Merlin Says It Hasn't Hit Botton Yet!

“Merlin, what are you talking about?”
“Kate, the powers that be have given out another stimulus package and are bailing out big banks. Where do you think all that money is coming from to pay for it all?”
“The treasury?”
“Kate, the treasury has no money. The United States government hasn’t had real money for quite some time; and middle income Americans can’t be taxed any more without being starved to death.”
“Then where does the government get the money to bail out the banks and create these stimulus packages?”
“To put it simply, the money is printed up on paper and the Federal Reserve just creates digits to say that the money exists, as soon as Congress requests the funds. When Congress requests two hundred and fifty billion to bail out their banking friends, or create a stimulus package, or for whatever they want it for, that legally gives the privately owned Federal Reserve Bank permission to create two hundred and fifty billion dollars, or whatever amount requested, that didn’t exist before the request, and then put those dollars into circulation. The money essentially is created out of thin air. It didn’t exist until the fed, by the stroke of a computer key, created digits on a ledger saying that the money is now on the books. Remember, America has become a debt base economy. Debt is used to create money and fund all our programs and needs. Wealth is no longer exchanged as a circulation currency. It is debt that circulates which creates inflation every time Congress decides to spend and create more dollars out of thin air. Debt creates great wealth for the rich, especially through interest on non-existent money. But debt based economies eventually drives the middle class into poverty, which is what is happening today.”
“Merlin, I don’t understand and frankly I don’t want to. All I need to know is that my dollars pay my bills and pay for what I need to buy. I’ll let the bankers worry about the details on how they make it all happen. I’m living quite well. The system has worked fine for me for decades, as it did for my mom”
“Do you have a 401k, some sort of pension plan, money in the bank?
“Merlin, of course I do. I’m very practical and frugal about my money. I’m not stupid”
“I agree Kate, you aren’t stupid. That is why you have noticed that your 401k is losing value, as are your stocks. I told you eight years ago to get out of the stock market.”
“Merlin, stocks go up and down. My stockbroker told me not to worry because eventually the stocks will go up again. It’s how the market cycles.”
“Kate, pay attention to every time the government spends money; every time Congress okays the president to spend two hundred billion on the war, or two hundred and fifty billion to bail out the housing crisis, because every time money is created out of thin air, adding more paper dollars to the system to pay for these huge expenses, the dollars that you worked hard for and traded your time for become less valuable, and that is called inflation. When the government puts more dollars into circulation, created out of thin air by the fed, to pay for programs, wars, or failing banks, then the money you have in your 401k, your pension plan, or savings becomes worth less and less.. By that I mean you buy less with those dollars than you did a month ago. And when it loses value month after month, and those months add up into years, you are talking about a lot of financial loss; and that value of those dollars is lost forever. Some people call this inflation the invisible tax. And when inflation happens slowly, people foolishly put up with it. But it’s not happening slowly any more. The life cycle of our American fiat currency is coming to an end, and will speed up into hyperinflation before most people realize what is happening. What you need to pay attention to is that it may cost you $300 a week of frugal purchasing to feed your family today, but next year, or maybe in just six months, it may cost you $500 dollars to buy the same groceries. Where are you going to get that extra $200 a week to pay for groceries? Will you cut down on the amount of gas you put in your car? Perhaps you will decide not to heat your house with oil this winter and stay warm by burning wood to make up for the needed dollars to feed your family? The point is that when the groceries inflate to $200 a week, so does everything else you need. What happens when a loaf of bread will cost $10 a loaf or more? Are your wages matching inflation? Of course not! If you want to keep your purchasing power to provide for your family and protect your assets, you must take the dollars that you receive for the hours you put into working and put them in a currency that isn’t experiencing as much inflation as the dollar. Some people are putting their savings and paychecks, for now, in silver, gold, or Swiss francs. Those who switched their savings over to euros, back when I told you to get out of the stock markets, didn’t lose the purchasing power that you did, Kate, over the past eight years. I am telling you this now, very firmly, because inflation is turning into hyperinflation, and soon you your dollars will be debased so much that even if you got a thirty percent raise, you won’t be able to support your comfortable living standard! Aren’t you feeling the squeeze now? The dollar is going to become worthless in purchasing power and the timetable for that is escalating. It is called hyperinflation. I don’t want to see you lose all you worked so hard for. How is the value of your house holding up against the mortgage you have on it? You do know that the housing market hasn’t hit bottom yet.”