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Wednesday, December 24, 2008

Financial Times - Cool Personal Checks

By George Shimmer

People are often confused about the economic conditions they find themselves. Everything has a cool check about label, and the extremes are that either we are living in inflationary times or a period of deflation.

Deflationary times means it costs less to buy goods and services. The purchasing power of the United States Dollar increases and is able to buy more.

Opposite of inflation is deflation and with deflation, most assets decline in value. You see the level of value of your home decline in value as well as gasoline. Corporate equities, mutual fund shares, insurances and pension reserves and equity in non corporate business decline.

There is only one exception; the U.S. dollar goes up by definition. The opposite is true. When the cost of goods and services goes up the accounting of the dollar shrinks.

When the price of the buck increases, it also increases against foreign currencies. The dollar buys more.

Check the measure of value of the dollar in your personal purchases. Is the dollar's value is going up? It's buying more gas than it used to, buys more real estate than it used to, and gets better deals shopping for cars than before. Everything costs less.

If you see your United States Dollar buying more, it means the value of the United States Dollar is increasing. The buck increases against foreign currencies as a market basket of value and it also buys more goods and services as a whole abroad.

The European economy is collapsing and the least worst currency worldwide is the United States Dollar . Your cool personal checks: for a safe place to keep your money is in U.S Treasury Bills.

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