You don’t need a Ph.D. in economics to understand that the modern financial system, based on paper or “fiat” currency, is riddled with fundamental imbalances.
- Our money is intrinsically worthless and will eventually return to its intrinsic value.
- Our banking system is a “fractional reserve” system that only requires banks to hold a tiny fraction of deposits in cash and allows the rest to be loaned out; this system could never support a sudden demand for cash or “run on the banks” in a financial crisis.
- Our National Debt, now in excess of $21 trillion and growing, is nearly insurmountable and even unaffordable at higher interest rates. A sudden collapse in the secondary international market for US debt (or treasuries) would lead to a complete collapse of the US dollar.
- The market for US treasuries is sustained by the US Dollar’s status as the World Reserve Currency. This status is under constant challenge by competing global alternatives in China, Russia, the EU, and even OPEC.
- While regulators addressed a number of financial practices after the collapse of 2008, the regulation of a derivative market, estimated to be over $250 trillion in size, (more than 5 times world GDP) of unregulated financial instruments was hardly ever addressed. This derivative market is often characterized as a ticking time bomb waiting to destroy our financial system as we know it.
The threats to the fundamental stability of third-party paper-based assets even including money the bank are real! Protecting your portfolio with tangible hard assets such as gold and silver is wise and important. Your financial advisor and your banker are likely not talking about the threats of financial chaos, but that doesn’t mean it doesn’t exist.
However, we don’t expect you to take simply our word for it. Economists, philosophers, US Presidents, and even religious leaders have addressed issues with financial systems and monetary policy. Here are just a few memorable quotes from globally respected authorities on the matter.