We all experience ‘gradualism’ in our lives. The paint on your house gradually decays. Tires gradually wear out. Grass gradually grows till it needs cutting. Soda pop gradually loses its fizz and becomes flat. Shoe soles and heels wear out gradually. Appliances gradually wear out and must be replaced, as do every mechanical device, light bulbs, TV sets, and the list is endless. Unless someone can invent perpetual motion, gradualism exists universally.
Gradualism, also applies to paper money. When Germany got into WW I, it first eliminated any relationship between the Reichsmark and gold. (The U.S. did that decades ago). Germany began to gradually sell its government gold to finance the war, and after WW I, thanks to the Treaty of Versailles, which Germany did not sign, it was responsible for Hitler’s rise, and for the decline of Germany and its currency. Within 3 ½ years, it took 42 billion Reichsmarks to equal one U.S. dollar. The Treaty of Versailles, ordered Germany to pay for damages it did in the war, which no nation before or since, has ever been ordered to do. Germany was broke, as all nations are when they lose, or for that matter, win a war. How to pay? Simple! Print the money. What had been ‘gradualism,’ till Germany lost the war, was out the window, and the presses began to really roll. Another ‘expert’ says that 42 billion Reichsmarks was equal to one American cent. It doesn’t matter, because Reichsmarks eventually were used as insulation, toilet paper, or to start fires.
When America got into WW II, some say thanks to FDR, and I agree, in the 3 ½ years we were in it, prices doubled. Literally. Why? Because WW II, like all wars, are fought with un-backed paper money, which can be created endlessly. The presses rolled, and turned out bonds and saving stamps, which if not enough were sold, since there were no computers, actual paper dollars were inserted into the currency supply by the hundreds of millions, as needed, to build B -17’s, guns, tanks, and all things needed to fight a war. The same exact thing happened during the Korean ‘war’ (which has never been won), or the Vietnam ‘war’ (which no one has ever figured out why we were in it), and all the crud which has gone on since. It isn’t just wars now, it is food stamps, welfare, and giving millions of illegals as well as citizens, untold millions of dollars’ worth of handouts every week. Like credit card debt, as long as you can pay the interest, you can still stay afloat. Go to the “USDEBTCLOCK.ORG” and see for yourself. As I write this on Sunday afternoon, that site says the US has debts of over $26 trillion, or $80,800 per citizen. The debt clock shows federal spending of $5.5 trillion, against an income of $2.6 trillion, and a deficit of $2.89 trillion. (In 2010, the national debt was under $12 trillion). If you translate that into a credit score, it would make the U.S. ineligible to obtain a mortgage! But they are in control of the money supply, and like Germany after WW I, can print all they want to pay the bills Congress runs up. “Print money,” is a rather general term. To be exact, they ‘sell debt’ to anyone who wants to invest in government, currently at less than 1% interest, but those T Bills are adding dollars to the currency supply. Why do people buy T-Bills or loan government their money at less than 1% interest, when government says we are having 2% inflation? It is so illogical, that I have no explanation.
The U.S. economic system is a classic case of ‘gradualism’. Inflation, (increasing the money supply), is said to be 2%, but remember, the fed controls the statistics, and few governments in history, including our own, ever tell the truth. If they did, they’d not be in the ‘gradualism’ category for long. How long will it take for ‘gradualism’ to not be ‘gradual,’ and the money supply increase quickly? Guess what? It has already happened, thanks to China’s virus, the money supply has increased by at least $5 trillion in the last couple of months, and even the Wall Street Journal opines that ‘more inflation is on the way.’ You have a warning then. The U.S. dollar is still the currency of the world, and Trump has done much to slow its decline, and the China virus was not his fault. Warning we have, and it will happen. All prices will go up, not just gold and silver, so why not save in them, since they will go up with the rest of prices, which means the dollar is going down. Why save in a leaky bucket?
At church today, a few of us were talking before service, and Phil was angry that his IRA had been cut in half lately, because his IRA paid broker, had invested in the wrong stocks. Norman (who has bought gold and silver from me over the years), was smug, saying that he was glad he had bought gold and silver rather than storing his wealth in dollars and IRA like stuff. I never tell anyone who gets gold and silver from me at any time, and Norm didn’t even hint that he had gotten his from me. Everyone at our church knows what I do, but few ever get any from me, which it typical I am sure. “Gradualism” prohibits them from buying gold and silver, because inflation seems to be so gradual, that they never think of the economic future, or for that matter think clearly at all, as long as there is a football game on TV, maybe. 95% of the world’s population have no idea what causes inflation, or even what it actually is, other than ‘prices going up,’ and when their government says it is ‘fighting inflation,’ they are happy and continually loan their money to it.
If anyone knew that a huge earthquake was going to hit, would they have done something to protect themselves by moving? Most know that a hurricane is on its way, so they board up windows, buy flashlights and bottled water. They have a warning, and usually have a couple of days to prepare. No one knew the China virus was coming, and that it would be so costly, causing inflation. If Biden beats Trump and starts spending trillions and trillions for ‘green’ crap, do you think we’ll have maybe severe inflation? I do, prepared a long time ago, and will continue to send Trump a few dollars. We all have decisions to make about everything. I made mine and am happy with it. Norm’s happy he made his too!
-Don Stott
– don@coloradogold.com