Yes sure people all think they know what it is and may even understand the effects of inflation and can understand why down the road this often leads to the devaluation of a currency but few will know or understand how the money from the BoE printing press gets distributed without someone dumping it from a helicopter.

School history lessons will have taught you that the American revolution was all about freeing the slaves and therefore will not know what script money was or why it placed brother against brother or more precise the bank of England against other new banks.

Some here may had come across the words gold standard but how many know that it was illegal for an American citizen to hold gold and they were all forced to sell it to the government at a fixed rate that was below market value and that was not that long ago.

Wild west gold miners that didn’t starve to death used banks to store their gold and the gold was weighed and a hand written receipt was given out but soon people discovered that these hand written receipts for gold could be forged and hence the need for a official receipt that became known as the American dollar.

Later this gold was lent out but soon that gave way to cheques and before too long the value of the paper money was far in excess of the value of the gold held by the banks and when the miners discovered this discrepancy they were offered something new at the time called interest payments to keep them all happy.

What the miners soon became unhappy about was another new invention called inflation where a ten dollar bill was suddenly worth only nine grams of gold and not the ten they had originally deposited with the bank.

Fast forward to today and we have shorts, longs , stop losses , petrodollars, futures , derivatives , CDO’s, and something you may had come across on the news called the sub prime crisis that gave you all a 0.25% cut in interest rates but also lead to the GBP buying you 1.5% less from abroad.

Now hands up all those people that have a pension fund with XYZ who I just so happen to be working for just now who can honestly say they know what money really is.

Bring yourself up to speed by watching

Money as debt

http://video.google.com/videoplay?docid=-9050474362583451279

The money masters

http://video.google.com/videoplay?docid=-515319560256183936

Monopoly men

http://video.google.com/videoplay?docid=-7065177340464808778

Now lets talk small figures like the £1800 it has just cost every UK tax payer to bail out northern rock http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/12/19/nrock119.xml and that’s just looking at the official figures.

Lets move on to the real deal and that the $500tr plus derivatives market that is starting to unwind and that alone weighs in at a staggering $90,000 for every man woman and child on the earth.

Please don’t take my word for it and look around the internet and you will soon find many people agreeing the figure is anywhere between $451tr and $600tr with others showing calculations that put it as high as $2200tr and shown below. http://www.financialsense.com/fsu/editorials/laird/2006/0624.html

Hopefully those still reading this article can make the link back to pension funds and by now will understand the personal impact this will have on them directly and maybe tempted to stop being too greedy and to reduce there exposure to the banks and the markets but what we have left is Gold that I believe is now over priced or bricks and mortar that has already peaked in most parts of the world and is now on it’s way down again.

I was stopped at Heathrow the other day after clearing customs when I was stopped and asked if I had any money on me to which I replied about 200 quid and then the gentleman asked if that was all in sterling or was some in Euros’ sir ! kinda makes you ask yourself what the hell is going on as I am sure many Americans are asking themselves after the offices of the liberty dollar were raided a few weeks ago.

http://www.courierpress.com/news/2007/nov/15/liberty-dollar-office-raided/

Banks can try to hyper inflate their way out of trouble to some degree much like Germany did in the 1930’s and Zimbabwe is trying today but it’s likely to fail and that’s why I think we are facing a situation just like Germany and Zimbabwe where food and water becomes much more important than bit’s of paper and ownership of a few meters of mud and if I am wrong then you can always eat your stack of food or go and do your bit for charity before the sell by date is reached.

Thank you for your post!…