Fiat Money

Among hoarders of gold and silver, there is an inherent distrust in fiat money, which is backed by nothing but faith in the economic system.  A lack of faith essentially makes money worth less.  We are obviously seeing that problem as central banks in Europe and the US create more money to prop up their rotten banks.  These actions leads to a lack of faith.  But wait, some may say, why is inflation so low?  Sure the official inflation rate is low, but that only has meaning if you want to purchase a flat screen T.V. or some such nonessential item.  Food and gas, as anyone who has to feed a family or put gas in the car knows, has shot through the roof in recent years (with the exception of the demand destruction that occurred in late 2008, of course).  The official inflation rate is only so low because it excludes anything you actually need to survive and because wages have not increased but actually dropped.  There is no hyperinflation as many fear because wages would need to increase dramatically and that is not happening.  (Although it has in China with the predictable results.) So we appear to get the worst: deflation of earnings and inflation of what we need to survive.  The breaking point has not quite arrived, but the next great shock will make 2008 look minor.

Once money is no longer trusted, what can take its place?  Well, the obvious answer is gold etc., but since very few people have much of it, alternative means of exchange will be necessary.  I suspect bartering, exchange and communal arrangements will become more common.  Now is the time to start thinking of those things.  What can you offer?  What do you need (as opposed to want)?  What can you scrounge?  These questions may become a very important considerations, and I would strongly suggest thinking about it.