In contrast with gold news, paper money-related news is no good news lately. Central Banks have repeatedly printed money and analysts have repeatedly explained their methods of modifying the value of national currency without triggering inflation, but the results of these measures were others than expected.

The Keynesian economic model, recommending Quantitative Easing as a method of avoiding financial crisis, is at the core of such a behavior. In this method a central bank is supposed to issue out extra money to buy up government bonds, thus decreasing the interest rate on government bonds. This way the revenue of all other bonds referenced to government bonds will be altered. Mortgages and borrowing costs should lower because of this, and savings made here by individuals and companies will lead to various new purchases.

Money in excess has already been printed twice by the Federal Reserve since 2008. This has been aimed at lowering the interest rates and winded up doing the opposite, as the rates went up. And interest rates went down significantly thrice after 2008, when the Federal Reserve ceased issuing out money.

Printing has once again been resumed, while the Keynesian model is clearly outdated. Hyperinflation is probably what the U.S. and Europe have to expect from not taking notice of this gap between theory and practice.

And even more issues concerning government bonds have been revealed with the case of Greece. A loan from a bank or a bond investor to a government is transaction implying commitment on both sides. The incapacity of a borrower to return loans leads to money loss in case of the investors.

Governments borrow on behalf of their states. Such debts are regarded as lower risks because states are long lived entities and payment terms can be renegotiated. Greece has been credited for this reason, irrespective of bad management of these credits. But another problem arises now with the case of Greece: a government has created a debt which would burden several generations but the citizens of the country may refuse to identify themselves with that government.

The economic laws of capitalism under which such loans are contracted don’t change if the borrower is a state, and not a company or an individual. But in the case of Greece, a member of the newly formed European Union, credited by different European economic entities, these laws have apparently been abolished. Economic laws and political interests collide, while the default of Greece is being postponed by politicians.

The European Union will eventually move towards political pragmatism and the U.S. economy will move towards better economic solutions than government bonds, under the force of the collapse of paper money. If not, more countries can repeat the case of Greece. Till then, following the gold news is the best thing for private investors who need a smoother way out, with paper money not being involved.

You will be able to make the right choices concerning your investment by reading the best gold news.