Last week, USA Today ran a story about how leaders of the American Postal Workers Union are outraged about a pilot program that the U.S. Postal Service is testing in four states.  The Postal Service has arranged for the installation of 84 postal counters to operate within Staples office supply stores in California, Georgia, Pennsylvania, and Massachusetts.

The union leaders are upset because they fear that if the pilot program is successful, the Postal Service will expand the program to more than 1,500 other Staples’ stores.  The union is demanding that the postal counters be run by postal workers who earn an average of $25 an hour, plus health and retirement benefits.  The current plan is for Staples to staff the counters with nonunion workers who will make little more than minimum wage.

With a loss of more than $5 billion last year, the only reasonable option that is available to the Postal Service is to either reduce labor costs, or cut back on the number of days that mail is delivered.  The Postal Service simply cannot continue to absorb multibillion-dollar losses every year.

The handwriting is on the wall.  It’s only a matter of time before government employee unions are forced to endure the same losses of jobs and benefits that employees in the private sector have had to deal with over the past 20 years.

The golden years are over for the retirement system that was put into place by private industry and local, state, and federal governments after World War II.  With the globalization of the economy and the forced discounting of prices caused by online advertising, companies can no longer afford to fund pension plans for employees.  Although it may take another 15 to 20 years for all the changes to catch up with government employees, those employees are going to eventually suffer the same fate as the employees in the private sector have suffered.

Last month, a federal bankruptcy judge in Detroit ruled that past and current city employees are subject to the same treatment as all the other creditors who are owed money by the city.  The long-term effect of the judge’s ruling will be that the city employees will end up only receiving a fraction of the union-negotiated pension funds that they were promised.

There are numerous other cities and states that are currently on the brink of bankruptcy.  Illinois is one of those states.  And unless the Postal Service takes drastic action, it will also end up in bankruptcy court.

If you have a 401(k) or other retirement fund that is being managed by an investment firm, you may be in better shape than the people who are relying on government and company funded pensions for their retirement.  However, a large share of your retirement funds may be invested in electronic blips that can and will disappear if there is a meltdown in the financial markets.

I wrote last week about the danger of having your money invested in electronic blips — digital currency that is stored on computers.  Before I discuss an alternative, I need to give you a brief outline of the history of money.

Money was developed as a replacement for the bartering and trading of goods and services between individuals.  Because of the need for a standardized unit of trade, a universal currency was developed.  After experimenting with different types of commodities, it was determined that gold was the best commodity to use as a universal currency.

The reason that gold won out over all the other commodities was because it was rare, portable, simple to use, and easy to carry around.  More importantly, it had its own intrinsic value — it could be used for purposes other than as a universal currency, such as jewelry, works of art, or as a metal alloy that is resistant to corrosion and could be used to enhance the strength and value of certain products.

For the same reasons, silver also became a universal currency.

Gold and silver were used as money before the time of Christ.  Today, more than 2,000 years later, gold and silver still retain their intrinsic value.  In addition to being used in jewelry and fillings in teeth, they play an important role in our modern-day technology.  Because both metals are highly conductive, they are used in millions of the components that are critical to high-tech devices, such as computers and cellular phones.

Because gold and silver are useful and valuable resources in their own right, they are considered assets, and can best be described as “Asset Money.”

The evolution of money progressed from the use of actual gold and silver as money to the use of paper “notes” that were “backed” by gold and silver.  In the United States, these notes were referred to as “gold certificates” and “silver certificates.”  At any point in time, the owner of a gold or silver certificate could present the certificate to the government and exchange it for the actual asset that it represented.  Gold and silver certificates could best be described as “Substitute Money.”

Eventually, because of changes in policy by our politicians, the federal government stopped backing our paper currency with gold and silver.  Instead, the government started issuing paper dollars that were backed by nothing more than a “promise” that the dollars would retain their value.  Economists call this type of currency “Fiat Money.”  A better name for Fiat Money is “Fake Money.”

Over the past 10 years, we’ve evolved from the “physical world” of money to the “digital world” of money.  We now have new money being developed, such as Bitcoin, which is nothing more than an electronic blip that is stored on a computer.  Regardless of whether your savings and retirement are in paper dollars or electronic blips, all you really own is Fake Money.

The only way to safeguard your savings and retirement is to convert them from Fake Money to Asset Money.  For your savings, the simplest way to do this is to start buying ounces of gold or silver coins.  Right now, you can purchase a (pure) one ounce American Eagle Silver Coin at a local coin shop for $26.  A percentage of your retirement should be safeguarded by investments in real assets, such as gold, silver, real estate, or other tangible assets.

I don’t claim to be a finance or investment expert.  But if you take a look at the list of 100 wealthiest people in the world, you will see that they all have one thing in common.  Their fortune is comprised of Asset Money.  We could stand to learn a few things from them about safeguarding our money and our future.

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