Retirement Income planning cannot be put on automatic control or with a buy and hold approach. Most investments or all investment consists of speculation and this is where retiree's make pivotal costly financial mistakes. We can show you how to attain, steady predictable, guaranteed income that will provide a lifetime income stream without all the management cost, risk, and market mania. So, first, guarantee your income stream an then speculate with the remaining dollars.......
A detailed review of the causes and effects of income inequality. Details on how extreme it is. Citation of many authors suggesting how it came about and what to do about it.
Retirement Income planning cannot be put on automatic control or with a buy and hold approach. Most investments or all investment consists of speculation and this is where retiree's make pivotal costly financial mistakes. We can show you how to attain, steady predictable, guaranteed income that will provide a lifetime income stream without all the management cost, risk, and market mania. So, first, guarantee your income stream an then speculate with the remaining dollars.......
A detailed review of the causes and effects of income inequality. Details on how extreme it is. Citation of many authors suggesting how it came about and what to do about it.
Post Globalization Issues and Power shift of the CenturyZeeshanMajeed15
GlobalizationWe can define globalization as the increasing interdependence and integration of economies, markets, nations, and cultures.
OR
Globalization envisages a borderless world or seeks the world as a global village.
OR
Globalization is the flow across national borders of trade, finance, people, and of course ideas.
Power shift of the CenturyEra of globalization is ending and giving way to new power centers.
Globalization world was where interconnectedness and the people used to do the same in terms of law and approaches but now we are witnessing the clash of civilizations.
We are now going to a multipolar world where at least three big regions do things increasingly differently.
How can we slow (1) increasing income inequality & (2) US debt.Paul H. Carr
How can we slow (1) increasing income inequality & (2) National Debt?
Possible solutions might include Keynsian and trickle-up economics. Might the Moral Equivalent of War increase social capital and wealth taxes?
Reform COVID19's Inequality to Avoid RevolutionsPaul H. Carr
COVID19 amplifies inequality, increasing tensions between poor Blacks, Whites, Police, and Immigrants. Economically disadvantaged Blacks joined by Whites are taking to the streets to demand reform. Economic inequality contributed to the French Revolution and to our Civil War, with the most casualties in our history.
We need reform to prevent revolutions. Karl Marx’s wrote his 1847 Communist Manifesto in response the newly rich industrialist’s exploitation of the poor workers in England. During this time, author Charles Dickens, as a boy, had to work ten-hour shifts pasting labels on bottles to support this family, because his father was confined in Debtor’s Prison.
In 1917,Trotsky led the Communist Revolution in Russia that ousted the Tsars’ monarchy. In 1924 Stalin emerged as the leader of the USSR. After WWII, the US fought the Korean and Vietnam Wars to stop the Communists from overrunning the world.
The rich, miserly Scrooge in Charles Dickens’ “Christmas Carol” underwent a conversion to a generous person who celebrated Christmas. In contrast to the Communist revolution, this can be a metaphor for the rule of law that enabled the US to overcome worker exploitation. The US passed child, labor, and anti-trust laws that constrained the power of the rich industrialists.
Since the 1980s, hourly worker pay has not increased in proportion to inflation and increased productivity. This disparity is increasing economic inequality. Most of the increased productivity pay has gone to those with education beyond a bachelor’s degree.
The minimum federal pay of $7.25 per hour has not been increased for over a decade. To keep up with inflation and productivity increases, the minimum wage should be gradually advanced to $ 20 per hour. Recently the minimum wage in Washington, DC increased to $14 per hour.
The property tax that funds public schools results in poor neighborhoods having poor schools and rich neighborhoods having good schools. State, federal, and corporate funds are needed to keep poor kids from being locked into poverty. Our high tech civilization needs an educated workforce. Let’s educate our poor rather than import educated immigrants. We must also reform our tax structure and corporate policies.
Macro Manifesto - Investment Outlook for 2015
ABRIDGED RELEASE FOR PUBLIC DISSEMINATION
John Winsell Davies
CIO - Fund Manager
The ‘New Charismatics’, leadership and financial markets
- in the post-consensus, post-parliamentarian world
Narendra Modi - Gujarati brand of compassionate conservatism
Xi Jinping - Bigger than Moa, stocks trump ‘SUFFR’
Shinzō Abe - Brave Diet; audentes fortuna Iuvat ... and Abe
Joko Widodo - Clove Revolution ‘A New Hope’, the Luke Skywalker of Asia
Abu Bakr al-Baghdadi - Badder than Bin Laden, ‘Black Crow’ event in the making
Enrique Peña Nieto - PEMEX RIP, Mano e mano with El Jefe, Yo Soy 132 be damned
Hassan Rouhani - The promise of Khatami realised 2015? EM investors refocus on Iran
Vladimir Vladimirovich Putin - VVP’s Russia, the endgame as I see it
Kim Jong-un - Fun Boy Three, no laughing matter
Emerging Markets corporate governance mandates
- total return not ideology
Where is the floor? Marginal supply and the economics of unconventional oil production
The Dollar Bully World - Captain America still feeling Marvel-lous
What’ll it be? Call drinks for in the New Year
Asset allocation - Huntington, Hopkins, Stanford and Crocker
Geographic dispersion - favoured destinations
Industry sector - priority focus
... Independent Global Macro and Emerging Market Investment Analysis
This is an original opinion piece which may not reflect the views of the Firm
No other parties contributed to the production of this publication; the opinions expressed here are his own
Registered in England and Wales: 02895959 | Authorised and regulated by the Financial Conduct Authority: 170913
My article published in Eurasia Review yesterday (March 9, 2013) has thrown some lights on how we are suffering in the world that is both leaderless and defenseless. It also gives some evidences and few suggestions that can help us to manage with.
https://journalistethics.com/
Free book available at this link
Coronavirus Corona Virus COVID-19 COVID19
Flu Influenza Virus Pandemic
Xi Jinping China Wuhan Province Italy Iran Donald Trump
CDC Center for Disease Control Pandemic
Govt butt heads War Room slides -- 01-24-2019hiddenlevers
Just as the government shutdown started, markets got their mojo back. US indexes are up over 10% since Christmas while pundits, including Jamie Dimon, project a dire economic impact of a US government in such disarray.
- Is gridlock a GDP killer?
- When will govt dysfunction impact markets?
- What is the economic impact of a Trump Wall?
Join us as we introduce a new scenario – DC Delinquency, and consider all possibilities, including the potential impact of another downgrade on US Treasuries.
Post Globalization Issues and Power shift of the CenturyZeeshanMajeed15
GlobalizationWe can define globalization as the increasing interdependence and integration of economies, markets, nations, and cultures.
OR
Globalization envisages a borderless world or seeks the world as a global village.
OR
Globalization is the flow across national borders of trade, finance, people, and of course ideas.
Power shift of the CenturyEra of globalization is ending and giving way to new power centers.
Globalization world was where interconnectedness and the people used to do the same in terms of law and approaches but now we are witnessing the clash of civilizations.
We are now going to a multipolar world where at least three big regions do things increasingly differently.
How can we slow (1) increasing income inequality & (2) US debt.Paul H. Carr
How can we slow (1) increasing income inequality & (2) National Debt?
Possible solutions might include Keynsian and trickle-up economics. Might the Moral Equivalent of War increase social capital and wealth taxes?
Reform COVID19's Inequality to Avoid RevolutionsPaul H. Carr
COVID19 amplifies inequality, increasing tensions between poor Blacks, Whites, Police, and Immigrants. Economically disadvantaged Blacks joined by Whites are taking to the streets to demand reform. Economic inequality contributed to the French Revolution and to our Civil War, with the most casualties in our history.
We need reform to prevent revolutions. Karl Marx’s wrote his 1847 Communist Manifesto in response the newly rich industrialist’s exploitation of the poor workers in England. During this time, author Charles Dickens, as a boy, had to work ten-hour shifts pasting labels on bottles to support this family, because his father was confined in Debtor’s Prison.
In 1917,Trotsky led the Communist Revolution in Russia that ousted the Tsars’ monarchy. In 1924 Stalin emerged as the leader of the USSR. After WWII, the US fought the Korean and Vietnam Wars to stop the Communists from overrunning the world.
The rich, miserly Scrooge in Charles Dickens’ “Christmas Carol” underwent a conversion to a generous person who celebrated Christmas. In contrast to the Communist revolution, this can be a metaphor for the rule of law that enabled the US to overcome worker exploitation. The US passed child, labor, and anti-trust laws that constrained the power of the rich industrialists.
Since the 1980s, hourly worker pay has not increased in proportion to inflation and increased productivity. This disparity is increasing economic inequality. Most of the increased productivity pay has gone to those with education beyond a bachelor’s degree.
The minimum federal pay of $7.25 per hour has not been increased for over a decade. To keep up with inflation and productivity increases, the minimum wage should be gradually advanced to $ 20 per hour. Recently the minimum wage in Washington, DC increased to $14 per hour.
The property tax that funds public schools results in poor neighborhoods having poor schools and rich neighborhoods having good schools. State, federal, and corporate funds are needed to keep poor kids from being locked into poverty. Our high tech civilization needs an educated workforce. Let’s educate our poor rather than import educated immigrants. We must also reform our tax structure and corporate policies.
Macro Manifesto - Investment Outlook for 2015
ABRIDGED RELEASE FOR PUBLIC DISSEMINATION
John Winsell Davies
CIO - Fund Manager
The ‘New Charismatics’, leadership and financial markets
- in the post-consensus, post-parliamentarian world
Narendra Modi - Gujarati brand of compassionate conservatism
Xi Jinping - Bigger than Moa, stocks trump ‘SUFFR’
Shinzō Abe - Brave Diet; audentes fortuna Iuvat ... and Abe
Joko Widodo - Clove Revolution ‘A New Hope’, the Luke Skywalker of Asia
Abu Bakr al-Baghdadi - Badder than Bin Laden, ‘Black Crow’ event in the making
Enrique Peña Nieto - PEMEX RIP, Mano e mano with El Jefe, Yo Soy 132 be damned
Hassan Rouhani - The promise of Khatami realised 2015? EM investors refocus on Iran
Vladimir Vladimirovich Putin - VVP’s Russia, the endgame as I see it
Kim Jong-un - Fun Boy Three, no laughing matter
Emerging Markets corporate governance mandates
- total return not ideology
Where is the floor? Marginal supply and the economics of unconventional oil production
The Dollar Bully World - Captain America still feeling Marvel-lous
What’ll it be? Call drinks for in the New Year
Asset allocation - Huntington, Hopkins, Stanford and Crocker
Geographic dispersion - favoured destinations
Industry sector - priority focus
... Independent Global Macro and Emerging Market Investment Analysis
This is an original opinion piece which may not reflect the views of the Firm
No other parties contributed to the production of this publication; the opinions expressed here are his own
Registered in England and Wales: 02895959 | Authorised and regulated by the Financial Conduct Authority: 170913
My article published in Eurasia Review yesterday (March 9, 2013) has thrown some lights on how we are suffering in the world that is both leaderless and defenseless. It also gives some evidences and few suggestions that can help us to manage with.
https://journalistethics.com/
Free book available at this link
Coronavirus Corona Virus COVID-19 COVID19
Flu Influenza Virus Pandemic
Xi Jinping China Wuhan Province Italy Iran Donald Trump
CDC Center for Disease Control Pandemic
Govt butt heads War Room slides -- 01-24-2019hiddenlevers
Just as the government shutdown started, markets got their mojo back. US indexes are up over 10% since Christmas while pundits, including Jamie Dimon, project a dire economic impact of a US government in such disarray.
- Is gridlock a GDP killer?
- When will govt dysfunction impact markets?
- What is the economic impact of a Trump Wall?
Join us as we introduce a new scenario – DC Delinquency, and consider all possibilities, including the potential impact of another downgrade on US Treasuries.
A list of blogs and articles by Shamik bhose...a list of links and summary of TV interviews of Shamik on National business channels like ET Now or Cnbc or Zee Business news etc etc..
Student name
Professor name
Course number
date
American future economic conjecture
From Piketty’s view about the American economy, I think the most likely outcome during the next 20 or 30 years will not be very good, may be massive bankruptcies, wars and revolutions. Although we had a period which called Golden Age, when the income inequality was very low, and the economic growth stayed in a high rate. However, the 1945-1975 period high-speed economic growth was not normal, it was just a historical exception. From Michael Lewis’s book Boomerang, we knew that as recently as 1980s, Ireland was one of the poorest countries in the world and it became the richest country in 2007. However, when the financial crisis occurred in 2007, the Irish economy suffered a devastating blow. The strength of Ireland had not recovered yet.
There were many serious problems we are face right now. Economic growth is usually driven by population growth and production efficiency. However, both of these conditions have slowed in the United States over the past decade. The newest data from National Center for Health Statistics shows that the number of American babies born in 2017 fell by 2% from 2016 to only 3.85 million. The birth rate has been falling for three consecutive years and reached the lowest point in the recent 30 years. The Fed raised its short-term economic growth forecast to 2.7% in March this year and 2.4% in 2019, in part because of the government's tax cuts. However, the Fed’s longer annual growth forecast is 1.8%, reflecting the resistance of the population. In addition to the reduction in labor, an aging society will delay economic growth as fewer and fewer people buy homes, cars and other expensive items. As people age and prepare for retirement, savings usually increase. Piketty’s the second fundamental law of capitalism β = s / g explain this situation. In the long run, the capital/income ratio β is related in a simple and transparent way to the savings rate s and the growth rate g. Based on the historical events, the capital/income ratio β would be high when the country faced the financial problems. For example, in 1990s, Japan faced a housing bubble, the capital/income ratio reached to 700%. Japanese people lost confident the government and saved their money as much as they could, the Japanese economy almost destroyed. The capital/income ratio for America today is about 500%, which is closed to the point in the World War I. Something must be happened so it can change this situation.
The income inequality is another serious social and economic problem. Inequality reached its lowest ebb in the United States between 1950 and 1980: the top decile of the income hierarchy claimed 30 to 35 percent of US national income. However, income inequality exploded in the United States since 1980. In the U.S. the top 10% people own about 50% of total income in 2010. The top 1% even have 20% of the total.
“Rebooting after the economic crash: IT, ET and America 3.0.”
Professor Jonathan Taplin , USC Annenberg School and ARNIC
The financial crisis will leave the next president with the task of rebuilding a shattered American economy. Professor Taplin will describe the potential roles of information technology and energy technology in America 3.0.
It is time for humanity to provide the urgently as possible tools needed to take control of their destiny and put in place a democratic governance of the world. This is the only means of survival of the human species and to halt the decay of humanity. Because there is no other means capable of building a world in which every woman, every man of today and tomorrow have the same rights and the same duties, and in which the interests of the planet and of all nations, of all forms of life and future generations would be finally taken into account, in which all the sources of growth would be used for environmentally and socially sustainable way.
Chapter 9 Global Inequality and PovertyONE PHOTO CAPTURES A SH.docxbissacr
Chapter 9 Global Inequality and Poverty
ONE PHOTO CAPTURES A SHARP CONTRAST BETWEEN RICH AND POOR IN THE DEVELOPING WORLD. The high-rise buildings in the background are apartments for the wealthy.
Learning Objectives
1. 9.1Examine how widening gap between rich and poor strengthens inequality-perpetuating institutions
2. 9.2Contrast between the viewpoints of globalists and antiglobalists on the effects of globalization
3. 9.3Examine the causes and the impact of domestic or global inequality between nations
4. 9.4Examine the economic, social, and educational inequality that exists within rich countries
5. 9.5Examine the inequalities that exist in different aspects of life in poor countries
6. 9.6Review the six dimensions of poverty that can be used to gauge poverty
7. 9.7Evaluate some of the measures for diminishing poverty and reducing inequality
The richest eighty people in the world control as much wealth as the poorest half of the world’s population. Thirty-five of those eighty are Americans. The top 1 percent of the world’s richest people control 48 percent of the world’s total wealth. More than one billion people in the world live on less than $1.25 a day. Inequality exists within the United States. The richest four hundred Americans own more assets than the poorest 150 million, or almost half the population. The bottom 15 percent, about forty-six million people, live in households earning less than $22,000 per year. The top 5 percent of households in Washington, D.C., make an average of more than $500,000, while the bottom 20 percent make less than $9,500. Conflict between rich and poor is now the greatest source of tension in American society. Economic inequality has emerged as a dominant global issue that has fueled massive protests and popular uprisings. The global financial crisis and economic recession have rekindled debates about inequality and its consequences. Discussions about wealth and poverty and how to achieve greater equality are as old as human society. They demonstrate a perennial concern about the implications of inequality for the security and well-being of communities. Given the persistence of inequality among individuals, groups, and nations over centuries, this debate is interminable. Struggles to achieve equality are also endless. Issues pertaining to global inequality and poverty permeate almost every significant global problem, from trade to the environment, from terrorism and criminal activities to democratization and human rights, and from ethnic conflicts to the proliferation of weapons of mass destruction. As we have seen, popular uprisings in the Middle East and North Africa were strongly influenced by widespread inequality and poverty. Consequently, as our discussion shows, inequality and poverty are closely connected to politics, economics, and culture.
A central question addressed in this chapter is whether inequality matters. Human societies are inherently unequal due to variations of abilities, opportun.
The end of globalization with the new coronavirus pandemicFernando Alcoforado
This article aims to demonstrate that contemporary globalization is threatened due to the continuing depression in the world economy that started in 2008, the pandemic of the new Coronavirus that shook international trade, the dizzying public, family and business indebtedness further aggravated by the pandemic. and the deepening of the economic stagnation that hit the entire world economy. The world faces the prospect of profound change with a return to the national economy that would be self-sufficient. This shift is the exact opposite of globalization. The longer the pandemic lasts, it will compromise globalization and reinforce the discourse of the search for national self-sufficiency.
Ziad Abdelnour, Lebanese American author, trader and financier is President & CEO of Blackhawk Partners, Inc., a “private family office” that backs talented operating executives in growing their companies both organically and through acquisitions and trades physical commodities.
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1. "Paper money eventually returns to its intrinsic value ZERO" -
Voltaire 1729
APRES NOUS LE DELUGE
By admin golds , March 6, 2011 @ 5:17 pm In 1. Egon von Greyerz'
Newsletters,Commentary (English)
APRES NOUS LE DELUGE
by Egon von Greyerz
Happy days are here again! Stock markets are strong, company profits
are up, bankers are making record profits and bonuses, unemployment
is declining, and inflation is non-existent. Obama and Bernanke are the
dream team making the US into the Superpower it once was.
Yes, it is amazing the castles in the air that can be built with paper
money and deceitful manipulation of all economic data. And Madame
Bernanke de Pompadour will do anything to keep King Louis XV Obama
happy, including flooding markets with unlimited amounts of printed
money. They both know that, in their holy alliance, they are committing
a cardinal sin. But clinging to power is more important than the good of
the country. An economic and social disaster is imminent for the US
and a major part of the world and Bernanke de Pompadour and Louis XV
Obama are praying that it won’t happen during their reign: “Après nous
le déluge”. (Warm thanks to my good friend the artist Leo Lein).
3. A deluge of an unprecedented magnitude is both inevitable and
imminent. The consequences of the economic and political
mismanagement will have a devastating impact on the world for a very
long time. And the consequences will touch most corners of the world in
so many different areas; economic, financial, social, political and
geopolitical. The adjustment that the world will undergo in the next
decade or longer, will be of such colossal magnitude that life will be very
different for coming generations compared to the current social,
financial and moral decadence. But history always gives us lessons and
the one that is coming will be necessary and eventually good for the
world. But the transition and adjustment will be extremely traumatic for
most of us.
We have reached a degree of decadence that in many aspects equals
what happened in the Roman Empire before its fall. The family is no
longer the kernel of society. More than 50% of children in the Western
world grow up in a one parent home, either being born by a single
mother or with divorced parents. Children are neither taught ethical or
moral values nor discipline. Many children consider attending school as
optional and education standards are declining precipitously. Most
families do not have a meal around the dinner table even once a week.
Sex and violence are common place on television and in real life. Both
press and television create totally false values and ideals. Everyone
must be young and beautiful often enhanced by surgical or digital
means. Old people have little value and their wisdom is not benefitting
the younger generations.
The Golden Calf or materialism is the ultimate value that is worshipped
and no means are eschewed to attain material goals. Since most of the
prosperity that has been achieved in the last 40 years is based on
printed money and debt, it is totally false and unsustainable. A major
part of the Western world has improved their living standard, by
exchanging services and swapping houses at ever rising prices financed
by printed paper and credit. The perceived wealth that is created out of
this is illusory and ephemeral. We have created a world economy
which is based on debt and thin air.
(Click image to enlarge)
4. The Gini coefficient of income and wealth is now reaching extremes
in many countries. This measures the inequality between the rich and
the poor. In the US the Gini coefficient is now at the same level as in
the 1920s before the depression. In countries like the US, the rich are
getting richer whilst 45 million people live below the poverty line, 43
million receive food stamps and over 700,000 are homeless. With a real
unemployment rate of 22% and urban youth unemployment much
higher, the US will soon experience social unrest.
But it is not only the US that will experience financial misery, famine
and social unrest. This will also hit most European countries and in
particular the UK, southern Europe, Eastern Europe and the Baltic
States as well as African countries, the Middle East, Asia, yes in fact the
whole world.
Are boom and busts inevitable?
Well if you listened to the former British Labour Prime Minster Gordon
Brown, he proudly declared that he had abolished booms and busts and
thus economic cycles. But he was expeditiously thrown out at the next
bust which of course had nothing to do with him since he blamed the US
sub-prime market for his ill-fated destiny.
Cycles or ebbs and flows are a natural part of both economic life and
nature. And right at the point when something could be done to limit the
damage, most nations seem to have the uncanny knack of selecting the
political individuals who will put fuel on the fire and make the situation
catastrophically worse.
Greenspan was one such individual. During his 19 years as Chairman of
the Fed, he could have limited the economic and social damage that the
US would suffer. Instead he took every single measure possible to
ensure that there would be a catastrophe with uncontrollable
consequences. But we shouldn’t just blame the incompetence of
Greenspan. It was sickening to watch every sycophantic congressman
and senator licking Greenspan’s boots and praising his wisdom. Because
Greenspan’s money printing and incompetent interest rate management
created one of the biggest financial bubbles in world economic history.
But the politicians loved this. It made the stock market boom, and
house prices surge. Thus the politicians were all loved by their voters
who did not understand the dire consequences that were looming. And
Bernanke de Pompadour is continuing the same disastrous policies of
creating money out of thin air. When will they ever learn that creating
money out of thin air and running astronomical deficits that never will
be repaid with normal money leads to the road of total ruin? When will
they ever learn? The very sad answer is that they won’t and therefore
they are leading the world into a hyperinflationary depression that will
have uncontrollable and cataclysmic consequences for current and
future generations.
5. Empty stomachs are rioting
We have for years warned about hyperinflation leading to famine,
misery and social unrest. Well, this is exactly what is happening in many
parts of the world. The protests and overthrowing of regimes in Tunisia,
Egypt and Libya are primarily due to a major part of the peoples of
these nations having no job, no money and little food. It is their empty
stomachs that are rioting. In addition they are protesting against the
leaders of these countries stealing from the people.
It is virtually certain that these riots will spread to many countries in the
Middle East, Africa and the developing world. This will lead to new
regimes and new political orders that could either be far left or far right
politically or religious extremists. But the new regimes will not be in a
position to change the root of the problem which is famine and poverty.
In Egypt for example there has been a quiet military coup. It is unlikely
that a democratic regime will take over from the military. So the people
will protest again and again. And this will be the same in most
countries. Eventually the people will take the law into their own hands
since no regime will be able to give them the food that they need.
The hyperinflationary deluge is imminent
Although food and fuel inflation is rampant worldwide already, we are
only seeing the very beginning. Massive oil price rises are likely to
continue as a result of the geopolitical situation as well as peak-oil. The
Middle East is a time bomb waiting to go off. Israel is in an extremely
precarious position and the involvement or non-involvement of the US in
this conflict would both have dire consequences for Israel and peace in
the world. Food prices will continue to rise dramatically. Major parts of
the world are living below the poverty line today and this will increase
exponentially.
The lethal concoction of rising food and fuel prices is already affecting
the Western world. The Continuous Commodity Index – CCI, (60% food,
17% energy and 23% metals) has almost doubled since the low in early
2009 and has gone up 42% in the last 12 months. The almost vertical
rise of the CCI is one of the best indicators of hyperinflation being
6. imminent. A catastrophe of astronomical proportions is looming.
This will hit the world at a time when there is no capacity
whatsoever to take any real measures that could alleviate the
problems.
(Click image to enlarge)
Most countries are already running major deficits which will increase
dramatically in the next few years. The banking system is bankrupt and
is only holding together due to false valuations of toxic debt and
derivatives. This is done with the blessing of governments since virtually
no major bank could face an honest valuation of its assets.
Unemployment and especially youth unemployment is currently a
problem worldwide and it will get much worse. In 2010, the US
government spent 60% more than its revenues. In order to balance the
budget individual and corporate income taxes would have to double.
7. Never before in history has the world run out of real money as
well as (affordable) food and fuel simultaneously. But his is
exactly what is happening now and it will get substantially worse in the
next few months and years.
Financial misery, famine and high unemployment combined with
governments that will not be in a position to give real help are a recipe
for disaster that will lead to social unrest and revolutions not only in
developing countries but also in the West. Hungry people are desperate
people and desperate people do desperate deeds. We could see already
in 2011 food shortages, and riots both in Europe and in the US.
Hyperinflation Watch
The following are INDISPUTALBLE FACTS:
• The US dollar is down 82% against gold since 1999
• The US dollar is down 49% against the Swiss Francs since 2001
• The Dow Jones is down 81% against gold since 1999
• The Continuous Commodity Index is up 100% since 2009
8. The above facts are clear evidence of an economy that has been totally
mismanaged. But more importantly most of these trends are now
starting to accelerate – a clear sign that hyperinflation is just around the
corner.
With years of negative net worth and negative cash flow, the US is
bankrupt today. The Federal deficit is forecast to increase by at least
another $ 5 trillion in the next 5-7 years. Add to this the State deficits,
the Municipal and City deficits that are rising at a galloping rate and we
have a country that is going to haemorrhage to death in the next few
years. One wonders when the totally ineffective and clueless rating
agencies are going to fathom this. Not that it will matter if they once
do. One also wonders what Mme Bernanke de Pompadour and his court
are thinking. “She” and her courtiers should have above average
intelligence and could not possibly avoid seeing the facts that we all see
today (of course, some of us have seen it coming for over a decade).
But “she” has to please her master King Louis XV Obama and her
devotion to the king goes above all reasonable common sense, or
9. rationale. So the two of them will continue to crank up the printing
press and drown their people and the world in worthless paper.
Stock Market
To believe that the current money printing liquidity boom is real and
sustainable would be a very serious and expensive mistake. The
temporary and illusionary pickup that we are now seeing in the economy
and stock market is the normal initial phase of a hyperinflationary
economy. It must not be mistaken for a real improvement in the
economy.
The normal pattern at the beginning of a hyperinflationary period is that
stock markets surge. This is the result of the increased liquidity and a
flight to more inflation proof assets. This was the case in for example
the Weimar Republic and Zimbabwe. Just look at the chart below of the
Zimbabwe stock exchange that went from 1,420 in January 2005 to 5.4
trillion in June 2008, a 3 billion per cent increase. That was of course in
Zimbabwe dollars. In US dollars the stock exchange went sideways with
major volatility. So in hyperinflationary terms stock markets could
continue to rise initially thus making them a better investment than
cash. However, measured against real money, the Dow has gone down
82% against gold since 1999 and 86% against silver since 2001 (see
10. chart above). We are currently seeing a dead cat bounce but we expect
the Dow to decline a further 90%, at least, against gold in the next few
years. So even if stock market investments will initially give the illusion
of protecting investors, it will be a very poor hedge against the ravages
of hyperinflation in real terms.
ZIMBABWE STOCK INDEX 2007-2008
Bond market
In January 2009, we warned investors that long term interest rates
were bottoming. Since then the 30 year bond yield is up from 2.6% to
4.6% an 80% rise. But more importantly the 30 year is currently in the
process of breaking a 17 year downtrend line which dates back to 1994.
This confirms that rates will now start a major and rapid rise which is
likely to reach the mid-teens or higher. Governments will attempt to
keep short rates low due to weak economies but eventually the rising
long rates will put strong upward pressure on the short rates. So the
flight to government bonds that we have seen in the last few years will
soon reverse into a massive rush for the exit. This will coincide with
rapidly increasing financing requirements by the US, UK, EU and many
other governments. The poisonous concoction of rising rates and rising
financing needs will create a vicious circle of collapsing bond markets
and unsustainably high financing cost. This will continue to drive interest
rates even higher which will further increase deficits and necessitate
even faster running printing presses. Add to that a collapsing currency
and the hyperinflationary picture is complete. It is our very strong view
11. that investors should exit bond markets entirely if they want to avoid a
total destruction of their assets.
(Click image to enlarge)
Currency Market
As we have explained for many years, hyperinflation is created by the
government destroying the currency as a result of money printing to
finance deficits. This leads to the cost push inflation that we are now
experiencing. Add to that, shortages in commodities worldwide, thus
creating the perfect hyperinflationary scenario. The Dollar, the Pound,
the Euro and many other currencies will continue to decline. They can’t
all decline against each other at the same time so the market will take
turns in attacking one currency at a time. But all currencies will continue
to decline against gold. We believe that the dollar will soon start a very
rapid fall against gold and against many currencies. Investors should
exit the Dollar and also the Pound and the Euro. There is no currency
better than gold or silver but for any small amounts of cash we prefer
the Swiss Franc, the Norwegian Krone, the Singapore dollar and the
Canadian dollar.
12. Wealth Protection
A hyperinflationary depression will destroy the value of money as well
as most assets that were financed by the credit bubble (property, stock
market). Wealth protection is now critical and urgent. We see no better
way of protecting assets against total destruction than physical gold and
silver stored outside the banking system. Thereafter, precious metals,
energy and food stocks are our preference. But it must be remembered
that any asset including stocks that is held through a bank is dependent
on a sound and surviving banking system.
The real move in precious metals is still to come as we have outlined in
many articles. Less than 1% of investors own gold. Before this economic
cycle is over we are likely to see a mania in physical precious metals
that will drive prices exponentially higher. And luckily for investors, this
is a mania which is unlikely to end in a collapse since gold most
probably will be part of a future reserve currency.
Finally we are again quoting von Mises who clearly understood that “le
déluge” is inevitable:
“There is no means of avoiding a final collapse of a boom brought about
by credit expansion. The alternative is only whether the crisis should
come sooner as a result of a voluntary abandonment of further credit
expansion or later as a final and total catastrophe of the currency
system involved.” – Ludwig von Mises
GoldSwitzerland is the precious metals investment division of Matterhorn Asset
Management AG which specializes in wealth management and wealth preservation and is
part of Aquila & Co AG, one of Switzerland’s largest independent asset management
groups. Matterhorn Asset Management AG Bahnhofstrasse 28a CH 8001
ZURICH Switzerland
+41 44 213 62 45 – Tel +41 43 456 97 11 – Fax
matterhornassetmanagement.com