This will be the last in this series, and maybe about the straw that broke the camel’s back. It’s about debt. We all want to be debt free, and hate monthly credit card, mortgage, and auto loan bills and payments. Debt can have a stranglehold on us if we aren’t careful. At my age, I have none, but I well remember having it earlier in my life. Being debt free, gives one a sense of well being and security.
Who has the most debt, and as a result, is on very unstable ground? The United States Government. The official debt is close to $11,000,000,000,000, but in reality it is far more. The fact is that counting committed payments of Social Security, Medicare, and others, the true, long term, debt is about $70 trillion. A trillion dollars is a lot of dollars, and a seventy trillion dollar debt, just happens to be impossible to pay, as is an eleven trillion dollar debt. The debt, is absolutely and literally, impossible to ever be paid, other than by the printing press method, which has been resorted to countless times in history. Currently, in Zimbabwe, a hundred billion dollar bill, will buy a meal at a restaurant. In Germany, in 1924, in three short years, the Reichsmark went from being worth a quarter US, to so worthless, that it took a wheelbarrow full to buy a loaf of bread. Reichsmarks were being used for toilet paper and fire starters. All because they were being printed without limit, and had zero backing.
The US debt grows ever higher, fighting two senseless wars, and with continuing subsidies of every conceivable thing a Congressman can conjure up to get thoughtless voters to pull their lever during an election. If Obama wins, and he has a Democrat Congress, it will be even worse, and at the end of a four year White House stint, we may well be in a hyper-inflation situation. If McCain wins, the process will proceed at a slower rate, but the end result will be the same, no matter who wins. If Ron Paul had won, and he had a Republican Congress, the debt would still be un-payable, other than by means of the printing press. There are situations in life, which are absolutely not fixable, other than by undesirable means, and that’s a fact.
The final result of the printing press debt payment method, will be a decline in the currency value. The one thing that may save us for a time, is the fact that America is not alone. All nations have huge debts, thanks to their respective legislatures, and all nations will resort to the printing press solution to pay their debts. Theirs are un-payable also! The dollar may be around for a long time, in other words. Not because of its value, but because it is being joined by every other currency in the world. This makes it smart for other currencies to try to make theirs go down also, so as to balance the trade. Stupid? Yup.
What to do to save ourselves? Get out of all currencies, other than for day to day, and month to month purchases. Pay off the long term mortgage with a 6% interest rate? I say yes, but to be practical, why do it when the inflation rate will be far higher than the interest one is paying, plus the fact that interest is deductable? Make the payments over the years with cheap money. Save in currencies? Absolutely not. Why save in a declining measurement? If you saved in gallons, and the gallon got smaller each year, your savings would decline in gallon value, even though the gallon term would remain legitimate. If you saved in pounds of flour, and the pound measurement shrank each year, your flour savings would have declined, even though the pound term you saved in would remain the same. If you save in dollars, and the dollar declines in value and purchasing power due to inflation, at the end of the year, your dollars would still be there, but they would buy less, so why save in them?
Getting out of currencies with one’s surplus assets, makes ever so much sense, but what to invest in? Anything tangible, but preferably something which is easy to buy, sell, store, and is desirable everywhere and throughout history. Coal requires space, and oil requires tanks. Butter requires refrigeration, and other things may be difficult to sell, such as antiques, cars, and real estate, even though they do give pleasure. So drive a car, live in a house, and fill it with antiques, but after that, there can be no other choice, other than gold and silver.
Of late, huge numbers of people have become jittery over their stock and dollar investments, and thousands are attempting to get into gold and silver. The demand is so large, that it has cleaned the shelves and vaults of gold and silver, and caused manufacturing ability shortages. Remember, when gold and silver are mined, they require milling, smelting, and after that, require manufacturing into coins and bars, which are sellable. No one should ever buy any gold or silver without a good hallmark or brand name on it, as it may be difficult to sell when one wants to do so. Currently, a well known person is selling un-hallmarked, ’generic,’ hundred ounce silver bars, and I urge you not to touch them. Would you buy “Joe Blow motor oil?” Of course not, because a brand name or hallmark is indicative of purity, and a ’generic’ anything will be virtually impossible to sell when one wants to do so. Sorry for the delays in silver, but manufacturers are working as hard as they can, and the machinery is on order, and actually being installed as I write this. How long before it is operational? I don’t know, but surely not more than a couple of months. Where will silver be then? I have no idea. Just protect yourself any way you can, is all I can advise. Gold is far better than dollars!
As a last minute help to the election, by all means go to goptrust.com. They are trying to raise money to run ads which McCain won’t, and which might turn the tide. I sent them a hundred bucks by credit card, so they can use it now.