How Sound Money Principles Can Bolster Your Personal Finances
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Sound money principles can serve to help grow the economy and restrain government. The political class, however, doesn’t particularly want to restrain itself. Washington, D.C. is addicted to the easy money policies that have enabled $20 trillion in national debt accumulation and tens of trillions more in unfunded liabilities.
Even with a new and unconventional GOP president who vows to take on waste and overregulation, the built in momentum of “mandatory” spending means the Trump budgets won’t be balanced. The debt will keep growing – and likely at a faster pace than the economy. Thus, political demand for the Federal Reserve’s artificially low interest rates and Treasury bond purchases will continue to be strong.
Short of a currency crisis that forces a monetary revolution, sound money reform efforts will have to proceed in baby steps.
Any fundamental proposed changes – such as tying the currency supply to gold and silver reserves – will encounter enormous resistance from Congress, the Federal Reserve, and its member banks. A metallic standard would also be roundly opposed by Wall Street, which benefits from the Fed’s artificial inflation of the financial sector.
You Don’t Have to Wait for the Politicians…
Even if the current monetary order proves too well entrenched to be upended within your lifetime, sound dollar principles can still be valuable to you and your family. Apply some of the timeless lessons of honest money to your personal finances, and you’ll avoid dangerous pitfalls while protecting and growing your wealth over time.
Unsustainable debt growth is a symptom of an unsound monetary system. Politicians, businesses, and consumers assume dollars will be worth less and less in the future, so they borrow more and more in the present.
It’s not entirely irrational on their part. Leveraging up works out as long as the underlying assets (the tax base, revenue streams, homes, etc.) continue to increase in nominal value as the currency depreciates. But asset booms can go bust, even within a secular inflationary trend.
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