There is a bitter-sweet sensation of the downfall of large government and overspending that is going on in Europe. For years, individuals with agendas to promote entitlements, government intervention, and higher taxes have always pointed to the great success that is being exhibited in Europe and advocating for the implementation of the same in the states such as socialized medicine and government ran entities. Well not that the U.S. is exempt from the pain that is going on across the Atlantic because we are headed down a similar path, but seeing the progressive system collapse because of its immoral practices is a testament to why we at are for small government with maximum freedom. It’s just painful to watch how poorly the system is set up and how bad the crash is going to be as the chain reaction begins starting in Greece, Spain, Ireland, Portugal, Italy, etc.



Lehman Brothers



Yeilds on the 2-year Greek bonds went nearly to 30% based on the lack of confidence that foreign investors had in Greece’s economy and its ability to pay back its debts. During the past few weeks, many have hinted and suggested that if Greece defaults and major events take place in the eurozone, that the world might have another Lehman Brothers moment where stocks crash hard and financial panic occurs that creates havoc in the markets. To say the least, with the rise in commodities and stocks plus the decline of the dollar, the 2008 feeling of uncertainty is definitely in the air.


Though Europe is leading the way at this point, the IMF cut its forecast for the U.S. economic growth on Friday and warned Washington and the European debtors that they are “playing with fire” and should take some immediate steps to reduce their budget deficits. The IMF lowered its global growth forecast from 4.4% to 4.3%.


For us doom and gloomers out there, the idea of leveraging huge amounts of assets with large amounts of debt is really enticing when you know the end game results, especially if you believe in a hyperinflation scenario. In this case, you the debtor, would have made out well owing worthless currency to the creditor assuming you purchased something that will retain or go up in value (which should be virtually everything). It actually has a very similar taste to what the government does each and every day, taking the country further and further into debt. Too bad they didn’t purchase or spend our money on anything that’s going to grow our economy. As eluded to previously, owing a fixed dollar amount for assets that are sure to skyrocket in price during hyperinflation, such as commodities, is actually a very aggressive way to put your money where your mouth is and really profit off hyperinflation. Many have drank the Kool-Aid and have gone all out loading up on debt with intentions to hyperinflate their way out of their debt. Although we do believe in the hyperinflationary crisis, we do not endorse going out and leveraging huge amounts of debt to purchase consumer goods. In fact, the opposite is true. We feel that paying off your obligations and freeing yourself from any sort of long term debt obligation is optimal because there is no certainty of when and how the events will play out and the ramifications of owing creditors can affect you and your family in the near future. Most Americans are in debt so badly that they are working to pay for things that they have purchased years and years ago. If you are going to do so, only get into debt by purchasing things that will have real value such as land/real estate, commodities, inflation protected stocks, and investing in businesses that you believe will survive and thrive through the depression.






Turning the topic over to gold and the panic of 2008. If we do see a similar destruction of the financial system, keep in mind gold didn’t collapse the way other industrial commodities fell during the same time period. Gold fell approximately 28% from its 2008 high as opposed to many others that got hit with numbers 50% and higher. We should note that gold did have a positive return for 2008, opposed to all other asset classes. Gold will be where wealth storage will go during a second plunge in the financial system and throughout hyperinflation.


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