Savings – Seeing Big Picture

If you could save 20 percent of your salary each month, imagine what that would mean in real financial terms. For example, if you earn 2000 dollars per month and you saved 20 percent or 400 dollars out of every pay cheque, after 12 months you will have saved 4800 dollars! Regularly saving this amount of money would give you financial freedom to take advantage of more of life’s opportunities. You could plan special holiday you have always wanted to go on, buy car that you have been dreaming about for years, or help put a child through college. When it comes to life’s challenges, having a lump sum put away could help you pay for private medical care or deal with an expensive plumbing problem in home, all without having to turn to bank for a loan and getting into debt.

How Can it Be Done?

As we have already seen, knowing exactly where your money is going is starting point. Next, start thinking about big things you could achieve with some money in bank. Some people compensate themselves for not having what they really want, by making many frequent small purchases and getting a temporary “feel good” sensation afterwards. Rather than satisfying yourself with small purchases, such as new clothes and CDs every week or always buying latest mobile phone, think about how much more satisfying it would be to save up and buy or do something special, which you previously thought was out of your reach, but is achievable with a little effort.

Myth #3 Governments are sole source of inflation.

Governments inflate their currencies. However, they aren't sole source of inflation. In fact, they aren't primary source of inflation. Credit is a more potent factor in supplying cash to consumers to buy products, thereby adding to demand and this price appreciation. Beyond credit, there are assorted financial instruments that add worthless paper to economic system. The most dangerous of these paper instruments are derivatives. The economic force that overcame Dark Ages was lending. The lenders increased money supply and allowed city entrepreneurs to go into business and sell more products and services. The Renaissance resulted and evolved into Industrial Revolution. By 19th Century, we saw rise of Western Technological Society. After WWII, Bank of America introduced plastic money. By way, plastic has no more intrinsic value than paper or gold, but public readily accepted it. Visa's success meant introduction of Mastercard and American Express card. Today, we have as much plastic money as paper money in world. Also, inflation is result of supply and demand. The reason that oil is $60/barrel relates to fact that demand for oil has radically increased in past decade in places like People's Republic of China and India. Meanwhile, known reserves appear relatively fixed and are expected to decline in next decade. The result is higher gas prices. Prior to being caught in supply/demand vise, oil prices moved up more slowly than overall U.S. inflation rate.

#4 Inflation will destroy World Economy.

Inflation will eventually lead to a financial crisis. There is always risk that public will lose confidence in U.S. Dollar. An inflationary financial crisis is unlikely to lead to an economic crisis. The Government is well aware of risks of continue inflation and would quickly move to avert a Depression. The Underground Economy is growing and a collapse of Dollar would send millions of Americans into it. In fact, Underground Economy is a greater risk to Washington than potential that public will realize dollar is intrinsically worthless. As with Continental and Greenback dollars, Government would issue a new currency. Since it's in public interest to not ask too many questions about new currency's intrinsic value, this currency would be quickly accepted and inflationary game could be started again.

#5 Invest Conservatively During Inflationary Periods.

You can't beat system by accepting financial illusion that more dollars that buy less are a safe investment. You need to find relatively low risk investments that pay well enough to offset inflation and give you a net gain in buying power. I'm aware of one and I'm sure there are many more. Take time to get past hype and find these investments.

If you can pay your debts until there is an inflationary crisis, you will be a winner in inflationary game. The winners of Weimar Republic hyperinflation after WWI were those who borrowed Marks and repaid them when mark was worth nothing. The problem is maintaining your debt load until everyone agrees that paper dollar is worthless. Borrowing is financially beneficial. Too much borrowing can be fatal to your short-term future.

In our world, nothing is as it seems. Look beyond puppet show and find reality. If you fail to do so, you could find yourself and your family dinning in a soup kitchen in a few years.