BernankeBucks
It would appear that the Fed believes two negatives equal a positive.
Ben Bernanke’s ill-advised strategy to create wealth out of thin air followed
by the ever-diminishing purchasing power of the ‘new money’ has investors running
for cover. Historically people would hedge currency vacillation with precious
metal investment typically at a rate of 5% of their holdings. Today, however,
that percentage is considerably larger with some folks opting out of markets
altogether. As in “honey, we’re clearing out the bank account, 401, and our
stocks and purchasing all the gold and silver we can get.” Has everyone
noticed all the ‘We Buy Gold’ storefronts that have littered the urban
landscape during the past few years?
After decades of using, representing, and associating paper money
with monetary value there’s a natural resistance to reallocating such into
precious metals. But it is, alas, these precious metals that ARE the value.
Fort Knox is supposed to contain gold bullion quantities in direct
proportion to the backing of paper money used as convenient transference.
(Gold gets a bit heavy in one’s pocket) It is the gold that is of value, not
the note representing it. Atop every paper dollar legal for use in the
country is written ‘Federal Reserve Note.’ It’s a promissory note backed
with the full faith and credit of the USA. With 16 Trillion dollars in
debt and no political will to curtail reckless spending, our politicians
have done severe damage to both the country’s credit rating and world
confidence in our currency. Markets have been crashing, the economy is in
shambles, unemployment in numbers not seen since the Great Depression.
Those in the know have been steadily purchasing what’s called
hard currency’ meaning that which one can hold, or which is tangible.
Having numbers across a computer screen representing your savings can
disappear in a flash should the economy collapse. Gold hidden in your
safe cannot.
In response to the economic meltdown still gripping the country after
almost four years, the Federal Reserve under edict by Ben Bernanke,
it’s chairman, decided to simply print more paper currency. It has no
backing other than a ginormous I.O.U. and may rightly be called
Q.E. Infinity. Dumping Reserve Notes (paper money) into the market
serves to undermine the system as a whole making each representative
note less valuable. Purchasing power falls steadily and with each new
printing run, the economic machine slows and falters until finally,
eventually, it just stops. Some may refer to this as a Fiscal Cliff or
precursor to the New World Order but in either event, our currency is
on life support.
Most people reading this article are working, saving, and planning for
their futures with an ultimate goal of being able to retire. To do the
latter requires a significant amount of money and should that money’s
inherent value decrease over time even though the amount grows,
the ability to retire will remain out of reach. Do recall Germany
during the 20’s and specifically the Weimar Republic wherein they,
like us, decided to just print more money. Eventually of course the gig
was up and it was not surprising for citizens to buy a loaf of bread for
$20,000.00. Some even used the paper to fuel their fireplaces!
Those who do not learn from history may well be destined to repeat it.
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