Editorial Introduction

The Chinese word for "crisis" contains two characters. One of them means opportunity.

The theme of individual economic survival, chosen for this special issue of REASON magazine, accurately reflects the challenge we all face today. In turn, the heading to my editorial strongly implies that what we really have is a crisis, but more importantly, a crisis that can be turned to the reader's advantage. But to do so the reader will have to invest his time to carefully re-think many currently accepted investment nostrums. If you want to make this commitment, this issue is the ideal place for you to begin for it constitutes one of the largest, if not the largest, collection of practical financial articles ever assembled for any issue of any magazine. In reality, the issue is a handbook of financial information, but, unlike a book, much of the material has immediate application to the markets of May, 1974.

Looking to the issue itself, you will find articles of several different types. For example, "The Coming Credit Collapse" and "What You Should Know About Monetary and Fiscal Policy" are included because they will provide you a "feel" for the macro-economic environment in which you are living today and bring to your decision-making a general, and I hope, critical understanding of the forces that are now active in the economy. Without such an understanding, valuable investment advice can easily lose meaning when you try to relate it to a nonexistent or shaky frame of reference. In the same vein, articles such as "The Dow Theory Revisited" will help you develop an understanding of the origin and nature of financial analysis, as part of a thorough understanding of financial history, the ideal ally for helping to put new economic developments in proper perspective. You will also find articles critically examining some of the common areas of investment today, notably the stock market and that sacred cow—real estate.

Whether you are a sophisticate or only a recent initiate to the world of investments, the articles on foreign currency trading, cyclicality in stock and commodity prices, and gemstones should be of interest to you as well.

Our emphasis on gold may seem excessive but such is not the case: gold has served for thousands of years as the ideal store of value investment. Unfortunately political developments have prevented American investors from making maximal use of its potentials for several generations. However this is changing rapidly as powerful market forces bring gold back to the forefront once again. Therefore I strongly urge you to place our two interviews near the top of your reading list since they examine in detail all major areas of gold investment used today.

You have an added benefit in the large quantity of specialized advertising in this issue. Advertising, a much maligned and misunderstood institution, should really be appreciated for what it is, a valuable source of consumer information. This issue has over 40 pages of it and the prudent will treat it as their working bibliography for financial success.

With our troubled world and the growing crisis of the economy, it seems only logical that we should look for a reason. That leads directly to the government and its interventionist economic policies, ranging from the flood of vote-buying paper dollars its presses produce to the shortages created when the market's allocative mechanism of price is choked by the heavy hand of governmental control. The government presents two important challenges. First is your personal survival in a politically distorted economy, and second, the necessity of removing the government from those areas that are the appropriate domain of the free market. The growth of government into our personal lives has been a gradual one; the removal will be also. It is a battle that can be won but it will take your personal and ongoing commitment to the libertarian ideal.

If you are new to REASON and have not subscribed I invite you to do so now. It is a young and growing magazine of the highest order: its perceptive economic and social analyses will reward careful and thoughtful attention many times over in the ensuing months.

I would like to give special thanks to the staff of REASON magazine for their invaluable help and ready cooperation with me in the assemblage of this issue, most notably Robert Poole Jr., and Ms. Lynn Kinsky. Also my sincere appreciation to the authors and advertisers in this issue whose importance is more than obvious.

From myself and the staff of REASON comes the profound hope that our readers may survive and prosper.