For Small Businesses Gold Is Capitalism What Debt Is To Bankruptcy!

With the downfall of the USSR (Union of Soviet Socialist Republic) in 1991, the era of communism was over. This triumph was seen as the victory of capitalism over communism.

With the collapse of the great Soviet Empire, the U.S. emerged as the sole superpower of the world. However, the efforts of becoming the world’s greatest power did not end with this war. In recent times, the struggle of world powers continues in a new arena of capitalism in an era of paper money.

In 1991, when the USSR collapsed, communism was already much weakened, but capitalism unknowingly lost its strength and went bankrupt in its costly, decades-long fight with communism. Today, the former communist superpowers Russia and China are re-emerging and playing the game with gold against the West, including the U.S and England with their vulnerable paper money.

The Intrinsic Value of Debt-Based Currencies in Capitalist Economies

Debt-based paper currency in capitalist economies possessed an intrinsic value as it could be converted into gold upon demand. This was actually the most important component of capitalism that changed the debt-based paper currency into something different than the Government issued IOU’s (I owe you).

However, since 1971, these banknotes can no longer be converted into gold. After World War II, the U.S., in its efforts to suppress China and Russia, overspent massive gold reserves that forced it to end the gold convertibility of its Dollar. Other currencies that were tied to the U.S. dollar became fiat (money that draws its value from government laws and regulations) as a result.

After the gold convertibility of debt-based currency ended in 1971, paper money became highly unstable and worthless. The value of the currency in recent times is speculated by currency speculators making leveraged bets in a hope to achieve short term profits.

The West today is desperately hoping and trying to prevent this hyperinflationary collapse of debt-based paper money, whereas, on the other hand, Russia and China had been preparing for this very day by stockpiling gold, to combat the much-anticipated currency crisis activated by the West’s collapsing paper money.

Money in Crisis

It is an alarming situation that the U.S is on the verge of bankruptcy. Not only the country, but its people and private institutions are also exposed to a higher risk of bankruptcy. It is important to get proper debt management or else you may have to face some unexpected consequences. The government is going deeper into debt due to which the debt ceiling is rising continuously, showing no fiscal restraint.

The negative savings rate of the U.S. nation reflects the habits of private citizens. These habits do not tremendously different from those of the public sector. Yet, the signs of decline are becoming ever more apparent. So apparent, if truth be told, that it seems unlikely that banking bailouts or other gimmicks will have even short-term success.

With this economic downturn, household income continues to fall all over the developed West. Unemployment is on the rise and people are already facing severe financial repercussions. In the struggling American economy, where people already face too many financial crises in their everyday life, it has become more crucial than ever to get proper debt management in order to take better control of your finances.

Young people face terrible prospects from this financial repercussion. Complaints about wealth inequality resonate in today’s environment, not because the financial sector has bred such paper wealth, but because life is such a struggle for everyone else.

Conclusion

To cut it short, it is essential to understand that power and money are two sides of the same coin and if we look at today’s gold market, you would notice the impact of both on current gold prices. With increasing demand from Russia and China for gold, it is anticipated that gold prices will continue to rise as the reserves of gold are increasingly becoming tighter.

In these tough times, when the government and the common man are facing the consequences of economic downturn alike, it has become really important to manage your finances in order to prevent yourself from falling into the trap of debt, which may lead you to bankruptcy in worse circumstances.

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan