I am not giving you investment advice. I am giving you preparatory advice related to self-preservation. Fools will think that the growth of commodities means that there is a recovery under way, because they just look at aggregate, end justifies the means, numbers. Common sense will show you that the replacement costs of goods is not returning a profit. This means that there is not a recovery. It does mean that their is inflation.
People just don't understand the role of money in an economy. Money is a store of value that creates liquidity (a flow) in the exchange of goods and services. Money, in and of itself, holds no value. It is the economy (the marketplace) that it represents that creates money's value. Our economy is deplorable, because we have not taken care of it. We allowed Bankers and Politicians to take care of it and they have taken care of the economy to the extent that it suits their own purpose. This holds true at every level of our governance. The dollar is supposed to be a store of value for the public trust of the United States of America.
When our nation was strong and our people were strong, then our economy was strong and thus the Dollar represented the prestigious stature of this nation. We built respect based upon our values that were represented by the Revolutionary War, World War I, and World War II. That is what earned us the right to have our nation's store of value become the World's Reserve Currency, because people trusted the United States to be a nation of its word to go along with its strength, power, perseverance, and most of all its benevolence; but all of that has changed now.
We have been stripped of our stature by the Confidence Men who sold us the bill of goods that we could have everything we wanted and not work for it. We can have trinkets up front and never pay for them or pay for them on our own time. We can expect to retire at a decent age and not worry about how to save for it. Someone else can pay for our healthcare and other social needs. They promised that they were going to take care of everything and we didn't need to worry about the details or pay attention; Just Trust Them. And in the end who is to blame for the economic debacle laid before our feet? It isn't the Confidence Men that sold us lies that we never should have believed. They just sold us what we wanted to buy. We were the fools who bought it all and stood by and watched our birthright and legacy be pillaged and plundered in short order. How shameful to have wasted what took generations of sacrifice and perseverance to build. The Bills are coming due and the Confidence Men won't be the people paying them. It will be you and I.
We can right this wrong eventually, but not if we never recognize and rectify the wrong. Oh yes, there will be pain, but it will only be worse the longer that we fail to act. Most people still don't even recognize the financial trouble and instability that we are in. Have you bought gas or been to the grocery store. What do you think is going on?
I wish that I didn't know what was going on, because it is depressing. But, I believe there is a reason why I am here and I am doing this. I hope that I am reaching a few people who can help make a difference and soon we can turn the tide. I need help. I need your help. You can help. Read below to see what I wrote over two years ago and see if it doesn't make sense and if it does, then please speak up and spread the word, because we are in this together, whether you like it or not. And may God's Peace be with you!!!
1) Get out of short term debt - You should be in no more short term debt (credit cards) than what you can pay off immediately. I believe that 5% of your take home pay would be about the Maximum amount of debt you should be carrying in this recession. If you get laid off, then you can easily pay that off.
As inflation rises, the adjustable interest rates on short term debt will also rise. You could very well see 20%+ interest rates on credit cards (if not way higher than that). How would you ever pay these debts off, if that were to happen?
2) Keep cash on hand and tuck it away somewhere that no one can find it. I am not saying that banks will go bust like they were in the 1930s, but on March 5, 1933 Franklin Roosevelt (the day after being sworn into office) called a 4-day bank holiday. The banks were closed and people could not withdraw cash from their accounts. Some people say that this same scenario nearly played out last September. What would you do if the bank was closed for a week or two? Remember the gas shortage last September and how everyone panicked?
3) Put some of your money in precious metals. Most of us can't afford $1,000 an ounce gold, but we can afford $14.50 an ounce Silver or even cheaper Copper. These metals will hold there value during inflationary times. In 1980, during the last inflationary period in the U.S., the price of gold spiked to $850 an ounce in 1980 (an equivalent of $2,178.05 in today's dollars). The same year Silver spiked to $48.70 (an equivalent of $124.79 in today's dollars). U.S. Inflation Calculator Link
I am not saying that we will see those levels in the coming year, but unless our government gets its spending under control, I believe we will burst through those levels by the end of Obama's first term. At the end of the year 2000, the Dow Jones Industrial average was trading at 39.5 times the price of Gold and 2,345 times the price of silver. Today the DJIA is 7.17 times the price of Gold and 494 times the price of Silver. This has all been brought about by the tanking of the U.S. Dollar. Until our government starts reigning in the ridiculous spending and comes back towards fiscal sanity, it is time to get out of our currency and into something real.
4) Be Thrifty and quit wasting your money - Don't throw things away unless they have no value. Eat at home, use coupons, share meals with your friends and neighbors, look for cheap entertainment, turn that heat down, use the fan (instead of the AC), and consolidate you trips when driving. This is not the time to throw money around. It is time to spend wisely.
A good investment would be to buy dry and canned goods in bulk. Remember the price increases last year during the fuel run up? Buy these goods and store them for the rainy day. If that day never comes, then you can use them; but if a truly inflationary period does hit, then you will have bought yourself some valuable time.
5) Grow a garden. The only thing that this will cost is the money for a few tools, the cost of some seeds, and some labor. You will be handsomely rewarded. You'll have something to eat to get through the summer months and you can can, freeze, or dry this stuff to get through the winter. This will help you get outdoors and get some exercise. You can be basic or elaborate. That is up to you. The deal is that this will save you money, when your budget gets tight, and that is money that may be needed elsewhere. You can also barter these vegetables for other food or maybe to get something else. Growing a garden creates value.
6) Secure your house. Crime is naturally going to increase. You need to get deadbolt locks for the doors and hide your valuables in safe, secure places. Don't flaunt what you have. You need to be humble and thrifty. Be aware.
7) Get to know your neighbors and look out for one another's well-being. This goes hand-in-hand with number 6 and maybe even number 5. One thing that we have lost in the age of gluttony is that sense of community. Neighborhood Watch will be very important if times get tougher and we will need to look out for the elderly, who will become very vulnerable as their fixed incomes are attacked by inflationary dollars.
8) Pay attention to what the Government is doing - It is time that people figure out that the condition our economy is in today is a direct reflection on the economic choices that have been made by our leaders and the bureaucracy over the last 40 years. No one expects perfection, but we also should not expect utter incompetence and/or corruption either. It is time for accountability.