International news is now filled with commentaries on the world’s slowing economy. The fact of that event is beyond question, but the cause has now become a subject of broad speculation. Yet, its far more important for us to understand the true effects of this event on our personal lives. More than that, we need to know what we should be doing in order to defend ourselves against a world in economic contraction. These effects include a slow-down of meaningful employment, along with a persistent fading of existing jobs.
Worse still, as this current economic tsunami approaches, we face the greater dilemma of a monetary disaster which had begun at the end of World War II. The chart pictured above is drawn directly from a similar chart created by the U.S. Treasury Dept. four years ago, and the noted inflation rate since then, worldwide, hasn’t slowed. It is a “geometric” inflation – which means that as time goes on, the rate of that inflationary increase can only speed up, with time. Why? Because the presses of governments are churning out money faster and faster, and as time goes on. The proof of this truth is seen in the fact that now, four years after this chart appeared, the present U.S. Federal money supply (and debt) are now pushing 23 trillions – that’s 23 million, MILLIONS.
What can we do about it? The simple answer is – nothing! But what we CAN do is to instruct ourselves in what these facts really mean – to ourselves, to our future and to the future of our children.
First, understand that World War II was the most costly war in human history. So that at the end of it, nearly every nation’s vaults were virtually empty. The only way open to them, if they were to rebuild a war-ravaged world, was to put an end to the world’s Gold Standard. Thereafter, the monetary world would be based on worthless paper! So it is, that from then on, the world has seen a 5000% monetary inflation (see the chart), which shows this inflation rising at an ever-faster pace. Gold and Silver, by then, stopped being money and became “commodities”. No one understood what it meant, when in the late 1960s – for the first time in 3000 years (with cost as the driver) no government on Earth was striking silver street-coin. The end of that massive demand for silver, then crushed the price of that metal to $3.00 per ounce, as the ratio to gold pricing rose to as high as 80:1.
In recent decades banks and governments have bought up Gold, against a time when the world’s inflation would reach a point where paper money – and everyone’s personal savings – will become WORTHLESS. You could then find yourself with a savings account full of money, and still not have the price of a soda pop. That’s when people will finally come to understand that saving “dollars” for their old age, was a bad choice. When instead, silver and gold had a proven record of securing one’s “buying power”, a quality which stood for 3,000 years – no matter what happened in the world!.
A final anecdote:
Back in the days before World War II, a U.S. $20.00 gold piece contained nearly a full troy ounce of pure gold. That gold piece, of course, could be traded for $20.00 in silver street-coin. At that time as well, any combination of U.S. silver street-coin, adding up to twenty-dollars held about sixteen troy ounces of silver. Therefore, in monetary terms, one ounce of gold was equal in worth to sixteen ounces of silver. Yet that ratio of 16:1 was not unique to the United States. It was, in fact, a universally accepted ratio of worth, that was honored by every nation on Earth. The fact was that it had to be!
Why? Suppose, for example, one country had a ratio of 20:1, while it’s neighbor’s ratio was 10:1. It wouldn’t take long before a fellow in the “10-1″ country took his ounce of gold to the “20:1″ country where he could exchange it for twenty ounces of silver.
Then, of course, he’d head back to his own country to trade his new-found twenty ounces of silver, for two ounces of gold. Then, once more, he’d be back in the 20:1 country to exchange his two ounces of gold for forty ounces of silver – and so on. It wouldn’t take long before all of the gold would wind up in one country, and all of the silver, in the other.
Now consider that in that future time, when the world’s paper money has turned to confetti, and the world’s governments are forced back to silver and gold street money, if they expect their societies to be able to function, what can we suppose will be the universal ratio in the “buying worth” of precious metals, then? Since that original ratio had been set in response to the “natural relative abundance” of precious metals, that ratio is certain to drop from the present 80:1 to the more “natural” 16:1
What this really means is that while it now takes 80 ounces of silver to buy an ounce of gold, in that future time, that 80 ounces of silver will get you more than four ounces of gold – so that when the buying power of gold goes through the roof, the buying power of silver will rise more than FOUR TIMES FASTER – FOUR TIMES HIGHER!