Economic Risks

There are many economic risks and some of them will be explained in more advanced sections of this site.

A well known risk is our use of fiat money. Fiat money is money not backed by a physical commodity like gold. Its value is based on is it's relative scarcity and the faith placed in it by the people that use it. The U.S. government is free to print as much money as it sees fit. If there is a gross imbalance between the amount of new money being brought into circulation and the amount of economic goods that are represented by an economy, then there is an unstable situation that can lead to hyperinflation.

There could be a risk with U.S. bonds. On December 13 2006, the U.S. 30 year treasury note had a rate of 5.375%. Were investors to become concerned about the future value of the US Dollar, they would demand a higher interest rate on US bonds to compensate them for the risk they are assuming.

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