Man the Life Boats

In the past I have written quite a lot about public policy. I am going to be a lot more practical today. I am not going to warn you about the gigantic policy blunders that our rulers have made. Instead, I am going to advise you on specific steps many of you can take to protect your families against the soon-coming consequences of these mad blunders.

If I could use an analogy, I am going to quit trying to rally my co-passengers on the Titanic to elect new captains who will change the ship’s course. The ice-berg is about to be hit and new captains, even if any with sufficient understanding were available, can’t steer us away in time to avoid the collision. So rather than rally my co-passengers to steer clear of the ice berg, I direct their attention to the location of the life boats so that they might escape some of the consequences of what is about to happen.

My advice is not so much to the very wealthy, who may get through the storm in any case. Nor will it work for those poor already too far in debt to have anything left to salvage. I wish all people well, but it is the middle and working class, those who have been most betrayed by these policy blunders, that can most benefit from this advice.

The key thing to understand is that the dollar is doomed. A wise response to a collapsing currency is at the heart of my counsel. From the inception of the Federal Reserve System in 1913 to today the dollar has lost over 95% of its purchasing power. That’s about 100 years. I roughly estimate that it will only take about 10 years for the current dollar to lose about the same amount of purchasing power- if the dollar even lasts that long. In other words, what you can buy for a nickel or a dime today will require a dollar in just ten years from now. That means gasoline at $25 or even $50 per gallon. It means electric bills ten times or even twenty times the amount on the statement you opened last month. The same thing goes for groceries and other essentials. We have already seen significant inflation in food prices over the last year. Expect that to accelerate.

As hard as that may be to accept, something very similar has happened to every other country in history which has conducted its fiscal affairs in the manner in which our rulers, Democrat or Republican, have conducted ours. Those with good sense are not in a position to alter policy, so what do we do to protect ourselves from government incompetence?

Job one is to have savings that are safe. Savers are being punished by artificially low interest rates on CDs. Saving is good, but dollars are losing their ability to store value. Convert dollars, as you can spare them, into silver or gold. They are real assets and they will hold their value even when those pieces of paper backed by the “full faith and credit of the U.S. government” lose theirs.

I feel that a modest household should own at least 50 ounces of silver. You can get it (in shops or online) in handy 1-ounce rounds, old coins from when the U.S. government issued real money, or special new coins whose face value is far below its actual value in precious metal that they issue today for “collectors.”

Next week I hope to talk about what to do about land, houses, mortgages, and credit card debt.