The Catastrophic Effects of Inflation

by | Jul 13, 2010 | Precious Metals | 11 comments

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    The following article has been contributed by Niall Devlin.

    Editor’s Note: For the last several years there has been a regular debate between the deflationists and inflationists about where the economy is going. It is clear that the amount of credit outstanding in the system will have to be unwound and unserviceable debt will have to be cleaned out before any economic recovery will happen. The broad view from deflationists is that there is so much credit in the system, that the government’s current stimulus plans are simply not enough to offset the collapsing debt – this is one of the reasons that Keynesian economists like Paul Krugman advocate the spending of Trillions of dollars. Krugman, Bernanke, Geithner and the rest of the powers that be are well aware that our economic and financial systems are under extreme deflationary pressure that could lead to a stock market collapse, an economic contraction and severely falling prices. Deflation is knocking on the door. The unknown variable in the equation is how far is our government willing to go to induce the opposite effect, as George Soros has recommended. The government simply cannot sit idly by and do nothing (which would likely be the best medicine).  If history is any guide, government will do whatever is necessary to “save” our system. Though it is impossible to predict exactly what the government will do going forward, and thus, it is impossible to determine if we should expect deflation or inflation during this depressionary cycle, we can draw on history to get an idea of what they plan on doing. Historically, governments have always debased their currencies when their costs have gone up and debt became unmanageable. Look no further than these two charts for a historical perspective of Rome and how it relates to the United States today.

    We believe that deflationary pressures will lead to a serious contracting in our economy going forward, which will include lower real estate prices, more job losses, and more personal and commercial credit defaults. At the same time, the government has demonstrated its willingness to print as much money as is necessary to offset, or as they like to say “stabilize” the price collapses. How far are they willing to go? We know that they have no problem spending at least $23 Trillion. So, we have to assume that they would be willing to go all the way and completely debase the US dollar to “pay off” all the bad debt.

    The fact is, that no government currency (fiat) has ever survived. What makes the US Dollar any different?


    The Catastrophic Effects of Inflation

    by Niall Devlin

    A SOBER THOUGHT

    The Debasement or Destruction of value in their money, has led to the decline and collapse of at least 6 major empires throughout history.

    WHY IS HISTORY IMPORTANT?

    • History repeats itself
    • It gives us the perspective we need to correctly understand our day

    INFLATION TODAY

    • Governments Enact Favourable Banking Laws
    • Banks Create New Money Through “Credit Expansion”

    WHAT DOES INFLATION DO?

    • Inflation Erodes Savings and Destroy Wealth
    • Inflation causes Artificially High Asset Prices
    • Inflation causes Mal –investment
    • Inflation causes Unsustainable Debt
    • Inflation causes Poverty through Deflation

    MONEY, HISTORY AND GOLD

    • 5000 years of Monetary History
    • Money is the barometer of the Health of all societies (ethical & moral)
    • Money has a Repetitive Cycle
    • Inflation – monetary phenomena is the number One cause of loss of wealth
    • We have been living in a time of extreme monetary Inflation

    UNDERSTAND THE LIFE CYCLE OF MONEY

    1) Free Market emerges
    2) Free Market Money develops (gold and silver)
    3) Government becomes involved in Free Market Process
    4) Government monopolizes money and supply
    5) Government debasement of money
    6) Confidence crisis and Collapse
    7) Gold and Silver re-emerge as Free Market Money (cycle continuous to repeat)

    A SOBERING THOUGHT

    • Inflation Erodes Savings and Destroy Wealth
    • Inflation causes Artificially High Asset Prices
    • Inflation causes Mal –investment
    • Inflation causes Unsustainable Debt
    • Inflation causes Poverty through Deflation

    The value of money is going down!!

    PROTECTION FROM DEBASEMENT & INFLATION

    • Gold & Silver maintain stable “Purchasing Power”
    • Gold and Silver only money that is not simultaneously someone’s debt.
    • Gold and Silver has functioned as money for 5000yrs.
    • Gold and Silver always been the King of Assets and Asset of Kings
    • Gold and Silver always been universally recognizable
    • Gold and Silver have always been very liquid
    • Gold and Silver have never suffered a confidence crisis
    • Gold and Silver always free market money of choice
    • Gold and Silver Geo-political and Financial “barometer”

    The article above has been contributed by Niall Devlin. Niall is passionate about gold, silver, wealth protection and sharing the message -the truth about money and the biggest financial deception known to mankind, Albert Einstein put it nicely “Gold is money, paper is not”. Visit Niall Devlin’s Wealth Protection and Creation web site.


    Editor’s Summary: It is clear that the long-term result of all government backed currencies have led to either debasement of the currency system in question or a complete default. We can expect something similar with the US dollar, though it is impossible to provide a time frame. In terms of gold, we know this particular asset has always served as money, especially during times of crisis. Niall Devlin is spot on in his suggestion that gold and silver are geo-political financial barometers. We pointed out in Gold and Silver – Will They Protect You? that precious metals rise not necessarily during times of deflation or inflation, but rather, during times of crisis. We can’t be certain of the exact direction of asset prices in the near- or long-term, but we can be fairly certain that the world is in crisis today. We encourage our readers to consider gold and silver as a way to help preserve some of your wealth and prepare for the possibility of coming catastrophe.

    URGENT ON GOLD… as in URGENT

    It Took 22 Years to Get to This Point

    Gold has been the right asset with which to save your funds in this millennium that began 23 years ago.

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      11 Comments

      1. Scar

        What I get out of pitches..um, I mean articles… like that is “buy gold-buy gold-buy gold”. Inflation coming-buy gold. Deflation? buy gold. Your mother in law is moving in with you? buy gold. An asteroid is going to hit Earth and kill everyone? buy gold- buy gold. Jeez, enough already!

      2. Goner

        When everyone is tapped out, no one will buy your gold.

        Buy a 5 acre hobby farm and arm yourself to the hilt.

      3. Jeff

        I appreciate the article Mac.  I see no advertisement on this site for coin / bullion dealers so I’m not sure how one could question your intent and even if there were ads for PM here, it’s good information for most visitors nonetheless.  Thanks.

      4. Paul Revere

        Agree Jeff.   Some idiots will have to die for their obstinance and ignorance.  No way around it.  They’ll be churned into the earth with the rest of their kind by way of a FEMA CAT D-8 and laid to rest in common graves.   

        For the rest of us there’s gold, guns, grub, our patriotism………… and if you planned really well……. a few cases of Crown Royal as a reward for prudently acting on your foresight and on the advise of Mac Slavo.     

      5. admin

        Appreciate the comments folks… The article above is written by someone other than myself, though I did add the editor’s notes.

        The only gold ads one might see on this site would be auto-displayed ads from Google Adsense. Full disclosure: this web site generates revenue via these advertisements.

        We also generate revenue from the preparedness products advertised in the right sidebar.

        Gotta pay the bills folks, and SHTF Plan can take up quite a bit of time, so the added income is much appreciated.

        As a side note, I am most definitely pro-gold and silver, as I am pro pretty much anything preparedness related. This web site has been publishing related material since the very beginning, before any ads were listed here.

        Naturally, if we publish content for a specific audience, we will also promote products and services related to the content that we feel may be beneficial for users. Personally, I see absolutely no problem with this, and I am confident most people feel the same way.

        Paul, I think Crown might very well be worth it’s weight in gold… plus, you get that little purple bag thingy which can actually be used to carry whatever gold you might own. That’s a winner in my book 🙂

      6. Hermes

        Jeff,  Mac didn’t write that article and it came from another site. So in a way it really isn’t his opinion, probably just what he felt to be relevant info(Which I agree with a bit of the info myself). I personally own silver, and read enough of Mac’s stuff to know he’s not trying to make any money off of us. However, upon further investigation of the author’s site( Niall Devlin’s site)
        you will notice that the very first advertisement on the site says “Buy Gold and Silver Now!” -When you open it up, look closely at the top and center of this site under you can see where it says, “You are a guest of NIALL DEVLIN – 814424” very clearly. I personally sell silver all the time and have a similarly positive opinion about PM’s as the author. My only point is that your response to Scar was actually incorrect, but I know you didn’t mean to deceive through such.

        Paul, So do you think Scar, Goner, or both of them are obstinate and ignorant idiots? I know people get touchy when others say the almighty “Gold’s” name in vain. But, yeah they’re generally idiots who need to be ground up in fertilizer plants anyway……. unlike myself of course, being that I never say the almighty Gold’s name in vain.  I’m willing to bet that Scar and Goner like guns and grub, and are patriotic Americans as well. So it appears that they have 3 out of 4 likes in common with you , even though they’re gonna be “churned into the earth with the rest of their kind”. (does that make you, one of their kind? having so much in common and all). Peace, man and don’t take gold so seriously or at least not in public.

      7. Hermes

        Mac, following up your comment.

        Honestly, your site deserves revenue. You really don’t have any advertisements here, unless you consider the different preparedness links on the top right. To me this site is here for the reader’s utility and all commercial links are relevant to the content as well as all of our common interests. Keep it coming.

      8. Cynical Optimist

        I’m very much pro PM’s, however my priority right now is food & survival gear.  Next on the list of priorities is guns and amunition.  Then after I have an adequate amount of provisions and means to secure them, I will begin purchasing silver coins and junk gold since the current price of gold per ounce is out of my price range.

      9. MadMarkie

        I believe that “BALANCE” is one of the most important aspects of survival preparedness. You can’t eat gold or silver and get any nutritional content out of either. Immediately after a SHTF situation, nobody is going to be willing to trade anything that they have put aside, food, water, guns, ammo, etc. for gold or silver. After the initial impact on society has had a chance to shake itself out and things have started to stabalize a bit, then gold and silver will be usefull as currency in barter type transactions. Toilet paper may be more valuable in this type of situation than $100 dollar bills.

        Balance your preparations between 1) food, 2) the ability to purify and store water, 3) guns and ammo to protect your family, 4) first aid supplies, etc. Only after you have these in place would I begin to accumulate gold and silver, if you can still afford them.

        God Bless and good luck to all.

      10. lostinmissouri

        Gold and Silver is for after the collapse.  It is for after we reform the government.  Gold and Silver will be the capitol needed to rebuild.
        It is real money, and the only real money that will be able to provide the capitol base of our new government.
        As for cases of Crown, and any other barterable  items;  Yes, they will be necessary for and during the transition.
        My preparations are putting together items necessary to make cheese, wine, whiskey, and growing skills….not necessarily just
        food.   Smoke will trade at a premium.  lol

      11. Hermes

        Lost in Missouri,
        When you said, “Smoke will trade at a premium. lol” Are you referring to cannabis, or tobacco? I guess either way, you’d definitely be right about that. I don’t smoke cigarettes, and frankly I hate the stuff, but it is major money maker for a reason. Violent crimes and homicides would definitely increase if people couldn’t get tobacco for more than a couple days. Quality tobacco seeds and some basic processing know how would be a valuable/lucrative investment.

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