The credit crisis is a hoax. Follow me for a minute.

The banks create 300K of new credit – created out of thin air via the magic of fractional reserve banking – to Joe to buy his dream home. Joe takes that 300K and pays George, the owner of the house Joe just bought.

Joe has no job, no savings, his credit cards are maxed out. Joe defaults on the mortgage. The banks can’t collect. They write off the “loan” – they don’t take it back from George. Once George is paid, he stays paid. The 300K does NOT disappear from the money supply. However, the banks now have a house on their hands they need to sell into the market quickly – holding on to it means that they pay municipal taxes and upkeep. Chances are, if they want to sell it into a market where there is stiff competition, they will sell the house at a firesale price.

George, however, takes his 300K and buys a new house, or a boat, or whatever. The point is, that 300K created by the bank, STAYS in circulation in the economy. Since Joe has defaulted, he no longer has to work for 20-25 years to pay back the 300K plus the interest back to the issuing bank, sucking those dollars back out of the money supply!

The banks and Wall Street have a crisis as Tom x 10,000,000 people have defaulted. It is an investor crisis, folks. The marionette government, operating at the behest of the banking and investor elite via the media shills, are spinning this as an imminent recession.

Now the Central Banks are stepping up and flooding the economy w/ newly minted money, under the guise that this will stave off the “dreaded recession”. What does it really mean?

It means that all this new money dumped into the economy will create a very sharp spike in inflation over the next few months.

In otherwords, you, me, and our families are going to bail out the banks via the insidious inflation tax that is going to hammer us like a fiscal tsunami.

Regardless of how you feel about gold, it has performed pretty well as a hedge against inflation. Probably would not be a bad idea to get some … while you can still afford it. Beware of speculator interest though. Gold can betray you. The gold market is one of the most heavily manipulated markets out there. In particular, central banks have a keen interest in keeping the price of gold down as they want to ensure people regard their paper franchise – the issuance of fiat currency – as strong and confident.

When you buy gold, you are hoping somewhere down the road when you need to spend it you preserved your purchasing power. This means that you are targeting a rate of return of 0%. The sad part is that is looks to be a great investment…