This is a great educational book about real money. Mike reviews the sound principles of money that have endured throughout human history. One thing is consistent and that is that gold and silver are real money. In today’s world of fiat currencies, gold and silver are tools you can use to preserve and protect your wealth. Mike reviews the differences between currencies, real money, and fiat money. Fiat currency is basically paper money that is not backed by anything. We will go into detail on why this is dangerous and the average investor should at least understand the importance of debased money and inflated fiat currencies. With the economic collapse of 2008 along with Ireland, Greece and other countries going bankrupt, we as small investors need to be educated so that we can protect ourselves.
Why is this important to me?
This is important because the largest transfer of wealth is happening right now and that transfer is moving away from the United States and not towards us. This should be a priority if you want to protect yourself and your family.
Various things are going on but 90% of the general public don’t really get it. This is understandable because the noise between the political big heads on CNN and Fox News sidetracks the real issues. The real problem is this: the Federal Reserve is a private institution that is not regulated or audited. They control the financial system. These guys are the quintessential kingmakers who run the country at heart. It is true that Thomas Jefferson was against a central bank in the United States. For more information on this topic, you can listen to Ron Paul. He is the congressman from Texas who is into all this stuff.
The big changes we’ve seen from the Internet boom to the housing crash have been a direct result of the Federal Reserve. Not many people know this and some will complain that this is wrong. The Federal Reserve has been keeping interest rates artificially low, leading to a bloated housing market. Equity debt lax and financial instruments of mass destruction known as CDOs and MBS and other weapons nearly killed the country. Financial education is needed so that we little ones have an opportunity. Read this book to open your eyes. One thing that is not being said in the mainstream media that is more powerful than terrorism is this: If the dollar is lost as the world’s reserve currency, our total standard of living will drop by a minimum of 25%. Right now it’s already hard for 85% of American families. Another wealth transfer could put the final nail in the coffin. Find out.
There is a lot of information in Mike’s book. The history of currency debasement is described in all the great empires, including the Persian, Greek, Roman, British, and now American. Currency debasement, inflation and taxes are the thieves of wealth. If your money is a candle, then taxes and inflation are the flames that burn at both ends.
1. Ingenuity: I am not a pessimistic person. I believe in the strength and determination of the American people. This still doesn’t preclude the fact that we all need to be educated and the only way to change is from the bottom up. There is no way that a top-down government can benefit the country in this way. It is the ingenuity of the iron horse of the American people that will solve our financial problems.
2. Gold and silver: Gold has been money for more than 5,000 years. Her red-haired stepsister Silver has also been known as money. The ratio between the two has historically been 16-1. I have personally seen the spread in the last year go from 80 to 1 to 30 to 1 and back up to about 40 to 1. What this means is that you can buy 40 ounces of silver for 1 ounce of gold. Therefore, silver costs $35 per ounce and gold costs $1,500 per ounce. Now, reality check. Warren Buffett does not invest in gold. If he’s been following any of my book summaries, then he knows I’m a Buffett fan, so let’s look at this. Basically, Buffett says that if he owned all the gold in the world, he would have a 67 foot cube of gold (height, width, length for math beginners). He could polish it and kiss it and sleep on top of it. Instead of the gold cube, he could have half the farmland in the US plus 7 Exxon Mobile plus a billion dollars in cash. He would rather take the latter as I would. Basically, Buffett is arguing that gold HAS NO USE. I agree with him. The silver in the hand is different. Buffett has had money in the past and he may still have some. Silver has utility because it is used in cell phones, computers, smart devices, and medical devices. That’s why I love Silver as a means of savings.
3. Cash Flow Vs. Capital Gains – We do not want to fall into the theory of the great fool and invest in Capital Gains. Well, in a truly contradictory way, silver is a capital gains investment. Regardless, you should look at all of your investments with a synergistic approach. This means that we want investments to deliver cash flow, but we also want our savings to grow. Robert Kiyosaki states that savers are losers. Translated, this means that if you are holding on to dollars, then you are losing due to inflation and currency devaluation. Therefore, you can keep your savings in silver.
Now let’s talk about having “real money” as a wealth lifeline. Note: educate yourself, I’m not saying go out and invest in silver and gold today. I’m saying educate yourself. I personally invest in silver and will continue to do so, but it is very volatile so be informed. Also, I’m not a financial planner and I don’t give advice, so please do your own homework. My goal is simply to help you with that task.
1. The Mountain of Debt: This book was written in 2007 BEFORE the subprime mortgage crash. Even then, the United States was buried in a mountain of debt. Since then, the Fed has TRIPLED the money supply. Thus, that Mountain became Mount Everest. This happened in the last 3 years and that is why the dollar is at record lows in 2011.
2. Unfunded liabilities: Social Security, Medicare, Medicaid… These unfunded liabilities, along with the mountain of debt, simply magnify the problem. When you give someone something and then try to take it back, all hell breaks loose. Take a look at GM. They had to file for bankruptcy, get a government bailout, and renege on all of their unfunded liabilities in order to survive. They are doing quite well now, but the little boy lost his pensions and medical care. Find out my friends. Don’t let other people handle your money… Same goes for the US with unfunded liabilities. Start planning NOW.
3. Derivatives – We mentioned this earlier, but in a nutshell, this is what happened in the subprime collapse. About 100 people sat in the halls and decided to sell MBS (mortgage-backed securities) to investors. The problem was that they were wrapping garbage and spraying it with perfume and selling it as triple-A rated instruments. The rating agencies and the leaders of these companies should be prosecuted. What happened was that a 1-2% move in stocks could kill companies because the leverage was so deep. These guys were leveraging billions to make tens of millions. There are too many zeros for that to work in the long run. As we now know, this was not the case.
To summarize, what does all this mean? This book and others like it will help you take control of your own destiny. It is recommended to keep 10% of your assets outside the financial system. This means that there is no counterparty risk. When you put all your money in the bank and there is a run on the bank and it goes bankrupt, the bank is the counterparty. Holding physical gold and silver as real money eliminates counterparty risk.
I hope you have found this brief summary useful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits are formed in as little as 21 days.
One thing you can take away from this book is EDUCATE. Please open your eyes and take a few minutes a day to educate yourself. You’ll be happy you did.
