Debt—Inflation’s Mistress!

The debt of the U.S. is now measured in numbers once only familiar to astronomy!  In a matter of years we have gone from Billion Dollar debt positions to Trillion.   How many of us truly know what a Trillion dollars is?  One trillion dollars equals one million x one million!

Here is an idea of how much money we are talking about:

  • A stack of $1,000 bills eight inches high would equal $1 million.
  • One billion dollars equals 1,000 x $1 million. $1 billion would require a stack of $1,000 bills 8,000 inches high (that is, 667 feet.) For comparison, the Empire State Building is 1,250 feet tall, so $2 billion dollars stacked in $1,000 dollar bills would be about the same height.
  • One TRILLION dollars equals 1,000 x $1 billion. This means a stack of $1,000 bills that totaled $1 trillion would be 666,667 feet high – which is just over 126 MILES!

You must understand some economics and debt to truly understand what might be next.  You should make some crucial decisions based on this information.  If you do nothing, then your value you have stored, earned, and pursue will dwindle.   If you do nothing, you risk loosing your purchasing power and we have all experienced this in the cost of living recently.   We Americans are isolated from most currency awareness.  If you live on the borders or have experience traveling across borders, you realize that our monies are not equal and they shift higher or lower in terms of buying power respectively.

You might ask how can this be?  We are not currently on the Gold Standard! Our dollars are not exchangeable for rare and precious metals with intrinsic value as they once were. There have been many times that currencies were created without scarcity and were backed only by the governments that created the money.  This is the current system the world now uses.  Economists call this system the “fiat” system.  A brief lesson in history will show that all fiat systems have failed in its economic evolution due to inflationary problems associated with having a non-intrinsically valued form of currency. Will our system fail?  Has it failed?   It brings me no pride or value to blame anyone or panic everyone for the economic chaos that globally plagues our world.  However, as is the purpose of this report, we can be prepared and live our lives prepared to the best of our abilities.

Problems with paper currencies exist because they are man-made and have no scarcity.  Precious metals, on the other hand, are rare and recognized without a need for a currency exchange system. You can find and extract or mine precious metals, but you cannot create or manufacture them.  There is risk incurred by creating a lot of paper or non-precious coin money: if you create too much of it, it can slowly become less valuable, which is known as inflation.

The affects of inflating currency are obvious today.   Twenty dollars in the 1920’s bought a fine man’s suit.  Since then, dollars have been added to the economy with no bearing on value erosion.  This is why a $20.00 dollar gold coin will buy a fine tailored suit to this day, but a $20 dollar bill will not even buy a tie in today’s inflated currency.

Inflation always follows debt in a fiat system of business.  Otherwise bankruptcy would be the case for an unhealthy budget!  Why would a government opt for bankruptcy if could print itself out of the debt problem?   There within lies the need and the problem with the Federal Reserve and our world wide economic system.

RECOMMENDATION:

Have your position in precious metals.  I recommend having 5-20% of your wealth in metals.  In my opinion, you should have physical to meet the demands of an extreme emergency.   In addition to physical gold, I would recommend looking in the mining sector equities for a value opportunity in a mining operation(s) that are in production.

This mining sector is where most of my efforts are currently.  I believe there could be an upside to the price of metals, but I KNOW there can be an upside to mining investment in the correct companies. Please see Featured Investments for more information.

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