Created Currencies ... Are Not Gold! (Financial Prepping 101)

By: GE Christenson | Wed, Oct 9, 2013
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Paper currencies seem normal. They seem natural. We are told they are necessary. Paper currencies with no intrinsic value are used everywhere - we pretend they are valuable. If we don't look closely, or remember the world of 60 years ago, they seem like a good idea.

Monopoly money. Euros. Dollars. What is the essential difference? Paper, with no intrinsic value, is accepted only because we have confidence in the issuer of the currency and/or because we have no other choice. Monopoly money can buy hotels on Park Place. Unbacked paper dollars can buy hotels in Manhattan. The hundreds of unbacked paper currencies that have become worthless during the last century can buy NOTHING.

If I am playing Monopoly and I change the rules to allow me, and only me, to add $85,000 to my stack of money, it seems likely I will "win" and own more property. Eventually, no one will want to play with me because I created $85,000 of fraudulent Monopoly money.

If I am a central banker and I create $85,000,000,000 every month to buy bonds, I will own lots of bonds in a few years. People will eventually realize my $85,000,000,000 per month gives me and my friends an unfair advantage and most others will refuse to play with me except when necessary, and they will certainly seek other "games" that are more fair and less slanted toward the player who can create boatloads of currency from nothing.

From Richard Russell: (link)

"For the first time in history, ALL the major central banks are printing money. One of two things will occur. If they continue to print, their respective currencies will lose their purchasing power, and we'll have inflation or even hyper-inflation. If the central banks pull back on their printing, we'll have crashing markets and a world depression."

Should we trust our central bankers? They largely control our financial lives. Inflation, deflation, depression, prosperity, booms, and busts are strongly influenced by banking policies, interest rates, and the availability of currency and credit, all of which are influenced by central banks.

Jim Grant: (link)

"Gold is a legacy monetary asset. It was there before they printed paper.

The price is the reciprocal of the world's faith in central bankers. The world ought to have much less faith in central bankers. As that proper distrust grows, the gold price will appreciate. I think gold is cheap at this price."

The world is overloaded with debt. As Bill Bonner said, "To solve the debt problem they added debt! The genius of this plan was, we admit, not immediately obvious." We think it is progressively more obvious that creating a massive quantity of currency each month - say $85,000,000,000 - is helping few outside the financial community and will eventually cause considerable harm to the economy and the purchasing power of the dollar.

We all know that:

What are the "solutions" to our massive and unpayable debt conundrum?

Hugo Salinas Price: (link)

"We have only limited knowledge regarding what massive monetary inflation really means. Those who are going to apply it know only some of the effects, not all of them. ... Thus the hand that will implement massive inflation trembles in doubt. Yet, there is no other recourse.

The world will plunge into the darkness of massive world inflation. There is no other alternative. It must take place, but what will happen then is obscure. We are going into uncharted waters."

"In the coming world-uncertainty and fear, humans will adopt the same measures spontaneously, and a flight into gold and silver will take place."

"The Powers-That-Be" appear to prefer a distracted populace, slowly rising prices, a strong dollar, weak gold prices, and minimal restrictions on their ability to accumulate assets and power. There will be trauma if currencies collapse, gold prices skyrocket, and inflation flies out of control. We can reasonably expect that the governments of the world will "do something" that unfortunately will NOT solve the problems of collapsing currencies and out of control inflation.

Michael Noonan: (link)

"Central banks and governments produce nothing. Governments exist by sucking the financial lifeblood from the same citizens the government is supposed to serve."

"If the prices of gold and silver were allowed to reflect their true worth, it would totally undermine the existence of the "dollar" and topple central bankers and governments. Those banksters in control are not going to go down without a fight, and they will destroy existing western currencies in the process. If the paper "dollar" is how you measure your worth, you have been warned."

When paper assets are overvalued, gold and silver prices are likely to be undervalued. How much are paper assets and unbacked paper currencies truly worth? That is a huge question. Consider:

SRSrocco Report: (link)

"The global financial system is floating on a sea of worthless paper assets. Unfortunately, the majority of people still haven't figured out that the end of this fiat monetary system is close at hand."

"The rate at which the dollar is being abandoned by international trade portends the end of the U.S. Dollar as a reserve currency much sooner than later. This is the very reason why the paper prices of gold and silver have been manipulated lower since 2013. The threat of much higher gold and silver prices is an immediate threat to the Dollar."

Will all this economic nonsense - unbacked paper currencies, massive printing (QE) of currencies, gold price manipulation, unregulated derivatives, out-of-control deficit spending, creating more debt to solve an excess debt problem, and so on - work out well for anyone except the financial and political elite?

Jim Grant: (link)

"I think the odds against a painless, peaceful and placid exit from all of this dollar, yen, euro and pound sterling creation, the odds against returning to something like normalcy, are very slight indeed. Therefore one ought to think about assets that will hold their value against money."

So what do we do to prepare - to "prep" for the coming paper currency disaster?

Arabian Money: (link)

"What you want to buy is an insurance policy against this coming catastrophe and preferably one that does not have a third party between you and your money. Gold is the ultimate money in times of chaos."




GE Christenson

Author: GE Christenson

GE Christenson aka Deviant Investor

GE Christenson

I am a retired accountant and business manager who has 30 years of experience studying markets, investing, and trading futures and stocks. I have made and lost money during my investing career, and those successes and losses have taught me about timing markets, risk management, government created inflation, and market crashes. I currently invest for the long term, and I swing trade (in a trade from one to four weeks) stocks and ETFs using both fundamental and technical analysis. I offer opinions and commentary, but not investment advice.

Years ago I did graduate work in physics (all but dissertation) so I strongly believe in analysis, objective facts, and rational decisions based on hard data. I currently live in Texas with my wife. Previously, I spent 20 years in Barrow, Alaska, the northernmost community in the United States, 330 miles north of the Arctic Circle.

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