Corporate earnings have been strong over Q4 2011 & Q1, 2012 but that trend may be changing. Earning announcements for Q2 are coming in and showing a definite weakening in corporate earnings. What does this mean to you?
Corporate earnings are lower due to a variety of factors with the biggest factor being an increase in operating expenses. As the Federal Reserve prints more money, inflation goes up and the value of the dollar drops. The companies who had strong earnings are now experiencing the hardship that inflation causes. If earnings continue to be a challenge for these companies over the next few quarters, this could signal yet another downward turn in the economy. This could be the downturn that leads to a monetary collapse or it may be the prelude to a major downturn over the next three to five years.
Regardless of timing, it is almost inevitable that a monetary collapse is in order. This is not only true for the United States but for other countries including Greece and England. Looking back in history, there have been many global economies built on fiat currency but interestingly enough, not many of them have survived. A fiat currency-based monetary system that derives its value from government regulation or law. In other words, there isn’t anything of value to back the paper that is being printed – such as gold or silver.
Many individuals have never lived through the Great Depression, let alone a monetary collapse. What would a monetary collapse mean to you as a citizen of the U.S. and more importantly, what would it mean to you as a small business owner?
When investors and central banks stop demanding dollars, U.S. bond prices will fall and interest rates will rise. Mortgage and credit card interest rates will begin to increase and send the economy back into a deep recession. The government will respond by printing additional paper dollars (fiat currency) in order to keep the economy from collapsing. The sudden increase in the supply of paper dollars will send the value of the dollar through the floor.
Prices for food, fuel, household items, clothing and almost every other consumer product will skyrocket. People who have chosen to save cash in bank accounts, certificates of deposits, or dollar-denominated bonds will be losers and end up wiped out. Many U.S. financial and manufacturing companies will be ruined, along with their stockholders. Ok, enough doom and gloom. Knowing this information, how do you protect and insulate yourself?
Until very recently, silver and gold have been a globally agreed upon medium of money for one very good reason: both gold and silver exist in limited supply, and governments can’t make more of them, so their values tend to be more stable.
As paper currencies collapse, the world will look for alternatives, one of which is sure to be gold. Massive amounts of global capital will start chasing a very limited supply of gold, sending its value through the roof.
It is highly recommended that you begin to insulate your family’s financial well-being by investing in silver and gold. Also make it a point of eliminating any debt with variable interest rates. These two steps will at least put your family in the right direction in the event of an impending economic depression or collapse. If an economic collapse doesn’t materialize, you wont’ be any worse for the wear by taking these recommended action steps.