As a result of the Great Depression in the 1930s, world trade declined sharply. This led the future founders of the IMF to plan an institution that oversaw the international monetary system. In short, this is a system of international payments and exchange rates that enables various countries and their citizens to purchase products and services from each other.

The goal of the new system was to keep exchange rates stable and encourage member countries to eliminate restrictions on exchange that hindered trade. In July 1944, representatives from 45 countries met in Bretton Woods, New Hampshire, and agreed on the IMF framework that would take effect after World War II. They wanted to avoid a repeat of the economic policies that resulted in the Great Depression.

IMF Articles of Agreement were signed in December 1945 and in 1947, France became the first borrower. Until 1971, exchange rates were kept to those that could only be adjusted to correct disequilibrium in the balance of payments, as agreed upon by the IMF. Since that time, members are free to select their own exchange arrangement, as long as they do not peg their currency to gold.

The IMF has performed varying roles throughout history and since the global economic crisis, it has been on the front lines. The organization was recently flooded with requests from advanced financial markets for policy and financial support. To meet this need, IMF lending capacity was increased to approximately $750 billion and lending policies were overhauled.

Related posts:

1. Gold Is An International Currency
2. Glenn Beck-Endorsed Goldline International Under Local And Federal Investigation
3. International Investing: How to Invest Internationally

To make a long story short, over the last few decades, the gold market has been manipulated by billion-dollar funds and banks. Secret agreements on when to buy and when to sell, inflating the “supply” of gold with non-existant gold reserves — these are just some of the tactics used to manipulate the market.

Big players own most metals

When it comes to gold, the top 10 gold holders own 12.5%+ of the gold. The top 50 probably own something like a quarter of the gold.

At the same time, a huge portion of the “gold” that exists isn’t, well, in existance. Plenty of gold ETFs claim that they have XYZ gold, but honestly don’t have it on hand, or have “lended” it or “leased it” out to other gold funds and investors.

How the manipulation works

To see an in-depth look at some of the going ons when it comes to gold manipulation, just read this article from Zero Hedge, one of the best financial blogs online.

To make a long story short, it’s done via secret trades, selling and buying done in unison, as well as long term planning.

What This Means

Diversify. Don’t only have gold in your inflation-hedging “doomsday” portfolio. If you are going to own gold, make sure it’s real —  bullion is always best. Silver is also a must own. I’ll be writing about how just a handful of people control silver as well.

Remember, the main focus of price manipulation is profit for those who are manipulating the metals, as well as to keep the prices artificially low to make the financial system look robust. They’ve failed in recent years — almost nothing could make fiat money look robust these days.

In the last few weeks, I’ve been writing a bit less than usual — there’s a reason. I’ve been taking part in an online club that has gone through investing for recessions, making money with inflation, turning a depression into a cash flow, understanding which debts to pay off first during hard economic times, etc. It’s been absolutely incredible. I’ll write more about this tomorrow or the next day. It’s absolutely epic.

Related posts:

1. Is The Price Of Gold Being Manipulated
2. Warning: Gold is NOT a “Get Rich Quick” Scheme
3. Price of Gold: Is the Price of Gold Going Up?

But how exactly is gold an inflation hedge? After all, during the 90s, gold did abysmally, even though inflation stayed fairly consistent. Is gold sometimes not an inflation hedge? The answer to these questions is fairly simple, and requires us to look into how exactly the gold market works.

If you’re investing precious metals to beat inflation, you should probably keep doing so — but you should also know what to expect.

Nothing Beats Economics

First, this is going to sound obvious, but nothing beats the laws and principles of economics. Supply and demand — artificial or organic — dictate prices. Period. Gold isn’t magical, and it’s value will collapse if people suddenly lose faith in the metal. I don’t think this is necessarily going to happen, but it’s an economic fact that has to be considered.

That said, this non-immunity to the laws of economics is what makes gold a great long-term hedge against inflation (everyone has always loved and trusted gold) and a fairly weak short-term hedge against inflation (people trying to predict gold prices and time the market mess up the short-term price of gold — it’s volatile). Let’s analyze this in further detail below.

Gold Isn’t a Short-Term Hedge

Gold doesn’t beat inflation in the short-run. During the 90s, we had inflation, but gold prices remained fairly flat. The same during the 70s and other decades where gold didn’t do great.

Historically, if inflation hits 3%, gold doesn’t necessarily rise 3% to keep up. Over time, however, that’s a different story, as we’ll talk about immediately below.

Over Time, Gold’s Value is Fairly Consistent

Over the long term, the story is different. No company comes close to being as old as gold. No non-gold based currency has lasted anywhere near that long.

Over 50 years, most currencies become essentially worthless. Gold keeps value. This is absolutely unavoidable, and something a lot of anti-gold writers tend to ignore. No matter what, gold has value in the market — and only a few other hard assets like silver are even comparable.

• Over the long term, cash is destroyed by inflation.
• Over the long term, bonds are destroyed by inflation.
• Over the long term, companies collapse and get destroyed.
• Over the long term, gold and silver are forever. This is unavoidable.

Short-Term Profit vs. Long-Term Security

The short term major price fluctuations for gold and silver is one of the reasons many people try to buy and sell gold and silver at the right times to get rich. There’s nothing wrong with this — it’s just something I don’t particularly care to do. I buy my silver consistently over time (learn how I do this here).

In the end, I value financial security over any other financial value. I think it’s the first stage of financial success, as I wrote over at Stand Strong Research just today. I believe everyone should own gold, silver, a generator, food and water, and land. It’s just the first step toward financial success, prosperity, and independence.

Is gold a good inflation hedge? Over the long run, yes — and no currency or stocks can even come close.

Related posts:

1. Ways To Hedge Against Inflation
2. Breaking: Even NY Times Admits that Inflation is Increasing
3. This is How Inflation Hurts the Economy

This is pretty twisted considering inflation destroys the middle class, the lower class, and transfers money to the politically connected. I posted an article a few months ago on how food prices, energy prices, silver prices, gold prices and most other prices that were necessary staples of survival were increasing. Some things we don’t need (some technology, some luxury items, etc) weren’t increasing, but they’re not exactly necessary to survival.

Well, now it looks like prices across the board are increasing, as the industrial prices are starting to increase so fast that even the New York Times are reporting it. Apparently industrial prices are increasing at a faster pace than they have in 18 months. Inflation is absolutely inevitable, as I’ve written before. I’ve even covered quite a bit of this in my inflation rate article.

Who’s Going to Benefit Now?

It’s not all violins for everyone. People who understand what’s going on can profit from the insanity. In the end, over the next 20 years, the winners in the economy are going to be two groups:

1. The economically literate. People like you and I who know that paper money isn’t sound money. People like us who understand that hard assets and income investing beat inflation. People like us who understand that the government isn’t a magical organization who can ignore the laws of economics.

2. The politcally well-connected. If you’ve got friends in high places, it’s possible to use legislation and regulations to make the market push money in your direction. I don’t know about you, but I don’t have anything close to that kind of clout, and never will.

I do, however, have enough foresight to put my money into hard assets like silver. Rather than just putting lump sums every once in a while into silver, I’m now 100% using Silver Saver, a website that essentially allows you to save silver every week or month without having to consciously think about it. Out of sight, out of mind.

Related posts:

1. The Appeal Of Gold During Deflationary Times
2. Inflation and Hyperinflation 101
3. How to Survive the Coming Inflation Onslaught

The first is a link to an awesome article on “Inflation Doublethink.” It’s an article by Simon Black over at SovereignMan.com. It’s a fantastic look at how the news is filled with stories of increased prices and expenses… but the government refuses to report it, and is trying to claim inflation is still incredibly low. I wrote a bit about why the government does this over in our inflation rate article.

The next resource is a new project I’m putting together explaining the definition of economics. It’s brand new so doesn’t have much going on, but in the next few months it will be turned into essentially an online economics dictionary with definitions of key economics definitions.

We also have two new projects going on here at the main gold coins website. We have a page on gold prices, and a page on the current inflation rate.

Make sure to check them out!

Related posts:

1. Inflation Rate
2. This is How Inflation Hurts the Economy
3. How to Learn Basic Economics for Beginners

I’ve written about why everyone should own gold, why it’s a secure investment, etc — but in this article, we’re going to take a different approach. Sometimes people get so caught up in a good concept that they overreact and become extremists.

For example, yesterday a reader contacted me bragging that he put all of his portfolio in gold and silver coins. That’s a horrible decision, and he’s essentially destroyed his ability to profit with his portfolio over the next few years. I’ll explain more below.

Here are a few honest facts about gold from an investor who is extremely pro-gold:

No income. Gold doesn’t provide an income, meaning it shouldn’t be used as a retirement investment. It should be used as a security investment like a type of insurance, not for income. Because gold doesn’t pay dividends, if it dips in value, it’s almost like it’s not in your portfolio in terms of the real-world impact of the gold.

It’s volatile. Gold is volatile. It can explode in value or drop drastically. It has bull markets and bear markets just like every other asset in history. Gold isn’t magical — it’s a great investment for some strategies, but it certainly shouldn’t be more than 10% of one’s portfolio regardless of economic conditions.

No get rich quick. This is probably the most misunderstood aspect of gold. Many people think that because gold is probably going to go up in value, it’s a sure thing and it’s ok to throw all your money into gold coins because that’s a way to get rich and retire early. That’s just dumb and naive. There’s no certain way to get rich, and even if gold does increase in value over the next year, buying gold coins costs a premium of roughly 7-10% because of dealer costs and the difficulty in selling gold coins back to the market. It’s not that gold isn’t a good buy, it’s just a long-term “buy and hold” buy for the sake of security, not riches.

Supply and demand. Gold isn’t magical, like I explained above. Nothing is beyond the laws of supply and demand — nothing. The price of gold is based on supply and demand. This means it will always be volatile. Yes, gold has never lost value in its entire history, yes everyone should own gold — but that doesn’t’ mean it’s magical. It’s an essential part of a well-balanced and secure portfolio, but it’s not the stuff of magical beans from Jack and the Beanstalk.

Penny stocks aren’t good. This should go without saying. I wrote over at Stand Strong Research the other day that penny stocks are a horrible investment. Penny stocks are volatile, and usually go bankrupt. Novice investors shouldn’t own them, ever. Ever. Even if they’re “gold” penny stocks and a website claims they’re going to “skyrocket” pretty soon. They’re usually scams.

It’s a long-term investment. Gold is a long-term investment, meaning you should have it in your long-term portfolio for the next few decades, not the next few months. If you’re trying to retire in a year, don’t buy gold. If you’re trying to find financial security and insure that your portfolio doesn’t become completely worthless, then you can’t risk not having gold in your portfolio. For an example of a long-term portfolio in action with gold, check out the permanent portfolio strategy.

In the end, gold is a great investment as an inflation hedge, and insures your portfolio won’t go completely bankrupt. But it’s not magical, it’s not for short-term investors, and it’s not immune to supply and demand.

If you want to learn more about gold, check out our free gold investing guide that covers gold coins, gold ETFs, gold stocks, gold funds, and everything else gold related.

Related posts:

1. Some Basic Facts About Gold
2. 3 Reasons Everyone Should Buy Some Gold Coins
3. Don’t Get Too Greedy With Gold, Diversify

Today, the national debt is 14 times larger and the years ahead look absolutely apocalyptic at this point.  We have literally sold our children and our grandchildren into perpetual debt slavery.  We have accumulated the biggest mountain of debt in the history of the world, and our children and our grandchildren will be burdened with it for the rest of their lives.

All of our politicians keep talking about how it is vitally important that we do something about all of this debt “soon”, but they just can’t seem to stop wildly spending our money.

They keep telling us that now is not the time for deficit reduction because it would harm “the economic recovery”, but the “right time” for deficit reduction never seems to come along.  The national debt statistics in this article are meant to shock you.

Hopefully they will shock you enough to actually take action.  Up to this point, the vast majority of Americans have been extremely apathetic about the horrific crime that we are committing against future generations.

How would you feel if you found out one day that your parents had run up a million dollars in debt that now you were obligated to pay off?

Would you be absolutely furious?

Of course you would be, and rightly so.

So how do you think future generations will feel about us?

We were once the wealthiest nation on the planet, but we have taken that great inheritance and we have squandered it.

Now we are handing our children and our grandchildren the largest debt the world has ever seen.

How in the world can we do that?

How can we consign our descendants to perpetual debt slavery and still feel good about ourselves?

The America that we have all been enjoying so much today is going to be wiped out by all of this debt.

We have literally stolen the future.

We just had to keep spending more and more and more and more.

The greed of this generation will be remembered for a very, very long time.

The truth is that both political parties are responsible.  Both of them have voted over and over and over to keep running up these huge budget deficits.

If you have voted for big spending Democrats at any point over the past 30 years then you have contributed to the problem.  If you have voted for big spending Republicans at any point over the past 30 years then you have contributed to the problem.

Now we have reached a point where a horrific financial meltdown is basically inevitable.  We are living in the greatest debt bubble in the history of the world, and it is only a matter of time until it bursts.

The following are 17 national debt statistics which prove that we have sold our children and our grandchildren into perpetual debt slavery….

#1 As of December 28th, the U.S. national debt was $13,877,230,355,933.00.

#2 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#3 If the federal government began repaying the national debt at a rate of $10 million dollars a day it would take approximately 3,800 years to pay off the national debt.

#4 Today, the U.S. national debt is increasing by roughly 4 billion dollars every single day.

#5 The U.S. government is borrowing approximately 2.63 million more dollars every single minute.

#6 On September 30th, 1980 the U.S. national debt was 907 billion dollars.  Just thirty years later, the U.S. national debt is over 14 times larger.

#7 According to a recent U.S. Treasury report to Congress, the U.S. national debt will reach 19.6 trillion dollars in 2015.

#8 It is being projected that the U.S. government will be paying 900 billion dollars just in interest on the national debt by the year 2019.

#9 A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times.  That amount of money would still not be enough to pay off the U.S. national debt.

#10 The U.S. Congress has raised the federal debt ceiling six times in just the past three years.

#11 The 111th Congress added more to the U.S. national debt than the first 100 U.S. Congresses combined.

#12 The 111th Congress got us into so much new debt that it breaks down to $10,429.64 for each of the 308,745,538 people counted by the 2010 U.S. census.

#13 The U.S. government currently has to borrow approximately 41 cents of every single dollar that it spends.

#14 When you break down the debt that the U.S. government owes to China alone it comes to over $10,000 for every single American family.

#15 If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.  Almost unbelievably, the U.S. government will accumulate well over a trillion dollars more debt in 2011.

#16 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#17 The Congressional Budget Office is projecting that U.S. government debt held by the public will reach a staggering 716 percent of GDP by the year 2080.

But the American people don’t want to hear that we have spent decades creating a horrific debt crisis that is not going to be easy to fix.  They just want someone to “tweak” a few things and get us back to being the greatest economy on earth.  Unfortunately, it is simply not that easy.

Just check out the chart posted below.  Our debt is exploding at an almost exponential rate….

But what do you tell a nation that is completely addicted to debt?

On an individual level, it can be a lot of fun to wildly run up credit card debt, but at some point you have to stop and start paying down that debt.

Unfortunately, on a national level we can’t even get our politicians to slow down the rate at which our debt is increasing.

Sadly, the chart above does not tell the real story.  It is based on fraudulent government accounting.  If the government used GAAP accounting (like all public companies on Wall Street must), the numbers would look much worse.

John Williams of Shadow Government Statistics says that if the federal government would have used GAAP accounting standards to calculate the federal budget deficit for 2009, it would have been approximately 8.8 trillion dollars and that there is simply no way out of all this debt….

The government’s finances not only are out of control, but the actual deficit is not containable.  Put into perspective, if the government were to raise taxes so as to seize 100% of all wages, salaries and corporate profits, it still would be showing an annual deficit using GAAP accounting on a consistent basis. In like manner, given current revenues, if it stopped spending every penny (including defense and homeland security) other than for Social Security and Medicare obligations, the government still would be showing an annual deficit. Further, the U.S. has no potential way to grow out of this shortfall.

The U.S. government is essentially bankrupt at this point.  It is just a matter of playing out the hand.

The rest of the world is starting to realize this, and confidence in the U.S. dollar is beginning to significantly decline.

Things did not have to turn out this way, but Americans did not listen to the warnings and so now this is where we are at as a nation.

The next time you see a small child, look into the hopeful eyes of that child and just think about what we have done to the future of all of our children.

We have obliterated the financial future of this nation.  Someone should be put into prison for all this.  But instead the mainstream media treats prominent politicians from both political parties like rock stars.

The mainstream media continues to perpetuate the myth that the U.S. economy is on the road to a grand recovery and that eventually we can get a handle on all this debt and that somehow everything is going to be okay.

Well, everything is not going to be okay.

All that is on the horizon is great financial pain, and the sad thing is that it could have all been avoided.

But now the game is over and the day of reckoning is coming soon.

We are going to reap what we have sown.

Original post by the Economic Collapse Blog.

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1. Debt Free: Why You Should Get Out of Debt ASAP
2. What Is The National Debt
3. How Far In Debt Can The United States Be

Anyone found to be violating this order was subject to a maximum fine of $10,000. This may not sound like a lot in today’s terms, but the 2010 inflation-adjusted equivalent is a whopping $167,700. Violators could alternatively face up to ten years in prison, or both punishments. To avoid having to turn over their gold or face fines or imprisonment, some U.S. citizens transferred their large gold holdings to countries like Switzerland.

No everyone was subject to Executive Order 6102. It provided specific exemption for those who used the precious metal within art, their profession, or industry. Therefore, artists, sign makers, dentists, and jewelers were among those exempted. In addition, all people were allowed to keep up to $100 worth of gold coins and coins that had recognized special value for those who collected unusual rare coins were exempted.

Once the Treasury bought back the gold, it raised the international transaction price of gold to $35 per ounce. The profit made by the government was used to fund the Gold Reserve Act’s Exchange Stabilization Fund. Regulations within the Executive Order were modified by Order 6111 on April 20, 1933 and both orders were subsequently revoked by Orders 6260 and 6261 in August 1933.

Only one person, Frederick Barber Campbell, was prosecuted under Executive Order 6102 and within that case, a federal judge ruled the order invalid. The judge based his ruling on the fact that the order had been signed by the President rather than the Secretary of the Treasury. Though prosecution of Mr. Campbell ultimately failed, the federal government’s gold seizure authority was upheld.

Related posts:

1. The Pre-1933 Gold-Coin Scam
2. Don’t Buy Pre 1933 “Rare” Gold Coins
3. I Was Right: Goldline’s Pre-1933 Gold Coins Scam

One of the most common questions I’m asked by readers of this website and most of the other websites in the Stand Strong Network is this: what should I do about inflation? How can I prepare?

I originally responded to each email individidually, explaining what inflation really was, what the real inflation rate was, and how to prepare for it. I’ve finally caved and am writing a full-fledged course for people wanting to learn more. It’s found at Stand Strong Research, where I do most of the “heavy lifting” work in the research and analysis field.

It’s still under construction, but already includes more than a few hours of study material for anyone who wants to get serious about learning more about inflation, and how they can survive the inflation onslaught. Here are a couple of scary points discussed in the free course:

1. Inflation and deflation happen at the same time. This means that while it seems like, in general, we’re experiencing a little deflation with prices going down, we’re actually getting hit with borderline hyperinflation in some markets. For example, food and energy are up 20-40%.

2. Inflation rips retirement investments in half. If you can get your savings to grow at 8% per year, you’ve done a fantastic job at investing. Unfortunately, inflation has been at about 8% over the last few decades — real inflation, anyway. That means your retirement savings are essentially destroyed.

3. There’s a special portfolio that will let you make money with inflation. It’s called the “permanent” portfolio, and it’s crazy good. It steadily makes money in almost every economy, deflationary, inflationary, recession, depression — it just works.

Related posts:

1. Why Inflation is About to Absolutely Explode
2. Is Gold An Inflation Hedge?
3. Inflation and Hyperinflation 101

The Chicago School supports regulation of the private sector and lower taxation. It almost lead to the downfall of Keynesianism, a belief that held that governments could manage money supplies to benefit economies. Milton Friedman, a Nobel prize-winning proponent, suggested an alternate policy of monetarism. Real world events later revealed that the Chicago School theories had fundamental flaws.

This line of thinking holds that markets are more efficient than government when it comes to allocating resources. A governmental attempt at economic regulation results in a monopoly. Rather than managing aggregate demand, governments should maintain a low, steady rate of growth of the money supply. Some of the models the ideology relies upon lead to conclusions like the fact that criminal activity is a form of career choice.

This school of thought differs from what is considered pure free-market economics. It supports a monetary policy regulated by the government. Its beliefs are supported by Nobel-prize winners within the world-renowned University of Chicago economics department such as George Stigler, Merton Miller, and Robert Lucas. The economic theories generated have been applied to other areas of science such as the law.

The Chicago School is a defender of capitalism and conservative economics. In recent years, it has become one of the most influential lines of economic thought. The emphasis on mathematical models derived from perfect starting assumptions and based on an economy in static equilibrium have caused many to view it as an unrealistic methodology. New Keynesianism soon replaced the Chicago School in subsequent economic models.

Related posts:

1. What Is The Austrian School Of Economic Thought
2. Economic Suicide: How to Invest for the Economic End of America
3. Nazi Economic Policy