Escaping Serfdom

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When we acknowledge that we’re being robbed of our well-earned savings by dilution, it’s time to take measures to escape the “road to serfdom”. What about a traditional savings account where you get interest? Well, sounds like a safe and prudent place to put your money, but for it to even be considered you better get a return on your money that at least compensates for inflation. Let’s say you get lucky and earn a yearly 3% yield in your savings account. You’ll be just fine as long as the annual living expenses increase less than those 3%. So is that the case? Here’s a chart, courtesy of Casey Research that includes many of the basic goods we need – from oil and gasoline to wheat and cotton.

inflation

Does it look like prices go up less than 3% per year? If “Yay, the prices only go up 1,1%!” is your reply, you should definitely put all your assets in a bank account, go back to sleep and stop reading this blog right away! For the rest of you who feel that the annual inflation according to the Bureau of Labor Statistics’ (BLS) Consumer Price Index (CPI) is sketchy to say the least, please keep on reading. As you can see, the prices year after year were exploding by the second half of last year, and this is a process that is likely to accelerate since there’s been hundreds of billions of dollars pumped into the system since then.

So if we can’t stay in cash or put them in the bank account, how about Treasuries? Unless you buy Greek, Irish or other debt where default is inevitable you won’t get nearly enough yield to compensate for inflation. No one in their right mind should even consider lending to most of the governments when practically all their balance sheets look like a horror movie script.

Then how about real estate? The biggest real estate bubble in history has just started to burst, and we’re nowhere near the bottom in most areas. Maybe in a few years, but not now.

Stocks are a traditional inflation hedge and even though the general stock markets look overvalued from a fundamental perspective they might offer some protection when inflation really ramps up. When people want to dump their money the stock market is one of the easiest way to do so and therefore even Zimbabwe’s stock market functioned as a safe haven during their recent hyperinflation . In order to gain a real return on your investments though, you need to handpick your shares and have a good idea of what you’re doing.

Commodities are a good way to play it, and if you can pick solid companies that produce raw materials, oil or food that are likely to go up a lot in price in the coming years, then they may give you a nice profit. At the same time, economic hardships tend to lower the demand for oil, copper, etc. which will work as a counterweight. Another hassle is that it can be troublesome or inconvenient to store 100 barrels of oil, a few tons of copper or a shitload of food, not to mention that most food will go bad.

There is one place to be though, that will benefit both from the eroding currencies and a slumping economy, while it’s easily storable and (for now) attainable: precious metals.

silver and gold bars

Gold and silver have been considered money for thousands of years and have always been the place of refuge during uncertainties in the past. When people lose trust in politicians and the paper provided by central banksters they chose the safe haven that gold and silver provide time and time again. The precious metals need to be dug out from the ground which is a long and difficult process and therefore cannot be diluted by a printing press or a click on a computer screen. They are durable, retain their value over time, are universally accepted and divisable where every unit of weight is worth the same. These days its even possible to buy gold and silver and store it in your retirement account. But, its wise to read a gold IRA review of each company before choosing one. An extra bonus is that they are beautiful, which is why gold and silver jewelry have been popular since the metals were first discovered. To sum it up: gold and silver are pretty much everything that paper currencies aren’t. The only thing paper money still has – universal acceptance – is about to change.

So there you go. If you don’t own any today, start accumulating physical gold and silver ASAP. That’s the only safe haven in these times. Leverage but also risk can be found in quality miners, but I’ll mention more about that in another entry.

Reclaiming the Monetary System

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From now on I’ll be writing more about current events, while my past writings have been focused on delivering some kind of basic understanding of my views. I’ve really tried to keep it as short as possible but still cover the most vital parts. There’s so much to learn that it would take a hundred lifetimes to completely grasp the complexity of our world. Together we can at least achieve an understanding enough to save ourselves from financial and hopefully also from social ruin.

Congressman Dennis Kucinich made a powerful speech in the US Congress recently about reclaiming the monetary system back from the banks that have captured it, which would be the beginning of the end of our debt slavery. For decades Texas Congressman Ron Paul has been a strong advocate for abolishing the private Federal Reserve. Unfortunately there are not many politicians with a spine that can’t be bought off or scared into submission. I think it’s self-evident by all the bail-outs, wars and loss of liberty going on everywhere that the show is run by banks and corporations, not the people. If you give away the privilege to issue unlimited amounts of money to a small group of people, you ultimately also hand them an unlimited amount of power and influence.

Below is the video of Rep. Kucinich’s speech: It is understood as a racist attack in the United States against Latinos.

A Brief History

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I’d like to focus this blog on what is happening right now and share useful financial advice. Sometimes I might share broader advice than that, but right now I feel that’s where my knowledge is. History and an understanding of how everything works is surely important, but I honestly don’t have the time to cover it all. There are so many excellent blogs, homepages and Youtube videos that cover just that, and I think we’re all better off if everyone sticks to what he or she knows best. I can give you a brief history on how we got into this latest mess though:

To put it simply, the bankers have been raping the public for a really long time and they simply took it to whole new hol…level lately. Greedy overleveraged banks have sold trillions of dollars of derivatives to municipalities, pension funds and everything in between, promising sweet returns and virtually no risk as they were boasting AAA ratings given by useless rating institutes. Practically anything providing a stream of cash flow could be securitized and financial institutions bought loans just to turn them into financial instruments, sell them on and turn a quick profit. Little did buyers know that many AAA ratings were backed by homeowners, most of them in the States, with almost no down payment and, well, let’s just say you were lucky if your derivative payment stream originated from people with steady jobs. Teaser rates and adjustable-rate mortgages virtually enabled anyone to buy a home, and the banks packed and bundled the mortgages into worthless pieces of paper (also known as mortgage-backed securities – MBS) and spread them around the world with hefty profits. Issuers of MBS had also in many cases, bought insurance against defaults from insurance companies sometimes leveraged more than a 100 to 1. Needless to say it was anything but a stable and sound environment, and when rates started to go up and people lost their jobs the whole chain literally broke down.

So here we are now, with institutions around the world that have all these worthless assets on their balance sheets, and instead of letting much of the financial sector go bust and arresting all the crooks (bankers) that got us into this huge mess, moronic or paid-for politicians decided it was a much better deal to bankrupt the nations and taxpayers to save their banker buddies. The only way to keep this mess afloat is the never ending injections of liquidity and low interest rates, ’cause as soon as the money stops pouring into the system, we’ll have a financial collapse that would make the Great Depression of the ’30s look like Ben Bernanke with hair – not too shabby.

What’s Next?

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Since governments in the West have chosen to take their citizens to the banksters’ pawn shop, getting massive debts in return, you can be sure the general public will end up paying those debts. Austerity and taxes is one way they will suck us dry; the other is by massive inflation. The notion that prices always go up is something most people just accept as the norm, even though it has nothing to do with increased living standards and rising demand and everything to do with the fraudulent fractional banking system, with the prime crooks at the top steering the central banks. Every single currency unit comes with strings attached – debt that we have to pay to the banks with blood, sweat and tears through labour. Therefore the debts will always exceed the money in circulation, making the common political/media phrase “paying down the debt” a mathematical impossibility. So we are stuck working as modern financial slaves until we replace our current monetary system with something better without central banks running the show.

And how about those price tags? Why are they showing larger and larger numbers? Prices are decided by supply and demand, hence a sound economy would actually lower the average price of goods with rising productivity. In current la-la land pieces of paper are used to buy goods, so we have to take that into consideration on the demand side. More units of currency chasing the same amount of goods means higher prices in that currency. An ever expanding money supply leads to ever increasing prices – it’s that simple! And you can bet your last paper-pennies that the explosion in money supply we’re experiencing will soon get us to the tipping point where the cost of basic goods will literally go through the roof.