WARNING: What I'm about to tell you is very strong. It is the opposite of what most experts say will happen. Why should you believe me? In 2007, I published "How To Protect Yourself From The Coming Financial Crisis" on http://www.saneramblings.com far before most experts knew there was a problem.
Since then I've published updates that were also right, while the experts have been wrong as is obvious from the deepening financial disaster that confronts us all. I have nothing to sell you, no ax to grind:
Our ship hit an iceberg and is taking on water fast. The captain and crew are bailing out the water but they're rapidly losing the battle as the water rushes in and the ship will soon sink.
But the captain shouts, there are "glimmers of hope" and many passengers sigh in relief and return to their normal activities. But those who are more prudent quietly make their way to the life boats taking with them others who will follow.
How do you know this disaster is happening? When our financial ship hit the iceberg aside from the jolt, you may not have felt much more. But you will soon. Interest rates have been manipulated by the Fed to record lows. However, those interest rates will rise and then will skyrocket.
Here is why it will happen, how it will affect you and what you can do to protect yourself:
Why will this happen? The already staggering size U.S. debt is rising faster than a mushroom cloud over an atomic bomb explosion and is every bit as toxic.
As a result the Chinese and other major investors are fearful the U.S. will default on its debts or inflate its currency. Fed Chief Ben Bernanke calmed the global financial markets recently by assuring everyone the Fed would join with them and buy up to $300 billion in U.S. debt.
However, confidence soon fell through the floor as investors realized the Fed is creating the money out of thin air to buy that debt. Compounding their fears, the U.S. deficits are mounting faster than ever.
The current estimate of U.S. debt to be funded this year is $2.5 trillion but don't memorize that number because it will soon be higher. By comparison the Fed buying $300 billion of it is a drop in the bucket.
How will this affect you? Inflation. When the cost of money goes up so does the price of what you buy. At first the government will deny it but you'll know better as you pay higher prices at the grocery store, the gas station, and in your home for electricity and gas. The banks you bailed out will charge you more interest and fees and your taxes will jump as federal, state and local governments become strapped for cash.
What should you do? If you have long term financings planned, do them soon while interest rates are at record lows, and do them with fixed rate financing only. You will not see interest rates this low again for many years and you will be glad tomorrow that you locked in those low rates today.
Second, keep your job. Either become an expert in a field the public needs such as healthcare or become a jack of all trades by learning to perform many different functions.
Third, if you can afford it please invest in income producing assets. For example, buy residential real estate in major job centers, preferably in low crime, good school communities. Everyone needs to live somewhere and most people will make it a high priority to pay you. That money will be in ever inflating dollars as they pay off your property and give you income.
Forth, some sophisticated investors are already buying gold as a hedge against the dollar collapsing. You too may want to buy U.S. Gold Eagles or other one ounce or smaller gold coins.
Fifth, life is precious so enjoy each day you have. It costs nothing to give a hug or to smell a rose.
Because of the rampant greed and a broken system that rewards it with bailouts and stimulus plans, and a powerful dependence on military spending, the U.S. will pay whatever it has to get money. Please take some or all of these steps to protect yourself.
Eventually we will rise from the ashes, hopefully a better and more compassionate society, wiser from the experience. The good news is we are all in this together and together we can help one another, as we persevere and triumph together.
Dick
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