Last week I added a new section to my blog and discussed the importance of keeping an eye on the economy as a measure to protect your wealth.
Whether you’re a seasoned Internet Entrepreneur or just someone who is currently working a job, protecting your wealth and the purchasing power of every dollar you earn is vital to your financial prosperity and the well-being of your loved ones.
If you’re reading this post, then I am assuming you value the importance of building real, lasting wealth and that you’ve made a commitment to take complete control over your financial future.
If you haven’t made that commitment just yet, then keep reading because I am about to tell you why I believe many people who have not made that commitment may soon lose their entire life savings.
I don’t want you to be one of those people and I want you to make that commitment today, if you haven’t already done so.
Fiat Currency
I was recently surprised to discover that a friend of mine did not know that the United States dollar was backed by no physical asset – what
we today call a fiat currency.
In other words, the only reason we believe that a dollar is worth anything is because our federal government tells us that it’s worth something and other governments across the world also believe and have confidence in our dollar.
This wasn’t always the case. Before we (The United States) abandoned the gold standard in 1971, the U.S dollar was directly tied of the value of gold, which has throughout human history been regarded as the only universal currency.
Today, every currency in the world is a fiat currency – that is, backed by no physical assets whatsoever.
Purchasing Power
A few days ago I was having a conversation with a colleague about the fundamental problems with having a fiat currency and a debt-based economy.
Since our currency, the dollar, is a fiat currency, the Federal Reserve can create money out of thin air whenever it feels it needs to.
My argument was that simply printing more dollars to pay our national debt obligations was a very destructive policy because when you print more dollars and put them into ‘circulation’, the value of those dollar (purchasing power) is eroded and the purchasing power falls for everyone else holding dollars.
If these practices are continued, over time the dollar is significantly devalued and therefore you can buy less products or services with those dollars than you could before. This results in you having to work even harder to earn more dollars so that you can simply maintain your standard of living.
In the long-term, this could very well result in a loss of confidence in the U.S dollar as a valuable currency, by governments across the world.
My colleague’s response was, “you have to think of the economy like musical chairs. As long as everyone still thinks they can hear the music, they game is still in play.”
“Exactly! But what happens when the music stops, because it always does” I said.
He couldn’t find an answer to my question.
The reality is that since the creation of the Federal Reserve in 1913, the U.S dollar has lost about 95% of its purchasing power resulting in 2,000% price inflation, since then.
Now you probably don’t remember how much things cost back in 1913 because you weren’t alive back then, but how about as early as the 1960s and 1970s?
I am sure you’ve heard parents, aunts, uncles or grandparents complain about how expensive things are today and how cheap they were back in their days.
My own mother once told me a story about her childhood in which she referenced a loaf of bread being $0.20. Today, that same loaf of bread is about $2.49 – that’s a 1,210% price increase!
Protect Your Wealth
Voltaire, who was a French enlightenment writer, philosopher and historian, once said that “all paper money eventually returns to its intrinsic value – zero”.
95% of the U.S dollar is gone and if we continue on this path, it won’t be long before the other 5% is destroyed. I believe we will see this in our lifetime.
I recently disclosed how I am building my wealth and the actions that I am taking to secure my financial future.
Legally, I cannot tell you what to do with your money but what I can tell you is that precious metals commodities are increasing in value. There seems to be a real opportunity for people to come out prosperous on the other end, should a collapse of the dollar unfold. Do your own research and make the commitment to take whatever measures necessary to protect the hard-earned dollars you’ve worked for.
Mastermind:
How serious are you about protecting your wealth, whether it’s $1,000 or 100,000?
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