Gordon’s Golden Rule gets Stretched

Time to go back onto other taxes, one of my favourite taxes, basically because no-one understands that it is a tax, reared it’s ugly head. I am, of course talking about Inflation. In this case, the word was not even mentioned, yet it is the obvious net effect of future government policy. As Gordon and Alistair employ an army of skivvies to stretch, mangle and twist the “golden rule” for government borrowing, statements have already been made that the overpressed British taxpayer will not be expected to dip any deeper into his or her pockets. Net outcome therefore is that

a) The government intends to borrow money by issuing more government bonds

and

b) These guys have no idea how basic economics work. The resultant inflation and pound devaluation will do more damage to people’s pockets. Although a cynic might argue they know that, but hope it won’t happen until after the next general election.

Any attempt to issue more sterling denominated bonds means that more Pounds will be created. The government is obviously the one who gets its hands on these new pounds and feeds them into the economy through it’s own spending. After that, these pounds continue to circulate, diluting the purchasing power of the pounds already in existence. Overall, you can see why this is a good plan for Brown and Darling, although there has never been a clearer signal of why you should pull your money almost totally out of Pounds Sterling. The only solution therefore, considering the currency alternatives are Euros (20% dearer than what they cost last year), Dollars (could work out short-term, but the US has the same longer-term problems as us) or Gold and silver.

You can probably guess what I’ll be choosing, especially given I'm the author of How to Invest in Gold and Silver.

HOW TO INVEST IN GOLD AND SILVER

Time for a sneak inside look at what's covered by the new book HOW TO INVEST IN GOLD AND SILVER, by ALAN DUNWIDDIE. Here's the contents page, to give you a taster :-

• INTRODUCTION
  
• INFLATION
  
• GOLD AND SILVER AS MONEY
  
• GOLD CONSPIRACIES
  
• GOLD AND SILVER COINS
  
• GOLD AND SILVER BARS
  
• JEWELLERY
  
• OTHER GOLD AND SILVER ITEMS
  
• STORING YOUR GOLD AND SILVER SAFELY
  
• INVESTMENT FUNDS AND MINING STOCKS
  
• EXCHANGE-TRADED FUNDS
  
• SPREAD BETTING
  
• THE FUTURES MARKET
  
• DERIVATIVES
  
• PERTH MINT CERTIFICATES
  
• ELECTRONIC GOLD AND SILVER
  
• E-GOLD
  
• GOLDMONEY
  
• BULLIONVAULT
  
• OTHER WAYS TO INVEST
  
• GOLD AND SILVER INVESTING SCAMS
  
• SUMMARY
  
• ABOUT THE AUTHOR
  
• RECOMMENDED RESOURCES

The Big Government Inflation Game

When it comes to the official government inflation figures, these often understate true increases in the cost of living, due to the statistical reporting methods used. As the famous old adage goes, there are "lies, damned lies and statistics", and nowhere could this be truer than here. One trick is to reduce the real price still further if the assumed quality of an item included in the basket of goods has gone up in quality. For example, a 2007 computer could be classified as ten times more powerful than a 1997 computer, and even though they have the same retail price of say, £1,000; the figures are adjusted downward due to the increased processing power: whether you really needed that extra processing power, or whether it is even possible to buy a 1997 specification computer is not considered. Another trick is replacement, or substitution theory, where, say, if high quality beef rises in price, then it is assumed that many households will trade down to cheaper beef, or even some other type of meat.

Neither of these sound like correct ways to measure price increases in anything, but they do sound like nice ways to massage the true inflation figure downward.

What's the best way to get yourself and your savings outside of the inflationary, currency devaluation, welath destruction cycle? Buy Gold and Silver, and any other commodities you use in your daily life. Historically proven to usually work.