If you are reading this article, and you are an American, than you are directly experiencing and witnessing the greatest financial paradigm shift the world has ever seen or known – and you are probably doing your best to pretend it is not happening, even in the face of your direct and immediate experiences.
However, regardless of whatever level of denial you are practicing or “group think consensus” you are enjoying, the facts of history, math, and reality are not subject to any bias or expectation you may harbor or think you are entitled to. If that seems a little strong, it’s nothing compared to the tragedy of willful ignorance in the face of all direct experience, empirical concrete evidence, and historical certainty.
Let’s examine a few facts about our dollar that are not open to interpretation or spin. Perhaps the clarifying and refreshing zest of reality will help to clear the mind a little and make room for some rational decision making, prudent planning, and decisive and creative action.
Fiat paper currencies fail 100% of the time. No exceptions, ever.
And what is a fiat currency?
It is a currency that’s created and controlled by a government, un-backed by any value of then “confidence”. A piece of paper is declared legal tender by government “fiat.” Our use of the dollar is a perfect example. The U.S. Federal Reserve creates new dollars simply by printing them or injecting electronic “reserves” into the banking system.
A universal example of a non-fiat currency would be gold and silver coins. They used to circulate in much of the world and there is only so much of each metal. Governments are unable to create this kind of money out of thin air, and the cannot grant gold and silver value and then take it away. These forms of money are value itself, and have been so throughout time.
The dollar, the euro, the Japanese yen, and British pound are all fiat currencies. And remember, this point cannot be disputed or interpreted: Every single fiat currency that has ever existed was eventually mismanaged and destroyed by its controlling government.
How and why do fiat currencies fail 100% of the time?
Throughout history governments have been incapable of maintaining their currencies. That’s because there are always two constituencies of any government always driving a spiraling and cascading dynamic. Those who want no taxes and those who want government to provide goods and services for “free.” Now a hypothetically wise government could tell the truth and tell their citizens that taxes are the price of civilization and that there is no such thing as a free lunch. Bu they don’t because they enjoy their positions of power and priveledg and therefore for our leaders there only exists one choice: promise and borrow, generation upon generation. After a while it is the expectation that this kind of system is the functioning status quo and all efforts are defined by its further enlargement and enrichment.
Borrowing to finance spending without raising sufficient taxes to cover these new obligations means deficits. But when you own the printing presses, electronic or otherwise, you simply create more money to meet your needs. When the Federal Reserve buys our own debt (when the US Treasury sells Treasury Bonds), they loan the money into existence with the ease of a computer entry. Instant money into the money supply.
The anti-tax and pro-spending folks each get what they want, and no one notices, for a while at least, the slight decline in the value of each individual piece of currency caused by the rising supply. Human nature being what it is, every government eventually chooses this second course. And the result, almost without exception, is a gradual loss of confidence in the value of each national currency, which we now know as inflation.
Have you ever heard a little inflation is like a little heroin? Over time, the gap between tax revenue and the demands placed on government tends to grow, and spending, borrowing and currency creation begin to expand at increasing rates. Inflation accelerates, and the populace comes to see the process of “debasement” for what it is: the destruction of their savings. They abandon the currency en mass, spending it or converting it to more stable forms of money as fast as possible. The currency’s value plunges (another way of saying prices soar), wiping out the accumulated savings of a whole generation. Such is the eventual fate of every fiat currency.
And that’s you right now, in a nutshell. Every year, decade after decade, you have watched your dollars buy less and less. In real terms we already live in an hyperinflationary environment. Since 1971, the year we fully eliminated any restraint of money creation by coming off the last of the fractional gold standard, our dollar has lost an astounding 80% of its purchasing power.
If you take only one thing away from this article, please let it be this: The dollar is not money. It is a promissory note backed by your confidence in the issuer. It has no intrinsic value and has a pre-determined fate, which is total collapse and failure. Nothing can stop that outcome and nothing will stop that outcome.
And just for a little perspective let’s take a quick look at real money, gold. This metal money exhibits a primary property of real money – it is a store of value. In other words, an ounce of gold can buy the same amount of goods of services today that it could 40 years ago. Or a 100 years ago. It might be time to consider a little “money insurance” in the form of gold bullion.
Unless you really prefer to play a 0% chance of success with the dollar. In that case, ignore this information, your observations and experiences, and all of historical evidence and precedent. The government will be happy to provide you with a more reassuring picture of reality.
Article Source: http://www.articlesbase.com/investing-articles/your-personal-invitation-to-the-global-financial-crisis-4671917.html
About the Author
Aaron Kutchinsky is a writer, lecturer, and committed financial activist.
In 2010 Aaron created and founded Guardian Gold & Silver as a definitive and groundbreaking alternative to the gold industry norm, a mission-oriented and revolutionary precious metals company with 3 specific goals in mind:
• Do the right thing.
• Lead others to understanding.
• Get as many into the boat as possible.
It is extremely important to understand the current world financial paradigm shift, which is now well underway. Please visit http://www.guardiangoldandsilver.com for more information and insights, and to request our Special Report.