Letter: Protect yourselves against debt collapse

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To the editor:

The credit (debt) collapse has begun. It is no longer on the horizon, but instead is here and now.

Reckless lending — particularly in areas like high-yield corporate (or "junk") bonds, subprime auto debt, credit cards, student loans, emerging markets and oil (fracking) companies — is leading to a period of vast credit defaults. Assets with prices that were boosted by artificially low interest rates and outrageous money printing will sell for pennies on the dollar. And while no one has a crystal ball, it is safe to say that the credit collapse is just in the early innings. It would seem only prudent to get out of harm's way.

The Federal Reserve is becoming more and more irrelevant, as Americans are finally losing confidence in the central bank's fake omnipotence. While raising interest rates into economic weakness was a "brilliant" idea, Janet Yellen is actually keeping the option open for more rate hikes while the global economy continues to stumble. In other words, the Federal Reserve has absolutely no idea what it's doing. In my opinion, it will have to reverse its interest rate hike policy and head for negative interest rates like its counterparts in Europe and Japan.

With negative interest rates, we will have to pay the bank interest on our deposits instead of the other way around. And to be successful, the Federal Reserve and the U.S. Treasury will demonstrate their collusion by outlawing cash. A cashless society will enable them to prevent a run on the banks and control every transaction, as they will all be digital and therefore traceable. In addition, printing presses will immediately become obsolete, since the Fed can then create a trillion dollars with a single keystroke.

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If the truth be known, the Fed is terrified of deflation. And deflation currently has the upper hand as people, companies and countries start declaring bankruptcy. So now is the time to get what cash you can out of your bank account and hide it somewhere, preferably not in your house. Cash is king when deflation reigns.

While the government and the banks will be entirely digital, people will always accept cash for payment. But, fearing deflation as they do, it's just a matter of keystrokes until they get inflation.

Which brings me to the subject of gold. Americans know nothing about gold, except the propaganda from the government that gold is a "barbarous relic." But the truth is that just like an insurance policy on your house or car, gold provides the same service for your investment assets. Gold cannot default, and as legendary banker J. P. Morgan said: "Money is gold, and nothing else."

When the day comes when we embark on a new monetary system, he who has the gold will rule. Protect yourself by buying the real thing: physical gold, not some paper contract that claims you own gold. Store it somewhere safe, but not in your home. When the big "reset" comes in the monetary system, gold may go through the roof. But, forget all that for now, and buy it for insurance.

Charles Steinhacker, Great Barrington


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