Financial Survival The financial system of the United States is in the early stages of a complete meltdown and the vast majority of Americans are completely unprepared for it. Have you come up with a plan for financial survival when TEOTWAWKI ("the end of the world as we know it") arrives? Perhaps you think such talk is alarmist. Well, before we discuss what you should do to prepare, let's take a look at the state of our financial system. First of all, the total of U.S. bank failures in 2008 was 25, in 2009, 140. So far in 2010, 120 with over 100 more "on the wire". Only three banks failed in all of 2007. So, I hope you can see that this is NOT a good trend. But perhaps you may think this is just a temporary trend. After all, the U.S. economy has certainly hit bumps in the road before and recovered well enough. Well, unfortunately this is not just the downside of a business cycle. What we are facing is the complete unraveling of a financial system built on a mountain of debt. The reality is that any major currency not backed by gold in the history of the world has eventually failed, and the actions currently being taken by the U.S government and the Federal Reserve are speeding up the day when the dollar will collapse as well. Sometimes words are not enough to describe a really bad situation. Hopefully the chart to the left will help all of you get an idea of what is happening to the dollar. This chart originally comes from the Federal Reserve itself. The chart shows the U.S. monetary base from 1960 until today. From 1960 until about 1980, the amount of currency in circulation was increasing, but it was fairly stable. From 1980 to the middle of this decade, the amount of currency in circulation just exploded, but the key to this chart is the end. If you look at what is happening today, the amount of dollars in circulation is absolutely shooting through the roof. Now, a lot of this cash which the U.S. government and the Fed have injected into the economy has not gotten into the hands of the person on the street yet, so we are still experiencing the beginnings of a deflationary depression. But eventually all of the money they have injected will get out there into the general economy. When that happens, there will be a whole lot more dollars in circulation than before but about the same number of goods and services. Do you know what happens when that situation exists? Inflation. Big, frightening, hair-curling inflation. The reality is that because of what the U.S. government and the Fed are doing to the dollar, we are going to be facing rip-roaring inflation of a kind that Americans have never known. And it will effect everyone For example, maybe you make good money now, but how far will your paycheck stretch when a loaf of bread costs ten dollars? Perhaps you have spent decades sticking money in a bank account. Well, inflation acts like a massive tax. When you wake up and your bank account only buys half of what it could buy the year before, how will you feel? There is no other way for this current economic situation to play out. The U.S. government and the Fed decided to spend their way out of the current economic crisis by cranking up the debt spiral one more time and by devaluing the dollar. So we will see massive inflation - it is just a matter of how soon it will hit and how bad it will be. So what should you do?
The truth is that you should buy what you are going to need during an emergency (food and supplies) right now while your dollars still have some value. Your dollars are never going to be more valuable than they are right now. If you are trusting in a big bank account to be your security blanket in the future then you are going to be very disappointed as the dollar crumbles and your riches quickly fade. A wise general once said that almost all battles are won ahead of time. When the economy completely crashes, it is those who have a plan and are prepared that will come through things smoothly. |