When the US unveiled its “Bailout” plans in October and it emerged
that at least $700 billion was to be created, borrowed by the US
Government from its creators, the Federal Reserve, and pumped into the
US economy, many commentators forecast that because of this the US
dollar would plummet on the foreign exchanges.

But they failed to take into account the fact that nearly every other
country would follow the Americans in inflating their own currency as
well, to try and spend their way out of the financial crisis. The
result has been that many currencies have been devalued even more than the US dollar, which as a result has come out of the mess so far
quite well.

The full effects of the madness of the October “bailout” will take
another few months to filter through into the economy at large, both
in the US and in other western countries. When it does, inflation,
which has been artificially kept in check on account of endless
“sales” and “special offers” from the retail sector, itself desperate
to stimulate sales and fend off financial disaster, will take off with
a vengeance.

This will make worse an already dire situation for millions of people
struggling to survive in the face of rising business failures,
redundancies and house repossessions.

How can we protect ourselves from the disaster now unfolding?

We’re all in different situations so only general comments are
possible. Stay away from debt as far as possible. That applies to any
time, not just this traumatic period. Assess your financial situation
realistically and if necessary cut your expenditure on luxuries in
order to balance your budget.

If you have medium to long term savings then consider putting them
into gold. Real gold, and not just gold certificates (which can be
manipulated in the same way as currencies). Currencies can be printed
and thereby expanded at will. This decreases the value of savings.
Gold cannot be printed. As weak governments borrow and borrow to try
to fend off the financial collapse, gold is bound to increase in
value.

It’s now very easy to buy gold. You can find more details here.

And don’t forget to download the classic guide to High Finance,
“Promise To Pay”, by Dr R. McNair Wilson, free of charge from our Home
Page. For an excellent article revealing the background of the Credit
Crunch, take a look at this while it’s still archived by the Times’
web site -

http://www.timesonline.co.uk/tol/news/uk/article4795063.ece

Spread the word.

This entry was posted on Monday, December 15th, 2008 at 10:59 am and is filed under News and Comment on The Banking System Worldwide. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.