed by the current administration, with years of reckless spending promised ahead. It's a nightmare scenario worthy of any Hollywood hack. We took our shot… hopefully we reached a few new curious minds.

Daily Bell: Tell us a little about Bill Bonner.

Addison Wiggin: Uhmn… here's an anecdote I've used to roast Bill at awards ceremonies that illustrates his laissez-faire approach to business and life, for that matter. In 1999, I was working at the Cato Institute in Washington D.C. when I'd heard Bill needed a writing assistant in Paris. I wrote to him offering my services.

"Bill, would you like me to come to Paris and write for you?" I asked.

"Yep," was the three letter e-mail I received in response.

I'd just gotten married and my wife and I had our first child three months before. But I quit my job and moved them all to Paris. It was a rather momentous occasion in our young lives.

When I arrived in Paris, I went to the address given to me. It was an old apartment on the bvld. St. Germain, where I found, behind a stack of newspaper clippings, dog-eared books laying open with notes in the margins, Bill typing away on an old laptop. He looked up and said: "Addison! What are you doing here?" He'd forgotten I was coming.

"Well, since you're here, why not pull up a seat?"

He moved the stack of papers and I sat down at the desk next to him. The same desk. And there I sat for the next three months pounding out the format for and editing The Daily Reckoning. I was using an old loaner laptop from Agora with a crack in the screen. The battery no longer functioned. So every time Bill had an idea and leaned back in his chair, he'd knock the power cord out of the wall and I'd lose all my work for the day. Occasionally, his pile of research papers would collapse and spread all across my keyboard.

We eventually moved to a larger space, but from those auspicious days arose one of the more interesting and engaging e-letters on the Internet.

Daily Bell: From humble beginnings to a world-spanning company. Why is Agora such a success?

Addison Wiggin: Because we practice what we preach. Management consultants have told us we operate on a "free market" model. Each of the Agora subsidiaries is independent and free to publish ideas of their own choosing. We gather on a yearly basis to compare notes, brag about our successes and commiserate over our losses. But for the most part we view one another as our fiercest competitors in the marketplace for ideas. We hire bright minds and give them plenty of rope to hang themselves with. With luck and hard work the ideas we publish will be unique and benefit our readers in ways they cannot find anywhere else on the Internet or in print.

Daily Bell: Where does Agora go from here?

Addison Wiggin: Whither goes the economy and the financial markets, so goes Agora. You'd think "contrarian" opinions would react counter to the broader trends in the marketplace, but that's just not true. When the markets – stock, bond, housing, credit, you name it – are on fire, the marketplace for new and interesting ideas is on fire too. When the markets cool, so does the desire for new, gutsy information. The "flight to safety" rally in the dollar and US treasuries during the Panic of '08 is all the anecdotal evidence you need to understand that bit of investor psychology.

Daily Bell: Where is the world's economy headed?

Addison Wiggin: The most interesting question to me right now is not necessarily where is the world's economy headed, but what is the fate of capitalism? The West grew wealthy, one empire at a time, largely sharing the same capitalist values. Spain, the Netherlands, France, England, then finally the United States were all ascendant empires. If, as we suspect, the mantle of capitalism is passing to the Chinese… or the Russians, the Brazilians or the Indians, or even to the United Arab Emirates, it will be the first time in modern history that the employment of capital is done so by countries outside the traditional roots of Western European values. That, in and of itself, is not a bad thing. But it is interesting. And I'm not sure many people in the West are prepared for it.

Daily Bell: Can the West save itself?

Addison Wiggin: If the crisis reignites a passion for high savings, high investment, low taxes, smaller government and a stable currency, then sure the West can save itself. We're hell-bent on the exact opposite course at the moment though.

Daily Bell: Do we need to return to a gold standard?

Addison Wiggin: The gold standard of the Victorian era England provided the longest period of relative peace and free trade in human history. During that time the percentage of world GDP derived from global trade reached it's peak. Even higher than the modern period of globalization we just passed through. We don't necessarily need to "return" to the gold standard, but we do need to move forward to a stable reserve currency that isn't susceptible to policy shenanigans and manipulation by central banks.

Daily Bell: What is going to happen to the dollar?

Addison Wiggin: "Deflation now, inflation later" is a mantra we've adopted at the Daily Reckoning. The Federal Reserve, through it's program of quantitative easing, is busting the seems of it's own balance sheet in order to fight a deflationary trend in the West. At some point, the tide will shift. Mr. Bernanke assures the world he's watching inflationary indicators like a hawk. We have our doubts whether those indicators will do him any good. As Paul Volcker, the great inflation slayer of the early 1980s, said when we interviewed him for I.O.U.S.A. "Once inflation gets started, it's very hard to stop. And there's a strong flavor of that at the moment."

Daily Bell: What do people need to do to protect themselves?

Addison Wiggin: During inflationary periods, precious metals and natural resources are a good place to put your money. But timing is everything. And as we learned last year, these markets are susceptible to massive speculation just as much as the stock, tech or mortgage markets turned out to be. In fact, in 2008, we became the first generation in human history to experience what the late economist Ludwig van Mises described as a "crack-up boom", world-wide. We cover that event fairly extensively in the second edition of Financial Reckoning Day (Fallout)… in stores now.

Daily Bell: What are the most important – seminal — articles of yours that you would encourage everyone to read? Where can they be found?

Addison Wiggin: Well, the books… and the film… of course. But my two sentimental favorites are essays entitled The Era of Fictitious Capitalism, about the fallacy of trading paper for profits and mistaking that for building prosperity; and The Mystery of Wyndcliffe about the collapse of the mansion in the Hudson Valley that gave rise to the popular culture expression "keeping up with the Joneses." You can find them both at www.addisonwiggin.com.

But I'd also encourage readers to keep up with daily analysis of the stock markets through the 5 Min. Forecast and the Rude Awakening, (Agora Financial's Executive Series of e-mails) at www.agorafinancial.com. And if you ever have the chance, attend our annual investment symposium in Vancouver in late July. You can find the details for next year's event at the website and even find an audio collection of the speakers from this year's event.

Daily Bell: On behalf of all of our readers we thank you for sharing your views with us and wish you and Agora continued success.

After Thoughts

Addison Wiggin and Bill Bonner have been in the forefront with other well-known hard-money analysts and writers in predicting the current economic crisis long before it occurred. We have pointed out before that the hard-money community is consistently accurate in its forecasting, yet the mainstream media seems blissfully ignorant of this fact.

The issue is much bigger than failed forecasts however. The model that the mainstream media uses, along with mainstream economists, seems flawed somehow. It didn't anticipate the problems of the 1970s, nor of the early 2000s, and it certainly didn't anticipate the difficulties of later 2000s.

It is even worse than that however, as some of the West's top financial luminaries such as current Federal Reserve Chairman Ben Bernanke insisted right up until the current economic implosion that there was more that was right with Western economies than wrong. And even when faced with a catastrophic meltdown, Bernanke and his many enablers were never able to explain what had gone wrong and why. Apparently, an American subprime crisis had caused a worldwide meltdown in asset prices and credit. This explanation, blaming the tail for the dog, is still floated today, though we wonder if it will fly tomorrow given the imminence of derivative and commercial mortgage defaults.

Incredibly, it seems that derivatives exposure continues to climb throughout the Western world. We have now read some statistics that claim that derivatives have pushed over the magic US$500 trillion mark. If the world's entire financial output is US$60 trillion, this means that the powers-that-be in concert with financial engineers have managed to create a global leverage of ten-to-one.

In our humble opinion, it is very sad that while many in the West closely follow this singer or that movie star and can recite intimate facts about their "faves," few understand that their own assets are already considerably leveraged and not with their permission. Of course the Western world itself is leveraged even more than the wider world, but after a point what difference does it make? Fiat money is being pushed to its virtual extremes and, no, we don't see a happy ending.

The failure of the mainstream media to report on these developments is fairly breathtaking. You will find such statistics at Agora and will find mention of them throughout the Internet's hard-money community. But imagine Katy Couric leading off with a news story saying that world was now leveraged ten times over. Can you see it in your mind's eye? We can't. And that is just the trouble.

The disconnect between what is being reported in the mainstream press and the reality evident online grows wider by the hour. We thank goodness for such courageous voices as Bill Bonner's and Addison Wiggin's, but we find the larger spectacle of economic coverage fairly depressing. The world has not "recovered" from the recent economic shocks. The recovery is part-and-parcel of the fiat money model and merely portends more severe consequences down the road.

It is the model itself that doesn't work. Fiat money ALWAYS implodes to its inherent value – which is the value of an electron. How much is an electron worth to you?

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