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Say Goodbye to the Middle Class

By: Steve Johnson

2/29/2008 - 30 Comments

The decreasing value of currencies around the world is causing a global currency crisis.  Governments are printing money so fast that their currencies are losing value faster than anyone can spend, save or invest it.

The middle class could very easily get wiped out over the next few years. For example, if you have saved one hundred thousand dollars in your 401k or IRA or CD’s, it has lost 15% of its value against gold in just the last two months.  At that rate, your savings will be worth ten thousand dollars at the end of 2008 and one thousand dollars at the end of 2009.  Wiped out!

The Cause of Inflation

At the very center of the inflation problem lies the US economy.  In an attempt to revive the US economy, Ben Bernanke and the Federal Reserve are increasing the money supply so fast that the dollar is losing value with currencies around the world.  But because the dollar is the Reserve Currency of the World Bank and many currencies around the world are pegged to the dollar, each nation is forces to increase their money supply in order to try to keep their currency from rising against the dollar - to protect them from a decrease in economic growth.  The result of this global currency inflation experiment is causing a great number of people around the world to become poor – as their savings are reduces to worthless.

Yet, Federal Reserve Chairman Ben Bernanke told Congress yesterday that the nation is "not anywhere near" the dangerous stagflation situation that prevailed in the 1970s.  Ben is correct, in that, we are facing a lot worse situation then the 70’s. We are approaching an inflationary crisis like never before – on a global level. 

Reference Video: Rich Dad 2008 Predictions - Part 4

Once in a Lifetime

In the 70’s, gold increased 24 times its value, from $35 an ounce to $840 an ounce.  If today’s economy were to follow a similar path starting at $280 an ounce in 2000, then we could see $6700 an ounce by 2010. If you have the stomach for the commodity markets, this could be your once in a lifetime opportunity.

If fact, the opportunity could be much greater today because of the massive increase in paper money available in the world today vs. in the 70’s. There are trillions of dollars that were simply not in circulation as they are today.  As people around the world realize their currency is devaluing, they are piling into gold. The only question that remains is when to sell gold and reinvest in the stock market and real estate.  Gold has the potential to create millionaires.  Hypothetically, if you had invested $50,000 in the year 2000, you might be able to sell in 2010 for a whopping $1,000,000.

(Please consult a licensed professional about your investment decisions, like Peter Schiff at )

Re-Educate the Public

What we really need is a new financial education. Yesterday, Bush said he would veto the proposed congress bailout plan for homeowners, because it would do more harm than good by increasing interest rates. He said people need to understand the financial decisions they make. The problem with that is 'how can they, when they have no financial education'. Most of the US public schools don't teach any financial education, and government social programs diminish the need for financial education and we have just gone through a very prosperous period with easy money coming from home equity loans and credit cards – which also provide little incentive for financial education. The only thing the public has been taught is how to spend money.

Perhaps the government should create a program to re-educate the public with respect to financial matters, by adding classes to high-schools like,

  • Budgeting
  • How to balance a checkbook
  • How to read a bank statement
  • How to manage a credit card
  • How to plan for large purchases

These classes are what we need to re-educate the public about financial matters. If the government wants to create more programs, public financial education would be a good investment.

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The Hyperinflation Survival Guide: Strategies for American Businesses

The Hyperinflation Survival Guide offers strategies for business managers to keep their enterprise afloat in the midst of runaway inflation. Within this succinct little book are a plethora of sensible business strategies for American businesses. If businesses are to survive they must effectively counter and minimize the ill effects of rampant inflation and/or hyperinflation. The utmost prudence is required in managing accounts receivable, inventory, and production at such a time. A sudden inflationary economic downturn may very well bring a business to its knees leading to insolvency.

Gold: The Once and Future Money

Governments and central bankers around the world today unanimously agree on the desirability of stable money, ever more so after some monetary disaster has reduced yet another economy to smoking ruins. Lewis shows how gold provides the stability needed to foster greater prosperity and productivity throughout the world. He offers an insightful look at money in all its forms, from the seventh century B.C. to the present day, explaining in straightforward layman’s terms the effects of inflation, deflation, and floating currencies along with their effect on prices, wages, taxes, and debt.

Freedom: America's Competitive Advantage in the Global Market

Gamble argues that globalization brings far more benefits to the U.S. economy than it takes away. Gamble shows that both Europe and emerging economic powers like China and India have serious long-terms problems linked to their cultures, political structures, occasional instability, and state ownership of companies. These and other factors will eventually put a brake on the economic growth of hot emerging economies. The fundamental protections of property and free speech, a culture that promotes and rewards entrepreneurship, banking policies that make capital easily available, are still more supportive of economic growth and wealth creation than can be found anywhere else.

Rich Dad, Poor Dad

Personal-finance author and lecturer Robert Kiyosaki developed his unique economic perspective through exposure to a pair of disparate influences: his own highly educated but fiscally unstable father, and the multimillionaire eighth-grade dropout father of his closest friend. The lifelong monetary problems experienced by his "poor dad" (whose weekly paychecks, while respectable, were never quite sufficient to meet family needs) pounded home the counterpoint communicated by his "rich dad" (that "the poor and the middle class work for money," but "the rich have money work for them").