$60 trillion of public and private debt at a 3.5X leverage ratio against national income means that historical credit-fueled growth is no longer possible.
America, don’t be fooled again. All of these wars are about protecting the dollar as the world’s reserve currency… that is, protecting banking and the status quo of the world’s elite. Arab Springs, orange revolutions, regime change removal of tyrants, invading Iraq, bombing Libya, giving billions of dollars and arms to tiny Ukraine and The Muslim Brotherhood in Egypt, saber rattling with Russia, these wars and many more are meant to prevent countries from trading in non-U.S. currency, prevent them from creating a new reserve system, and prevent them from dumping the U.S. dollars currently in their central banks. That is what politicians mean when they say, “protecting U.S. national interest.” They absolutely do not mean protecting your sovereignty, your freedom, your wealth, your job, or your national border.
If I saw ANYONE trying a strategy to manage down the $60 trillion bubble, then I could devise a fundamental investment strategy. But, very unfortunately, the Keynesians are in charge today. Their solution to every problem is to print more money and more government. The U.S. dollar has lost 99% of its value since the Fed was created in 1913. President Woodrow Wilson, who signed that law, said it was his worst mistake. Until the general voting public realizes that Keynesian monetarism is a failed economic theory that transfers their wealth to maintain the status quo of the top 1%, then staying in cash is the best course of action. This is a realization may not happen before the bubble bursts because the PR and politics are controlled by that top 1%. When millions of people begin saving and start paying off their debt, prices will begin to drop.
When you are in cash, you are standing on a somewhat fixed rock in the middle of a very big river flowing rapidly toward the waterfall.
Higher immigration levels and illegal immigration worsen the economic data for Americans, regardless whether the statistics are American citizens or all U.S. residents. Only a minority of incoming immigrants work, and when they do work, their wages are usually lower than the prevailing wage for that position. Immigration, legal but especially illegal, drags down the pay scales in all OECD developed countries, which is the reason the status quo globalist oligarchy wants open borders. That is the policy of the oligarchy, The Council for Foreign Relations (CFR), the UN, the EU, etc.
Generally, labor cost is the largest component of in the cost of revenue for manufactured goods, and labor cost is an even higher component in the cost of revenue in service industries. Cheaper labor means lower cost of revenue and normally results in higher margins and profits. Thus the U.S. Chamber of Commerce and most multinational corporations want higher immigration so that they can produce higher profits, despite the fact that open borders and multi-culturalism has failed in OECD countries, producing cultural strife if not violence. When this strife occurs, the government beefs up internal security; all government agencies and police forces are built up with heavily armored SWAT teams. Note that the U.S. Department of Interior sent heavily armed force to remove rancher Bundy and his cattle from the Bundy’s ancestral grazing lands, but orders of engagement for the U.S. Border Patrol and ICE at the U.S. southern border prevent interdiction of illegal aliens unless they are carrying drugs, guns or trafficking people. The oligarchy’s strategy of flooding the country with cheap labor is clear and in the open for all to see.
The Inspector General at IRS reported that child care credits paid to illegal aliens exceeded the taxes paid by all unauthorized workers by over $4 billion in the 2010 tax year, the latest year on record. U.S. taxpayers are literally paying for their country to be invaded, paying by our taxes so that our wages and net worth can be lowered. The attached chart shows that most Americans no longer have increasing income and net worth, not in real terms.
It is worthwhile to point out that our heroes of capitalism, free market and libertarian (i.e. classical liberal) ideas, such as Thomas Jefferson and Adam Smith, were well aware of the problem of unequal income distribution which results from excess government regulation … crony capitalism is as old as politics. Cicero, among others, had documented the problem for them.
“The property of this country is absolutely concentrated in a very few hands… I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labor and live on” ~ Thomas Jefferson’s letter to James Madison, 1785.
“It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” ~ Adam Smith, The Wealth of Nations.
But, progressive taxation does not begin to solve this problem. It’s just a political “do loop,” just red meat to be used by the party in power. Higher taxes are required by bigger government and more regulation, and these reduce GDP and general wealth. Cronies in corporations, law firms and NGO all profit from the government’s massive buying. Presidents who had $1M net worth as candidates somehow increase their wealth by 40 times in 5 years in office even while their investments are in supposedly blind trusts, and friends of Presidents build multi-million dollar estate homes and a library for the Presidents … this corruption does not benefit the republic or The People.
The only mystery to me is that voters keep returning these political prostitutes to Washington, D.C., state capitals, and city halls.
I can explain all of this, but I have been unable to define an investment strategy that will work, at least to my satisfaction, in this situation. I could invest 25% in an index fund to ride the Fed’s liquidity wave and the illegal immigration wave while these cronies are increasing taxes, profits, P/E ratios and prices. The Russell 2000 index is approaching a P/E of 80. What? Me? Worry? But, then I must also invest in derivatives along with the big banks and global corporations and hope against hope that I am hedged against the coming chaos of the biggest black swan economic catastrophe in history. That would be treading water and is not a wise course of action when one can already see a massive waterfall ahead.
- http://www.youtube.com/watch?v=9RC1Mepk_Sw General Wesley Clark
- Malthus: http://en.wikipedia.org/wiki/Thomas_Robert_Malthus
- The United Nations World Food Program reports that 24,000 people die from hunger and hunger related causes EACH DAY and 800 million get inadequate nutrition.
- “Does it feel like you’re poorer? There is a simple reason why – you are! According to a new study by the Russell Sage Foundation, the inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,355, a 36% decline. Welcome to America’s lost decade.” http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/07/20140726_lostdecade.png
- “…I think the Fed is hopelessly lost and completely incompetent, if you want to put it starkly, a posse of academic zealots and unreconstructed Keynesians who think debt is the magic elixir, and they won’t stop printing money and putting their foot on the floorboard until they really blow something up. I think the Fed is now inflating the greatest and third bubble yet of this century.” “The Russell 2000, even though it’s come off a little bit, is still trading at 80 time trailing earnings. That’s crazy, and you can say that about many other sectors of the market.” ~ David Stockman, April, 2014. a former S. politician and businessman, serving as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985).
- “We are taxed in our bread and our wine, in our incomes and our investments, on our land and on our property not only for base creatures who do not deserve the name of men, but for foreign nations, complaisant nations who will bow to us and accept our largesse and promise us to assist in the keeping of the peace – these mendicant nations who will destroy us when we show a moment of weakness or our treasury is bare, and surely it is becoming bare! We are taxed to maintain legions on their soil, in the name of law and order and the Pax Romana, a document which will fall into dust when it pleases our allies and our vassals. We keep them in precarious balance only with our gold. Is the heartblood of our nation worth these? Were they bound to us with ties of love, they would not ask our gold. They take our very flesh, and they hate and despise us. And who shall say we are worthy of more? … When a government becomes powerful it is destructive, extravagant and violent; it is an usurer which takes bread from innocent mouths and deprives honorable men of their substance, for votes with which to perpetuate itself.” ~ Marcus Tullius Cicero …Cicero. About 50 B.C.
- “The graph below is all the proof that is needed to demonstrate that Wall Street has become a pure Fed enabled casino. If honest “price discovery” was actually functioning, the stock market would not be at nosebleed heights, capitalizing hockey sticks that never materialize. Instead, it would be discounting a badly impaired economy that is stuck in a sub-2% rebound—and one that is dangerously at risk owing to the third and greatest financial bubble the Fed has created during this century.” ~ David Stockman