On a temporal note (the theme "provident living" being my excuse), here's a heads up on one of the craziest things on our economic horizons: negative interest rates. Desperate governments in Japan and Europe are turning to this ultimate expression of fiscal insanity in a bid to stimulate stagnant economies that haven't been stimulated enough by the massive market distortions created by artificially low interest rates. So now they want to force people to use their money to spend, spend, spend by essnetially taxing money saved in the bank. A negative interest rate means you pay the bank for the privilege of using your money. It's a vicious new tax on savings that no government should be able to impose on its people, disguised as just another carefully considered banking policy allegedly within the ever expanding powers given to the Federal Reserve Bank.

Negative interest rates haven't worked for Japan, and are likely to be a failure for Europe. So naturally, I expect the US to follow suit. The head of the US Federal Reserve bank, instead of mocking the insanity of such a move, recently said it was on the table for the Fed.

But won't negative interest rates just drive people to take money out of the bank and hide their cash somewhere? Yes, which is why some cynics think that it will be followed by a war on cash itself, making cash harder to use, so that everyone has to keep money in electronic form. In a world where thieves break through and steal with more power than ever before, that may very well be on the table also for our future monetary policy.

How do you prepare for a world with that kind of fiscal insanity? Turning some of your electronic bits into food storage is one way. Keeping cash on hand for now is also a very good idea, especially in light of the ability of hackers to wipe out accounts. I also think that it's smart to have some of your savings in precious metals such as silver or gold. I think over the long term these will grow dramatically in value, but make sure you are buying or investing in real physical metal and not just paper that someone claims represents gold. For retirement accounts, one vehicle that I like is the Central Fund of Canada (NYSE: CEF) where shares are backed by real gold and silver bullion.

Or you can just not worry about the future and trust someone else to watch out for you and your posterity. Your call!
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