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Understanding Debasing Currency & How To Protect Yourself From It

Silver Bullets
  • Who and What Will You Trust? Government Lies or your Own Instincts?
April 2, 2013 7:56 am est

Reminder: One week from today, April 9th at 8pm EST – 5pm PST The Silver News Surfer will be hosting our live “Executive Lifestyle Summit” Dedicated to your Health, Wealth & Success with my special guests Dr. Sonya Young and Mitch Steitz… Mark it on your calendar, you don’t want to miss it!

Today is the first part of a four part series that is dedicated to achieving your goals of preserving your wealth, protecting your purchasing power and creating generational wealth through the knowledge I will present to you here this week. Only through the facts, can one make an educated decision as it relates to anything, especially your investment strategy.

As noted yesterday, there are 4 major components that warrant every investor to acquire physical precious metals in their portfolio and they are debasing currencies, inflation, geo-political tensions and supply & demand and today we will start out with debasing currency. Although history is fun to reflect on, If you study it long and hard enough, it tells signs to our future and if we are prepared enough by observing history, we will become the new wealth of the new age!

On to the business of protecting your wealth…

As simple as it seems, we all realize that when money is created without anything backing it’s value (such as gold was before Nixon took us off the gold standard) there is no value.  In fact, as you can see in this chart below, the US dollar has lost significant value since the birth of the Federal Reserve in 1913.

shrinking-dollar

Today, Central Banks across the globe are in a race to debase their currencies at the cost of it’s citizens in this generation and multiple generations to come. This has been an experiment that has gone bad each time it has been tried and we see that throughout history starting with the Greeks. You see, The ever genius tax men of Athens discovered that if you take in 5,000 gold and silver coins from the masses, melt them down and mix in 50 percent copper, you now have 10,000 new coins to spend! Now you can see where the old saying “the more things change the more they stay the same” comes from. And with that said, the advent of currency debasement and devaluation was born.

Over the next few years the public took notice, and exception, to the rip-off and their now devalued currency became practically worthless. Only those who held on to the original pure gold and silver coins were left with any real purchasing power making them of course the richest of the land.

Then the Romans also tried it: The Roman tax man outsmarted his Greek predecessor when he figured out that you can print the same coin as before but stamp and higher value on it and presto you’ve got thousands of more coins to spend! Yes another birth, this time called REVALUATION all of these dirty deeds were necessary for, of course, the funding of more wars and too many social services.

Roman Coin Image By now the currency had become next to worthless and the economy had started to unwind. With a population of roughly 1 million people up in arms the Roman government was forced to hand out free wheat to over 200,000 of its citizens. And here we have another first which we now have come to know as WELFARE (these stories should really start to sound familiar by now).Of course what would any sane government do in times like these? Debase the currency at a record pace and spend more, in effect doubling the size of the government.

Now onto Weimar Germany, which should be on the forefront of everyone’s mind. Why in economic debates raging on right now about which fiscal policies our government should adopt does the story of the Weimar Republic and 1923 WWI Germany continue to be told?

Because the suggestion that hundreds of billions (if not trillions) of dollars in currency be freshly printed and injected into the economy for stimulus is not a new one. And the story of how Germany’s decision to do just that, not that long ago, resulted in one of the worst economic catastrophes of all time and needs to be told. German Woman burning marks In a 4 year period from 1919 to 1923 the Germans economy was bleak.

They were coming off of a very costly war and owed huge sums of money to France as part of reparations negotiated at the end of Word War 1 all on top of the normal cost associated with social services. Not having the money on hand to pay for such things, the German Wiemar government made the ill fated decision to simply create massive amounts of German marks out of thin air and put their printing presses into overdrive. At its peak, the government was churning out 500 quadrillion new German marks per day and in a four year period the amount of currency in circulation rose from roughly 29 billion marks to almost 500 quintillion marks.

As always the premise of injecting more money into a system and giving people more money to spend sounds like a good idea, unfortunately there comes a heavy price tag for such policies, as the Weimar Republic soon would find out. German mark It didn’t take long for the public to lose complete confidence in their currency when the masses realized that the money that they had worked so hard to save had just lost 90% of its purchasing power once the newly printed money found its way into circulation. With hyperinflation firmly in place the price of common items soon became astronomical.

A pair of shoes once costing 12 marks was now priced at 30 trillion marks; eggs once going for less than 1 mark were selling for billions of marks. And of course gold rose from 100 marks per ounce to 87 trillion marks per ounce. The incredible story of the rise and fall of the Weimar government will be told for centuries to come and used as a classical example of how financial ruin can come to any great government who dares defy certain economic principles. As always it is not wealth that is destroyed but it is simply redistributed to those that know how to read the signs and adapt to changes that not only survive but reap the rewards…

Conclusion:

As you can clearly see, history does indeed repeat itself even though the mistakes of printing money are written in stone throughout our history.

It is the control of the governments and the central banks that have us in the debacle we are in right now and the most surprising fact to me is that there are so few of them and so many of us… why do we let them get away with it?

These are extraordinary times we live in folks, but it is the action we take today that determines our outcome and our family’s outcome and the choices are left up to you…

Do you want to wait and see what happens because these governments and central banks who are working together are telling us everything is OK? Or do you want to wake up and see it is just history repeating itself and this time, with the knowledge and resources that are available, you can preserve your wealth, protect your purchasing power and create massive generational wealth so your family name can live on long and strong!

Stay tuned tomorrow for the series on the issues on money printing… INFLATION. Please read these related “current” articles on the fate of the US Dollar!

Either way you look at it guys… This spells massive trouble! Do not let “them” fool you into thinking everything is A-OK – It’s very far from OK!

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Thanks, World Reserve Currency, But No Thanks: Australia And China To Enable Direct Currency Convertibility

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May Health, Wealth & Success be Yours!