That is not the only scenario for preserving value:
Lets talk about making money. No, I dont mean earning it, I mean making it.
Thats counterfeiting you say! Well true, if you are doing it without the legal authority to do it.
What I am talking about is an entity that the citizens of the US have granted the permission to legally do it.
If you are a citizen of a country other than the US, this is still important, as the US Dollar is still considered the worlds reserve currency (at least for now!)
Lets go back in history a bit to the year 1913. Why is this year so important? Well in the year 1913 two very important things occurred in the US Congress that impacted the entire future of the US, and even the world.
Those two things were:
The creation of the Federal Reserve Act - which transferred the legal authority to create currency from the US Congress to a private bank called the Federal Reserve.
The creation of the 16th Amendment - which allowed the US Government to tax its citizens wages directly.
Interesting to note that these two pieces of legislature were passed in the same year, because if you research the matter you will find that they are dependent on each other to fulfill the objectives of those who pushed the legislature. What exactly those motives were we will leave for another time, but lets just say it was not the benevolent intentions of a small group of banking magnates for the good of the people.
Lets get back to the creation of the Federal Reserve, and the fact that the Congress literally handed over the keys of the kingdom to a private bank. By doing this, the Federal Reserve was given the authority to create the legal tender of the land, a responsibility to took to with gusto.
Over time, abuses of a gold and eventually total severance from a gold standard in 1971, has created a situation where the government can now 'create' as much money as it wants, without having to earn it.
Why is this bad? Well, because it is the sole cause of the vast majority of problems we are experiencing in our economy today.
Market Bubbles: Bubbles are caused by false demand. When demand forces anything to go up higher than its true value, eventually the laws of nature, the universe, God, whatever you want to call it, will force it to correct. It is important to understand that when the government is 'creating' this money, it has to get the money into the economy somehow. How does this happen? Through debt. For example - lets just say that for the sake of this theoretical scenario, that there was a society silly enough to give out $250,000 to $500,000 to anyone who asked for it, regardless of whether they could pay it back or not, to say, maybe, buy a house. Sound familiar? Now lets just imagine, in this totally imaginary unbelievable scenario, what kind of demand is placed on the prices of homes. Keep in mind, this isnt real demand, its all fueled by debt. Oh its real, some might argue. Is it? What would the housing market prices look like if there never was such a thing as a mortgage, and the only way someone could buy a home was with whatevr cash they had earned through their labor? What does the housing market look like now? Yes dear reader, market bubbles are indeed created by 'creating money'.
Devaluation of the dollar and devaluation of a countries prominence on the world stage: Preposterous, nothing as simple as printing money out of thin air could destabilize such a massively mind boggling powerful economy as the US of A! Oh really? Lets go back to basic supply and demand. You do not have to be a Mensa Genius to get this. When you have more of something, does it go up in value, or down in value? Let me help you, it goes down in value. Now, lets pretend for a second, that the government has literally doubled the amount of currency in circulation around the world, every ten years, ever since 1971 when we left a gold standard which prevented this from occurring prior. Ok lets not pretend, lets just say it has, because that is exactly what has occurred Does this cause the value of the currency to go up, or go down? Let me help you with this, it causes the value of the currency to go down.
Ok, so what happens then? Well every country in the world loses its incentive to keep using dollars as the reserve currency of the world, and things like countries de-pegging from the dollar like dominoes happens. Sound far fetched? Do some research my friend, you will see this is already occuring. Other things tend to occur as well, like re-pricing Oil into Euros. Good for those who have Euros, but for countries like the US who has to convert currency that is rapidly becoming worthless into Euros to buy its oil, not so good. No way you say! Just go google OPEC and their discussions on changing to Euros for oil. Oh, there are other side effects of course. The US currently borrows over $2billion a day just to keeps the lights on (yes, thats how much we are borrowing to continue running the government).What happens, when the entire world, who bought a ton of Sub-Prime based financial paper that happend to be repacked and rated AAA by Wall Street and sold to the Worlds Hedge funds and Banks, finds out it was all a big credit scam? Well, they lower the credit score of the issuer, of course. Combine an abysmal credit score with an abysmal currency valuation and what do you have? A situation where the world will no longer lend money to the US Government to keep running. Uh oh, now that might be bad.
Massive Inflation: Gas prices are skyrocketing, groceries are becoming ridiculously expensive, it takes two working parents today to buy half the lifestyle that a single working parent could buy 30 years ago. The middle class is being destroyed by inflation, taxes, and a river of jobs flowing overseas. Why is this happening? Once again my friend, because when you double the amount of money in existence, you also half its value by simple suply and demand. In other words, earned a $100,000 salary today is the equivalent of $12,500 a year in 1977. Boy this is fun, isnt it?
Right about now is a good time for a very interesting quote:
"Whosoever controls the volume of money in any country is absolute master of all industry and commerce...and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate" - President James Garfield, who was assasinated two weeks after making this statement.
So whats the point of all this, now that you have me seriously depressed, you might say?
The point is, that gold and silver have been true money for over 5000 years of human history, and it has only been th last half century that we have strayed away from this wisdom, and we are indeed paying for it, and will continue to pay for it in the years to come.
Gold and Silver are some of the only ways to protect your wealth in a currency that is not constantly devaluing at such a rapid rate it makes ones head spin.
The leaders of the worlds largest countries are figuring out that the US Dollar has been the worlds reserve currency not because the US is all that and a bag of chips, but because it was backed by gold for almost 200 years. As they realize that all fiat currency will eventually implode, it is my opinion they will be headed for gold.
