I constantly harp on saving in gold and silver, and it may get a bit boring to you, and I apologize for that. However, there are some things in life, that are virtually, if not 99.999% impossible to happen. Things such as the sun failing to rise, or water failing to seek its own level maybe. Things that have never happened, and chances of it or them ever happening for the first time are so remote, as to be deemed impossible. I think I have it.
Going back into all of known history, or history that has been written about anyway, has there ever been a government, any place on earth, which has survived? The Roman, Ottoman, and British empires lasted for hundreds of years, but all failed. When they failed, they left admirable traces, which we enjoy today, but they all failed due to economics. They failed to have enough money to raise more troops, couldn’t afford enough guns, mass revolts by the populace, or dozens of reasons, but all have failed, and have failed because of economics in one form or another. Our nation has survived for 242 years so far, and the average for a nation’s survival is supposedly 200 years. Are we overdue by 42 years? I hope not.
All of history’s nations had money which was used for trade, as money is supposed to be used, since it makes life ever so convenient. After all, barter is difficult, but was nearly always used when the money failed or was used for wallpaper. It may be used here again, and is used somewhere in the world today, as a matter of fact. Using money as a trading device, has always been common and universal, think for a minute. When all paper monies have failed and become worthless, and they all have, who lost their savings if they had saved in those paper monies? If they stored their money under a mattress, in a bank, or a safe, were those paper monies a good vehicle to save for the future? Have all those wonderful, beautifully engraved, colorful, promises by governments of value down through history, been truthful? Does my 20 trillion dollar banknote from Zimbabwe, have any value, other than as a novelty? If Zimbabweans had stored their surplus assets in dollar denominated Zimbabwe currencies in a bank, or under their collective mattresses, how would they have faired? Not at all. I have framed in my office a few Confederate bills. Southerners who saved in them lost all. Same with Continentals and Greenbacks.
If a graph of the slide of all paper monies in history, including the buck, (remember nickel Pepsis, $275 Fords, 20 cent a gallon gas etc), were drawn, the slide would have started a slow downward slide, and an ever increasing slide towards zero. Having saved one’s surplus assets in any of history’s paper currencies, would have achieved a total zero for the saver. Slow at first, with an ever increasing slide towards worthless. The reasons always have been government spending more than it takes in, and paying its bills by the printing press. The subjects of all those governments, paid dearly for trusting in their government’s promises.
At age 18, I was pressured by an insurance salesman to purchase a $5,000 life insurance policy. I mean $5,000 would have bought eight new Fords back then. I didn’t, and today, that $5,000 might not even fix a single Ford. Saving in dollars, would have been unwise then, and I think unwise today. Currency decline in value, is not the fault of citizens who use the currency, such as you and I, but the universal habit of politicians promising voters ever more largess from the public treasury, thereby decreasing its value. An old Stott rule: “The more of anything there is, the less they will be worth.” This includes everything, and certainly paper money, such as dollars.
So then, to refer to the title of this: I say it is impossible for the dollar to ever gain value, and it is impossible for it not to eventually go to zero. You may say that it is happening so slowly, that money in a bank, annuity, IRA, or insurance policy, is no real risk. I disagree, since I will soon be 85, and have watched the dollar go down in value, as indicated by prices of everything going up, my entire life, and have also watched politicians promise and print my entire life. I have a 1941 Plymouth truck, which was bought new for $400 in Silverton Colorado, by Mountain States Telephone and Telegraph Co. A $60,000 pickup truck today, is not unusual. Had you opened a savings account with $400 in 1941, even with interest, or bought a $5,000 life insurance policy, you would have done poorly, and this is with probably the strongest, most admired currency in the world today: The American dollar.
I say therefore, it is impossible for the dollar to ever regain any of its former purchasing power. The reason, all down through history, is that un-backed paper money has always gone eventually to absolute zero. No exceptions. The dollar, in the last 85 years, has lost over 95%n of its purchasing power or value, and therefore is a foolish way to save one’s surplus assets. America’s debt to GDP, committed obligations in the future for Social Security, Medicare, Medicaid, and other promises, is in the neighborhood of $175 trillion, and even current debt is close to $22 trillion. Another way to look at the buck’s health, is to compare our nation’s tax receipts per person, vs. its debt per person. The IRS takes in $10,035 per person, or $27,550 per taxpayer. The national debt per person is $66,190, or $178,338 per taxpayer. Obviously, an impossible situation, and a 3rd grade arithmetical computation, indicates that anyone storing their surplus assets for future support or use, other than for a year or two, is traveling down the wrong highway. Guess what has always been a total hedge against inflation? Guess what has always gone up with prices, as a currency has lost value due to inflation? You know. Gold and Silver. 85 years ago, gold was $20.67, and silver $1.25 – Don Stott – 1-888-786-8822