Preparing Your Home Business For Economic Downturns

I am going to start off this post with a story just about everyone is familiar with.  I’m doing this because it perfectly illustrates what I’m going to be discussing today.  And that topic is inflation and how the act of printing money will affect your home business.

The Ant and The Grasshopper ~ Aesop

An Ant was spending a frosty winter’s day drying grain he had collected during the summertime.  A Grasshopper, dying of hunger, passed by and earnestly begged for a little food.  The Ant inquired of him, “Why did you not stock up on food during the summer?”  He replied, “I had no time.  I passed my days singing.”  The Ant then said in derision, “If you are foolish enough to sing all summer, you’ll dance supperless to bed in winter.”

So what does this story have to do with your home business?  It is simply a lesson on being prepared.  If the economy suddenly turns south, are you prepared for it?  Do you need to start planning ahead now to protect yourself?  The answer to that question is, undeniable, YES.  To get some insight into what we are facing, I would recommend watching this 10min video to get an overview, and to opt-in to watch the full 90-min video.  But time is of the essence, as the videos will be coming down at midnight on Sunday, Dec 19th (TODAY).

A quick economics lesson, along with a few charts will help illustrate this point.  There has been something very scary going on in the U.S the last couple of years, and that is the government’s action of printing money.  Not to mention the issue of the government spending much more money than they take in.  Now, if your business was spending more money than it was taking in, you would soon go out of business.  However, the federal government can delay this action simply because they can print more money to pay for their debts.

In fact, with all the bailouts, social programs, and pork recently, the U.S. has printed more money in the past 24-months than in the first 200yrs of existence.  As more money is added to the economy, the actual value of the money decreases.  And as the value of the dollar decreases, it now costs more dollars to pay for items.  This chart shows the amount of money in the system.  Notice the point where we went vertical…right along with the first bailout.

This is known as inflation, and it is already starting to rear its ugly head.  For instance, the price of cotton has increased 100% in the last year.  Grain, oil, metals…all increased last year.  And if people are paying more for groceries, heat, and gas they may be less likely to spend money on your products.  You need to prepare  yourself and your business for this.

Take a look at these next two charts.  They show the price of gold and silver over the past 30yrs.  Notice how the price of both metals increase right along with the increase in the money supply?

GOLD SILVER

Another interesting point to make is the fact that the U.S. Dollar has been the world’s reserve currency for the last several years.  However, as the value of the dollar continues to decrease, this run may very well be coming to an end.  You see, the dollar used to be backed by gold.  However, in 1971, President Nixon took us off the gold standard, turning the dollar into a fiat currency overnight.  And history shows us, a fiat currency has NEVER been able to survive.  What happens if the dollar is no longer the world’s reserve currency?  Or if it fails entirely?  The value of the dollar will go down even further, and prices will continue to rise.  You may think this could never happen in the U.S., but it already is.

Remember the story of the Ant and the Grasshopper?  Wouldn’t you rather prepare for winter by storing grain versus having no grain?  If it is a mild winter, well…then you are still no worse off.  But if it is a bad winter, you are prepared.  This is the time you need to consider a purchase of gold and silver to protect your assets.  Don’t wait around like the Grasshopper.  Prepare now before it is too late.

Again, arm yourself with information and knowledge.  Don’t just take my word for it.  Watch this video to see for yourself the 7 stages of currency, where we are now, and what the future is going to bring.

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