Currency News – Time to Take on Debt?

The currency news mill is working overtime.

There have recently been more predictions of the imminent collapse of the U.S. dollar. And for good reason. According to some sources, a U.S. default is now certain.

Other sources say that the financial oligarchy — the true men in power in the U.S. — are preparing to drive the value of the dollar down by 30-50% in the next 12 months.

I’ve actually already seen the images of the plates for a new North American currency that could be released by the end of the year (2010). There are no dead presidents on these bills, but rather pictures of each of the founding members of the Federal Reserve.

How’s that for creepy?

No matter whether or not the rumors of a new currency are true, the future of the dollar isn’t looking good. And if it continues to decrease in value, it’s going to spell trouble for Americans. Which is why I think you have to ask yourself…

What If the Currency News Is True?

If the currency news is true, then that means our buying power is going to decrease during the coming months. Which means that we will not be able to buy as many products and services with the money we earn.

It could also mean that your income will go up. But this will only be an illusion of progress. While your income may increase, it most certainly will not increase as quickly as the prices of goods and services will increase.

Now let’s see how this relates to getting out of debt.

Your debt is essentially a fixed number, assuming that you are not incurring debt and you are making all your minimum monthly payments.

But in an inflationary situation, your income may be going up, as well as the prices of everything you normally buy.

This means that it will actually be easier to pay off your debt later with dollars that are worth less. I have read of stories where people paid off their homes in a just a few short years once hyperinflation kicked in.

So if I expect that we will see rapid inflation this year, it doesn’t make much sense to pay down my debt a whole lot. It makes more sense to wait and pay back the debt with cheap dollars that are easily obtained.

Protect Yourself from Inflation

In the mean time: I suggest you use the dollars you have right now to hedge against inflation. In other words, buy tangible goods… things that you think you will need this year and next.

Personally, I’ve used some zero-interest loans to acquire physical goods. I’ve done this with the expectation that the goods themselves will be worth more than dollars will be worth in the near future.

Also: I’m buying gold and silver. Owning precious metals will protect you from inflation in the months and years to come. I have already bought silver myself, and I believe this was a wiser way to spend my money than to pay down my debt.

This is just what I did, and it’s not intended to be financial advice, nor should it be considered as such. You will have to do your own research and due diligence before making any financial decisions.

Staying on top of the currency news is always a little bit discouraging… and exciting at the same time. I hope you’ve found this information helpful and interesting.