05.19.11

Invest in fertilizer, uranium, gold

Posted in Fiat money fear and loathers at 7:54 pm by George Smith

From the Pennsylvania Pocono Record, a very small town newspaper, a columnist goes fiat money crazy:

It is not hard to imagine a scenario in which the dollar would get so weak that it would have to be replaced with another currency at some point.

This scenario has been played out numerous times in Brazil, Argentina, Germany, Zimbabwe, et al. For those who think it can’t happen here I would suggest you wake up now. Although past occurrences are not a guarantee that this will happen in the future, the exact situation that we face today was faced by these countries before their currencies imploded. They had bills they couldn’t pay and printed money to create the illusion of normalcy for the population. According to the Federal Reserve, we are printing $1.6 trillion just in 2011 while our economy is actually spending $1.3 trillion less than we were three years ago, according to the Federal Reserve statistics of private sector borrowing …

That $1.6 trillion is creating an illusion of normalcy but we are still mired in a depression. Yes. I said depression. The real unemployment rate and real private economic numbers bear that statement out.

So the main question is how to hedge against a loss of purchasing power.

This is not an easy question. We have to worry about whether the Fed may grow a conscience and actually stop printing. I doubt it but we have to be aware that they are capable of anything and plan accordingly. In a scenario where they do slow down I believe it would be short-lived. Don’t forget there are elections next year.

Because I do believe we may see some weakness in the summer, I believe that we have to add new positions in a prudent manner. Buying and holding gold, silver, and international bonds can be a hedge against loss of purchasing power in the dollar. I look at these as my “core positions.” Oil, natural gas and uranium producers as we speak as well as food commodities and companies that produce fertilizers can be incorporated into a portfolio to also help combat against a loss in purchasing power …

I know that this sounds dire and for most people it will be …

White coots and cranks bid for the Zimbabwe trillion note on eBay:

House Budget Committee Chairman Paul Ryan (R., Wis.) and Stanford economist John B. Taylor are among the new owners of Zimbabwean bills. Each keeps one in his wallet, brandishing it at opportune moments …

Comments are closed.