QE2 = buy gold now

The Fed’s just announced that it will print up pieces of paper and use them to buy about $600 billion US government bonds over the next 6 months.  That’s $600,000,000,000.  That means it will grow the assets on its balance sheet by $600,000,000,000 on top of the existing $2.3 trillion.  That’s $2,300,000,000,000.

Lot’s of zeros huh?  No, not really, at least not still anywhere near the 90 sextillion percent annual inflation Zimbabwe experienced in November 2008.  That’s 90,000,000,000,000,000,000,000%, or 90 billion trillions.  So the US is still hovering in the 12-zero range as opposed to the 21-zero range.  Big difference.  Sort of.  Not really.

As Zim found out rather quickly, the transition from 12-zeros to 21-zeros happens a lot faster than you think.  Is the US the new Zimbabwe?  No, it hasn’t yet stooped to the all-out banana-republicness of our esteemed neighbour, but it IS Zimbabwe in principal.  Buying government bonds with printed cash is the same as borrowing money from thin air.  If it sounds weird it’s because it is.  And fraudulent.  And it destroys wealth… and ruins the dollar.

So the dollar, like once upon a time for the Zimbabwe dollar, is in the process of getting ruined.  All other currencies are following suit, albeit at a slower pace.

Money is dying, and QE3, QE4…QE20 will only take us further down the path of debasement and the ultimate death of money as we know.  In the meantime good money is driving out bad and will continue to do so.

If you don’t own gold yet you have to ask yourself…why on earth not?