The truth about debt

The rich rule over the poor, and the borrower is slave to the lender. ~Proverbs 22:7

Since the Bretton Woods Agreement in 1944, the people and governments of the world have made the U.S. dollar a store of value. No longer backed by gold or silver, this means the world’s wealth rests in “the full faith and credit of the U.S. government” and its 21 trillion in debt. If you hold your wealth in a U.S. dollar savings account, in U.S. treasury bonds, or in the actual green-paper currency, then your wealth is part of the government’s enormous debt and is subject to the world’s confidence in the U.S. dollar. You are counting on the rest of the world to buy and hold U.S. debt as an investment and medium of exchange.

According to Hebrews 11:1, faith is the assurance of things hoped for and the conviction of things not seen. To hold dollars means investing your wealth in “the full faith” of the U.S. government’s assurance of things hoped for and conviction of things not seen. It also means you are investing in their credit, or the ability of the government to obtain worldwide goods or services before payment, based on the world’s “trust” that payment will be made in the future. That’s a lot of confidence in politicians and paper, especially given the history of the U.S. dollar’s relationship with gold and enormous ever-increasing debt. To review this history, see In God We Trust.

If it’s not clear already, here’s what is wrong with storing your wealth in the full faith and credit of the U.S. government…

  1. The U.S. government is not God, and the dollar is not gold. Gold, not the U.S. dollar, is God’s chosen store of wealth throughout the Bible.
  2. The more currency the U.S. government prints, the less valuable it becomes. With a trillion dollars being added every ten months, this will ultimately make the currency worthless.
  3. The more debt the U.S. accumulates, the more dependent it becomes on other countries to buy and hold its U.S. treasury bonds and to use its currency as a medium of exchange. China is one of the biggest foreign holders of U.S. debt and curiously it’s also one of the biggest buyers of gold. Need I mention the trade deficit?
  4. One of the reasons the U.S. has been able to accumulate so much debt without feeling the consequences is because the entire world was using the U.S. dollar to buy oil. This was known as the petrodollar, which is now competing with China’s petroyuan as of April 2018. Countries are no longer required to buy dollars to obtain oil; they can now purchase oil with the yuan.
  5. Without any backing but the faith and credit of government, the U.S. dollar is a fiat currency, and no fiat currency has ever survived in the long term. Fiat currencies  always devalue to zero against gold and silver. Not a single currency has survived more than 100 years, and I don’t think the dollar will be an exception.

What happened in Venezuela was the result of the government printing too much money. As of now, the currency loses half its value every seventeen days. What’s happening in Argentina is the same story. Its huge federal deficits, enormous debt, and a negative trade balance looks very similar to the USA, only the world isn’t using Argentine Pesos as its reserve currency. The U.S. is fortunate, but when the world gives up on the dollar and all its debt, or if somewhere there’s a default, the value of that green paper will drop like a brick! In the blink of an eye, the confidence Americans have in the faith and credit of their government will disappear with their wealth.

All great empires fall; don’t allow yourself and your family to suffer for the government’s financial mismanagement. Store your wealth in gold and silver.

 

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