Friday, September 3, 2010
Bank Day Coming - Taking Advantage of Hyperinflation
By Ray Gano
Bernanke: Shut down banks if they threaten system
WASHINGTON – Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
"If the crisis has a single lesson, it is that the too-big-to-fail problem must be solved," Bernanke said Thursday while testifying before the Financial Crisis Inquiry Commission.
source - http://news.yahoo.com/s/ap/us_financial_crisis_bernanke
Here is a major "telegraphing" of the Fed's intentions. Bernanke is letting people know that a bank holiday is coming, or what I am calling "Bank Day."
Imagine all the banks in the US closed, ATMs closed, Credit Cards not working, no one taking checks. Can you imagine the chaos, riots, crime and so forth that will take place? That's what will happen.
This type of event has taken place here in the US before when FDR declared a "bank holiday." What resulted was the savings of many of the middle class being wiped out literally over night.
When Will "Bank Day" Take Place?
Sooner or later the Feds along with the Gov will have to declare a bank holiday to devalue the dollar so that US debt can be paid. They will "default" on a loan and that is when "Bank Day" will take place. This will most likely take place also on a Thursday or Friday so that the powers that be will have a full weekend to cook the books and manipulate the numbers.
Some have speculated that this will take place end of the government fiscal, which ends Sept 30th with the new fiscal year beginning October 1st.
Another speculated timeframe would be the week between Christmas and New Years. Many companies are closed for the holidays and people are on Christmas vacation.
What Will Take Place and What Will Be The Effects?
What many believe will take place is that the dollar will be "split." How this works is much like the "splitting" of stock. So if you have 100 dollars you will now have 200 dollars. This sounds great, but it has killed your buying power and your "money" or medium of exchange is being manipulated outside your control.
Things that were already expensive, will double, triple even quadruple in price and what happens is a mad tail spin of ever rising prices.
Here is an example - You can walk into a hardware store, pick up a hammer for $30.00, look around the store. When you go to pay and the hammer and say fifteen minutes have elapsed, the cost of the hammer has increased in price to $40.00.
It is this type of cause and effect that took place in countries like Argentina where their currency was split and the prices of goods and services increased overnight.
In fact, it is said that if you went to a restaurant and ordered a bottle of wine and consumed it there at the restaurant. The money you could get for the empty bottle the next day is more than what you would have originally paid for the bottle of wine the night before.
This is hyperinflation run amuck, and this is what is coming to this nation.
Why Would The Government Hyperinflate?
How this helps the Government is due to much of the "fixed debt" that this nation has aquired. Say that there is a fixed debt of 200 million and they only have 100 million to pay the bill. Over night the money is split and they are able to pay the 200 million and the debt is wiped out. What is happening is the Government is playing a numbers game so that they can benefit literally at the cost of the people.
The good news is that like the government, you too can take advantage of the situation if you plan ahead. During the Weimar Republic in the early 1900s one ounce of silver was selling for 1.3 billion marks. People were able to pay off fixed debt and also purchase property that had a fixed number debt for just ounces of silver.
Let's put this in terms closer to home.
Let's say your mortgage is a fixed debt of $100K. If you have tangible assets that maintain a medium of wealth like silver or gold, you will be able to pay off that mortgage rather easily. Imagine silver selling for $500.00 a oz. You can pay off your house with 200 oz of silver or possibly just a couple of oz of gold.
This is how many people who saw the coming storm during the Weimar Republic were able to take advantage of hyperinflation / depression. This is how the Fed will also be able to take advantage by hyperinflating the dollar and then paying off US fixed debt.
Hyperinflation helps when you have a fixed debt like a mortgage, car loan, any type of fixed debt loans. Because one has a fixed number, hitting that number becomes easier because you are dealing in numbers not money any longer.
But what happened back then is happening now. Stock markets are in flux wiping out savings, millions on unemployment, rising costs of goods and services, all of these things drain the common man's bank account. So the common man does not think of maintaining a medium of wealth, such as gold and silver, they are running the rat race just trying to stay ahead. So they work only in what is called a medium of exchange... aka the dollar that does not preserve their wealth.
So if one only has dollars, their "wealth" can be manipulated by raising and lowering inflation, cost of goods and services, APRs, etc. This is how so many lost their life savings when the stock market took a dump.
Remember Enron and MCI/Worldcom crash?
Remember all those retirees who lost most if not all of their retirement?
When "Bank Day" or a bank holiday takes place, it will do the same thing but on a far larger scale. That is unless you have your "wealth" stored in an asset that maintains its wealth like gold, silver, and other hard assets. Then you will be able to operate outside the dollar because your wealth is maintained in a tangible asset not a piece of paper that can be manipulated by the powers that be.
See cash is trash, and those who have precious metals or other tangible assets will be able to move outside the cash circles where most of the US population will be restricted to working with paper cash. Those people will be able to take advantage of paying off fixed debt because the government changed money into plain numbers.
Question - What fixed debt would you be able to pay off if Silver was worth 1.3 million dollars per oz?
What would you be able to purchase with the "change" you get from paying off that fixed debt with that 1 oz of silver?
Hyperinflation is bad, but those who have prepared for the coming storm will be able to weather the storm and possibly even fair well out of it.