![\"Money](\"http:\/\/www.cheapiv.com\/wp-content\/uploads\/moneysupply.jpg\" "\\"moneysupply\\"")
<\/a><\/p>\nAs you can see in the chart above, the money supply has grown exponentially.\u00c2\u00a0 Our country has to finance this debt through loans.\u00c2\u00a0 Just like the average household, we have creditors, people willing to loan us money.\u00c2\u00a0 Except they are not people they are countries.\u00c2\u00a0 The two largest countries are China and Japan.\u00c2\u00a0 Two countries that both have fiat currencies as well.<\/p>\n
These loans have interest rates that the countries want in return for lending us money.\u00c2\u00a0 As we have seen in Greece over the past week, the investors are demanding higher and higher interest rates because they fear the risk that they will not get paid back is high.\u00c2\u00a0 The US interest rate has remained relatively low even though our debt levels are high, not as high as Greece, but high.<\/p>\n
When investors start to fear that the increase in money supply will decrease the value of their money, they flock to something that will hold its value…gold.\u00c2\u00a0 When money supply increases, this causes inflationary pressure and the countries that finance our debt want a higher interest rates in return.\u00c2\u00a0 They are getting paid back with inflated dollars(less value).\u00c2\u00a0 If the risk of the US defaulting increases, like Greece, then they will want a higher interest rate as well.<\/p>\n
Through history the price of goods have remained stable in price only when compared to a gold.\u00c2\u00a0 Gold has increased and decreased in price but it has also been very manipulated.\u00c2\u00a0 The manipulation in gold and the increased demand is starting to create a buzz to own the actual.\u00c2\u00a0 This means that you actually have the gold in your possession.\u00c2\u00a0 There are plenty of stories about when an investor chooses to take delivery it is misplaced.\u00c2\u00a0 There is a reason that China and India have recently(within the past 6 months) made huge purchases of the actual and demanded delivery.<\/p>\n
So why have the central banks wanted to keep the lid on Gold and Silver?\u00c2\u00a0 If the price of Gold and Silver increase it is because investors are looking for a safe asset to protect against inflation.\u00c2\u00a0 If central banks are constantly telling you that there is no inflation as seen in their government statistics and gold is stable, will you believe them?\u00c2\u00a0 If they push out the stats with no change and gold is consistently making new highs then maybe you will take a second look at their numbers.\u00c2\u00a0 Maybe the flight to safety guys are seeing something that you have missed?\u00c2\u00a0 Maybe interest rates are about to or already are spiking.\u00c2\u00a0 If rates spike it is because of inflationary pressure.\u00c2\u00a0 Inflationary pressure causes gold to increase.\u00c2\u00a0 We have seen US rates at near zero for over a year and we know that these rates can not stay at zero forever.\u00c2\u00a0 We have seen some short term spikes in the US Notes and Bonds of different durations.<\/p>\n
If foreign investors start to demand higher interest rates to buy the ever increasing amount of the US debt through Notes and Bonds, then we will see several major problems that stem from higher interest rates.\u00c2\u00a0 The mortgage and housing market will collapse even further.\u00c2\u00a0 Spikes in mortgage rates could cause less homes to be purchased and higher foreclosure rates because of the amount of adjustable mortgages that would be reset to a higher interest rate.\u00c2\u00a0 Higher rates means it costs more to fund out debt. Our national debt will be out of control and the most logical result for the 50% of the US population that actually pay taxes will be higher taxes.<\/p>\n
Every investor should be concerned about the future of our country.\u00c2\u00a0 There is a reason that the M3, a money supply statistic is no longer calculated by our government.\u00c2\u00a0 There are only so many tricks in statistics before the truth reveals itself.\u00c2\u00a0 That chart shows the current path of our money supplies and it is not predicted to decrease any time soon.\u00c2\u00a0 What happens to our country when the money supply stops increasing? Are we at a point in our country that we need to keep the money supply increasing just to offset the destruction of wealth from the bubbles that the money supply has created.<\/p>\n
Never before has the world economies been so tightly entangled.\u00c2\u00a0 In the 1950’s we did not invest in communist China.\u00c2\u00a0 Now we are dependent on them to buy our debt.\u00c2\u00a0 They have their own debt problems along with Japan.\u00c2\u00a0 How long can the charade keep going?<\/p>\n