The American consumer is financially exhausted. After at least 40 years of the credit lifestyle – buying essentially unaffordable homes, cars, shoes – many are stretched to their limit, or beyond. There simply isn’t any money left to spend.

And yet, the United States government believes that the quickest way out of the situation – the best way to stimulate the economy – is to encourage spending. They’re doing this by bailing out the banks, so that they’ll be more liquid (and offer credit to their customers). And by handing over cash to inefficient car companies. And by throwing money at the problem (rather like handing a heroin addict some more heroin). The truth is, though, that the more money they print, the more they encourage inflation. Which makes those cars, for example, even more unaffordable. So consumers instinctively want to save – yet the government wants them to spend in order to save the economy. It’s a stalemate.
The spiral of inflation can be stopped, of course, if the government stops printing money. But, so far, that’s their only solution. That money is becoming less and less valuable.

Gold, however, is not.