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Wednesday, March 16, 2011

43% of Americans spend more than they earn

Gold-Stater Gold comment:According to a recently published Federal Reserve Board study: 43% of Americans spend more than they earn each year.

It may sound simplistic to say that each person living in this way is causing poverty, misery and starvation all around the world. However, this is indeed the case.

How so? Each and every person living in this manner bids up the price of commodities that go into making that which they consume. Grains, cotton, sugar, oil, etc. As these commodities are bid up, they become that much more expensive to those living on subsistence wages: those who can not afford to purchase more than they earn as they have no access to credit.

The economic relationship between this lifestyle of consumption based on debt and the destruction of the lifestyle of consumption based on subsistence wage labor is a simple economic fact of life.

It's true that the US government is the most egregious debt spending offender in the history of the world. Still, every US citizen who spends more than they earn is directly contributing to the food riots spreading across the face of the globe.

America and Americans can only continue this debt orgy as long as the world accepts the US dollar as the reserve currency. This is because the US government can simply print more and more dollars to pay off their debts, and bail out failing lending institutions so they can keep funneling dollars to US consumers.

This no secret to the central bankers of the world. They all know it. This is why the dollar is being sold by these world banking institutions, and gold is being purchased. It is why countries are banding together - China, India, Briazil, Russia and even France and Germany, as well as many South American and African nations, to settle commodity trades in currencies other than dollars. This is happening right now. This drives down the value of the dollar and makes consumer staples ever more expensive right here in America.

The dollar will continue to lose value as the US debts mount. And gold will be the major beneficiary of this movement.

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