The inflation rate in Venezuela is 67,934 percent per year, currently anyway. This means that if you wanted to buy an ounce of gold, it would be 81 million Bolivars, which is what they use to use for money, at least for now. By the time you read this, they may have switched to the “petro” which is just another bit-coin, or sham. Here is a paragraph from a recent “Forbes” magazine. “The rate of inflation quickly makes paper money worthless. Money must have three attributes if it is to serve its role: A store of value, a unit of account, and a medium of exchange. When one of those items disappears, whatever you used to call money, isn’t that anymore. In this case, the Venezuelan Bolivar no longer acts as a store of value. The number one problem, according to Brown Brothers Harriman, is that the government has persistently failed to deal with its massive overspending and deficits.” Well now isn’t that “Elementary, my Dear Watson,” to quote Sherlock Holmes?
Zimbabwe went through the same ridiculous procedure a few years ago, when the government went wild with spending, making their ‘Zimbabwe dollar’ currency go to virtual zero. I’ve still got my $20 trillion Zimbabwe dollar note, as issued by the Reserve Bank of Zimbabwe. They have since switched to the U.S. dollar as official currency, and doubtless Venezuela will do the same. Not that the U.S. buck is a firm store of value, but it beats the rest of the world’s un-backed monies, of which the U.S. is one. I must disagree with the Forbes piece a bit. Even if the debt is high and spending is out of control, the dollar or any other currency must have buyers for the debt the government creates. When governments create debt, they always try to sell it by promising high interest rates to those who will buy it or loan to government. How ridiculous, to me anyway; loan government fake money they created? Oh well!
The U.S. Treasury bond is bought around the world, because it is thought to be safe, due to being issued by the U.S. Treasury, and backed by the Federal Reserve, which actually is no part of the U.S. Treasury or government. The “T-Bill” is regularly quoted as to its interest bearing, and the most quoted is the ten year bond, which runs generally at about 2.9% interest yearly. When other currencies fail, as a last gasp, it is because no one wants to buy the government’s debt. So far, the “T-Bill” sells with no problems around the world.
Socialism, by dictionary definition is: “Any of various theories or systems of ownership and operation of the means of production and distributorship by society or the community rather than by private individuals, with all members of society or the community sharing in the work and in the products.” The commune is socialism, and it has never worked. Or a second dictionary definition is: “The stage in society, in Marxist doctrine, coming between the capitalistic stage and the communist stage, in which private ownership of the means of production and distributorship has been eliminated.” To this ancient sage, the socialistic, huge bureaucracy, which began with FDR, was at its peak under Obama, and is now trying to be drastically reduced by Trump, is socialism, or the mid range before we become Russia or Chinese communist. Keep working at it, Mr. President! When Congress passes thousand page bills, which no one has read, and passes enforcement to bureaucrats, which have not been elected, but appointed, you have basic socialism. If anyone out there or anywhere, has ever seen any government, at any time or of any size, ever perform better than individuals, businesses, companies, or even corporations, please let me know. Otherwise, the Democrats have moved so far to the left, that we can hope they will not capture the House in November.
But suppose you were a Venezuelan citizen, and knew that your country had the largest underground oil reserve in the world, it was operated by efficient U.S. corporations, Caracas was a wonderful, prosperous city, and all seemed to be great. Then in 1998, Chavez was elected, who managed to overcome several attempts at overthrow, and when oil prices went down, he privatized everything in his grasp, seizing U.S. refineries and production techniques and equipment. Would that have been a time to begin buying gold and silver? Yes! Did the Bolivar crash instantly? No, any more than other un-backed currencies crash instantly, with the exception of the German Reichsmark after WW I. That one went sort of quickly, thanks to the Treaty of Versailles in 1919, but even that took a few years. There was notice to those who were alert. Are you alert today?
Many times, things happen like a lightening flash, with no warning, and that’s why we have insurance. Auto crashes, falls, floods and fires can happen quickly, and everyone believes that not to have homeowners or auto insurance, is insane. Well then, how about inflation insurance? Inflation insurance? Never heard of it? We have it by the ounce, and it’s called gold and silver. Will the dollar collapse? Some think soon. Some say never, and both can be wrong overnight, if certain happenings occur. Devastating hurricanes, floods, political overthrows, world wide economic catastrophe, or any possible happenings, can quickly happen to anyone and everyone. If fire, flood, hurricane, or auto accident happens, it’s too late to buy insurance. But not to have gold and silver as the ultimate economic or un-backed paper money insurance, while it is so cheap, is insane, to me anyway! I am insured. Are you? – Don Stott 1-888-786-8822