With silver and gold prices going crazy many folks are jumping in and out of the PM (Precious Metal) Markets. Some folks are interested in making money, others in some safety against a falling Dollar and inflation. So I thought I’d tell you why I’m in Physical Silver (Coins, Bars I can hold in my hand). There are a lot of ways you can own silver. Paper certificates, stocks in miners, PM funds and bonds, I only own metal I can hold in my hand for a few reasons…Warning: History, Economics and Math coming next…..
Those little green pieces of paper called Dollars but are more correctly referred to as Federal Reserve Notes. Notes are a promise to pay a like an IOU or unsecured credit card. There is no collateral held in trust or offered in exchange for this Note. Notice the term Federal Reserve this is the Federal Reserve Bank and is an independent corporation that issues our ” US dollar”. Not the Treasury, not the US Government, a corporation just like Apple, AT&T, Comcast or General Motors. Have corporations ever gone bankrupt or need bailing out? All I hold here is a promise to pay, an IOU. There is no collateral or of value backing it if the IOU is not paid. I can’t put a lien against the Fed if they refuse to pay.
Andrew Jackson killed the first Central Bank/ National Bank and considered it his greatest achievement and I agree. But bankers want to make money and what better way to do it than to control the very creation of money itself?
In 1913 the Central Bank was resurrected again and this time passed by the congress and given the mandate of issuing money. This was to “protect” the USA from the Boom and Bust cycles that always plague a free capitalist economy. Since the banks controlled the money supply they also created a new credit system in the USA after WWI of a dollar down and a dollar a week and you to can own the newest gadget the radio. Or phonograph or any of the new gadgets coming out. almost daily and to the A&P near you or available by catalog. At an interest rate set by the bankers loaning the money. Well the USA was a young economic Titan, Europe was devastated by WWI, the population of young men destroyed and the USA was barely touched by comparison. Everything was perfect, the USA couldn’t lose. We took on most of the manufacturing of the world. We had plenty of resources, inventors, schools and a lot of money in hand. We were no longer uppity colonials but players on the world stage. With a pocket empire, and an Army and Navy that was a winner in a World war. How could we lose?
The Roaring 20’s ,Well if I can buy a radio or the latest Model T on credit, why not stocks? We are growing the USA has the most patents, inventions this will go one forever… I can buy on Margin it sure money the market always goes up! Sound Familiar? 0$ down and just pay the interest. Housing must always go up, They ain’t making any more land.
So they did buy and the Boom lasted 10 years and went bust. The Federal Reserve didn’t stop it but actually made the Depression worse because as a bank it fed into the cycle and kept more cheap credit into the system. It was all credit, before if you ran out of money you couldn’t buy more than you could pay for today. While the folks of Wall Street took a beating, those poor folks that had saved their silver and gold coins did okay.