Thursday, November 17, 2011

What does a bailout mean for a saver

People save money. The banker uses that money to loan it in good or bad schemes. Lately it has been mostly bad, because there is too much money, and good schemes are always rare. The money is gone, and the bank owes money it doesn't have to the people. The government comes and creates some money out of thin air and pays to the bank. They can do that because it is made of bits, and bits cost nothing. The overall value of the money reduces. So ultimately the money comes out of the pocket of the people that saved, because it is that money that got devalued.

Now the bankers give themselves a big pat on the back for the mess that they created and then pay themselves large bonuses, and so more money goes down the drain.

Meanwhile the value of the money has gone down so price of everything rises.

The USA is in a very interesting situation, because the world uses their money. So when they print money, everybody who saves money, doesn't matter where they live pay for the bailout.

They are going to print again by end of nov or early december. They are short by 2.1 trillion. Your savings will become smaller again.

The only way is to get out of the system. Don't save in the fiat currency, save in commodities or companies that you know are actually sound.

Gold has been performing much much better than the stock market over the last 5 years. Gold/silver are the best commodities for investment.

2 comments:

  1. A very interesting article on Gold
    http://www.kitco.com/ind/Hunter/nov162011.html

    ReplyDelete
  2. http://www.kitco.com/ind/willie/nov172011.html

    ReplyDelete