Happy Friday from Washington, D.C.! I am here at Yanik Silver’s “Underground 8” Internet conference learning a ton and meeting a lot of great people. I hope you are having a terrific week and that your March is off to a great start!

My post on “Til Debt Do Us Part” this week struck a chord…here are some comments on the global money and debt situation:

From Steve:

Kung Fu Girl,
Awsome piece. You bring these points out so very clearly, It is very hard for all of us to grasp what is really a very complicated issue. Thank you.
I only want to maybe clarify one thing, in 1972 I could fill up with a tank of gas for .25 per gallon, and at times we would call it a gas war, as low as .18 cents at times. Can you imagine a full tank of gas at 4.00 dollars. Basically the cost per gallon today. Of course wages, inflation and so forth I understand, but just imagine. The other thing is this:
On 1972 it was only 40 years removed from the great depression, now in 2012 it is 80 years removed. For me the time frame doesn’t relate— it seems the same from when I was young to my age now. But the similarities with the current situation are astounding, but it is hidden in the way the Government has dealt with the situation. No soup lines, today just food stamps and social income, if we could really put it in the perspective and relate the depression of the 30′s to today and actually see the soup lines, we would be devastated. It is hidden behind the Banking system and the supporting welfare systems today.

Thank you Steve! You are right, I can’t imagine a time when gas was under $1.00 / gallon, even though I know it was! (I wasn’t born yet in 1972). It is crazy when you look back over the years since the Federal Reserve was created to see the devaluation of our “money”. Thank you for your story!

Yes, Doug Casey calls this the “Greater Depression”…it is much like the Great Depression although so far we have avoided the deflationary spiral that happened then. But we are still suffering—sure, the DOW crossed 13,000 recently but that doesn’t change the fact that millions of people have lost much of their life savings with all of these bubbles and crashes (which happen ever more frequently now), that many Seniors are struggling to live on fixed incomes with abysmal yields (most fixed income investments yield only 1-2%), that the middle class is being systematically wiped out, and that unemployment is still staggering. Difficult times, indeed.

That’s why I keep beating on my “you can and you must become ‘smart money’ and take charge of your own financial independence” drum here at Kung Fu Finance…I really am worried about our fellow citizens! I’m so glad you’ve taken charge of yours and thank you for your nice comment.

From Honolulu Aunty:

Welcome home, Kung Fu Girl! As always, I learn so much from you about money – its history as well as its future ramifications. If only I can remember the points you make as well as how well you make them in conversations with others – then I would be mesmerizing in my brilliance!
I also signed up on Simon Black’s site SovereignMan.com, but Aunty must admit, it is a scary future out there. I am glad you are taking the steps to protect your family’s financial future and well being.
I feel like an ostrich hoping for the best but knowing all hell is about to break loose. Not a pretty picture – my small little head in the sand while my butt is being disintegrated.
It almost makes me wish for the world to come to an end as predicted by the Mayan calendar followers this year.
Almost, but I do want to live, and live well for a long time to come. I pray with gratitude and for good stuff, but also believe that we are responsible for our own destiny. So your research and wisdom are much appreciated and Aunty will take little aunty steps to solidify and protect our future. I just hope they aren’t too little or too slow.
With Aloha,

Thank you Aunty! You are absolutely doing the right thing by taking charge of your financial future but at the same time not panicking about it every second. I have really reduced the amount of news (other than financial) in my life because it is so negative, and in my heart I am an optimist and I really do believe in a better future for all of us!

Please don’t wish for the end of the world… 🙂 Life is a precious gift (I know you know that, but it is always a nice reminder when you are feeling overwhelmed or influenced by all of the negativity out there!). You are doing a fantastic job of getting yourself educated, taking action, and sharing with others, especially with us here on Kung Fu Finance…thank you!

Next, Willis asks:

Thanks so much for the insight KFG on how you check markets and for the examples on the contraction of currency KFG!! I will try out some of the sites you mentioned to get a broader understanding in what’s going on around the world. Judging from what you said it feels like everything is inter-connected in one way or another.
Greece 10 yr bond Bloomberg link says it’s still in the 34% range. Bye bye Greece?

I assume though that the world overall trend is expansion rather than contraction of currencies?

It’s incredible that the money system is the way it currently is, makes me think of a game of rat-race but with plenty of backroom deals done on higher levels to ensure no rats ever escape. Which gets me asking, why IS the money system the way it currently is – is it by design? Or is it something that progressed naturally therefore reflecting somewhat mankind’s lack of ability to come up with a better system?

Hi Willis, great questions!

Yes, Greece is toast…10-year bonds are now 37%, and yes, the world overall trend is definitely expansion of the currency supply, not contraction…central banks and governments will pull out all stops to prevent a deflationary collapse, and Ben Bernanke is known ’round the world as “Helicopter Ben” for his famous comment saying that he would do anything to avoid a 1930’s style depression—even drop dollar bills from a helicopter and scatter them all over the country!

On the “why the banking system is the way it is”, I touched on this a little in my article on “Conspiracy Theory Thursday (What Is Money? Part 2)“; specifically, was the fractional reserve banking system designed to slowly impoverish the masses (“evil and nefarious”) or just a result of capitalists trying to put money to its highest and best use (“perfectly legitimate”). While no one knows the answer for sure, the more I study this the more I side with “evil and nefarious”. The gold standard has worked well throughout history, so I know that mankind can come up with a much better system than the current one, because we already have!

I am an optimist and I hope and believe that mankind will prevail.

My apologies for the short QnA today, but I will be back home on Monday and not traveling for a bit! Have a great weekend, don’t let the negativity get you down, and get rocking those 2012 goals!

To your financial success,

— Kung Fu Girl