This article was first published here on 15 December 2008.
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 easily find out how by searching on the internet.
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 –
Spread the word.