LanceFreeman
Mayor
The following is an excerpt from Richard Maybury's Early Warning Report, and illustrates where we are headed economically in the next few months. As Mr. Maybury points out, this sluggish economy will roll merrily along, as is, until the 2016 elections are over; then things will start happening. Do note how our elites manipulate the markets in order to manipulate us, the citizens:
Maybury: I believe the financial markets in recent weeks have been signaling a depression. Not a recession, a depression. Here’s the story.
The present mess in the markets is more evidence that my April 2015 article, “Mechanical Systems are Kaput,” was correct. Governments have so fouled up the world economy and financial markets that we must each put our money in the hands of advisors who can keep an eye on things day to day and hour to hour, and make changes to our portfolios as the results of the ever shifting political lunacy become known, as now.
If you look back over the past year, what do you see as the standout political trend all over the globe?
Devaluations. This was explained in the March 2015 EWR. Here are some of the currencies that have been devalued so far: Chinese yuan, Canadian dollar, European euro, Japanese yen, Swedish krona, Mexican peso, Australian dollar, New Zealand dollar, Turkish lira, Brazilian real, Colombian peso, Russian ruble.
When a government devalues its currency, its exporters get an immediate boost, as the prices of their products become instantly cheaper to foreigners.
Consumer prices do not jump immediately, however, because importers are afraid to raise their prices, for fear of losing business; they delay as long as they can. So there is a sweet spot, or window, between a devaluation and a rise in consumer prices. In this sweet spot for some months, things look better.
The governments of the above named currencies are trying to buy time by creating these temporary sweet spots.
When malinvestment begins to surface, investment markets crash, as prices of assets are adjusted to reflect the newly recognized “mal.” That’s what is happening now.
I believe that, like the officials of the governments that have already devalued, US officials have been interfering in the economy for so many decades that they have only one arrow left in their quiver: devaluation.
My guess is that they have their eyes set on the elections. They will devalue the dollar with whatever timing and magnitude they think will create a boost for exports before the elections, with the rise in prices delayed, at least to some extent, until after the elections.
A crucial point to focus on right now is, if you bail out of your investments and go into US dollar cash or other US dollar-denominated assets, such as Treasuries or bank CDs, what will happen to the value of your money if Washington suddenly devalues the dollar?
It could drop very quickly. That’s what happened when Nixon suddenly devalued in 1971. My wife and I bought a new (imported) Volvo just before the devaluation, for $4,000, and if we had waited just a few weeks longer, it would have cost $4,400. So, in terms of imported goods, in just those few weeks, US dollars lost ten percent of their value.
And, the dollar continued falling for the rest of the decade. By 1980, a similar Volvo was $11,000.
Today I believe we are back to where we were in 1971, which was the last time US officials had used up all their arrows except the devaluation one.
Governments have once again plunged the world into chaos. Financially, there is no safe place to hide. One simple piece of long-term advice I can give everyone, which I’m sure will hold for at least a few years is, own precious metals and other assets that cannot be created out of thin air, as currencies can. The world is back to the 1970's. Governments are kicking the can down the road in the only way they have left, via devaluation.
Maybury: I believe the financial markets in recent weeks have been signaling a depression. Not a recession, a depression. Here’s the story.
The present mess in the markets is more evidence that my April 2015 article, “Mechanical Systems are Kaput,” was correct. Governments have so fouled up the world economy and financial markets that we must each put our money in the hands of advisors who can keep an eye on things day to day and hour to hour, and make changes to our portfolios as the results of the ever shifting political lunacy become known, as now.
If you look back over the past year, what do you see as the standout political trend all over the globe?
Devaluations. This was explained in the March 2015 EWR. Here are some of the currencies that have been devalued so far: Chinese yuan, Canadian dollar, European euro, Japanese yen, Swedish krona, Mexican peso, Australian dollar, New Zealand dollar, Turkish lira, Brazilian real, Colombian peso, Russian ruble.
When a government devalues its currency, its exporters get an immediate boost, as the prices of their products become instantly cheaper to foreigners.
Consumer prices do not jump immediately, however, because importers are afraid to raise their prices, for fear of losing business; they delay as long as they can. So there is a sweet spot, or window, between a devaluation and a rise in consumer prices. In this sweet spot for some months, things look better.
The governments of the above named currencies are trying to buy time by creating these temporary sweet spots.
When malinvestment begins to surface, investment markets crash, as prices of assets are adjusted to reflect the newly recognized “mal.” That’s what is happening now.
I believe that, like the officials of the governments that have already devalued, US officials have been interfering in the economy for so many decades that they have only one arrow left in their quiver: devaluation.
My guess is that they have their eyes set on the elections. They will devalue the dollar with whatever timing and magnitude they think will create a boost for exports before the elections, with the rise in prices delayed, at least to some extent, until after the elections.
A crucial point to focus on right now is, if you bail out of your investments and go into US dollar cash or other US dollar-denominated assets, such as Treasuries or bank CDs, what will happen to the value of your money if Washington suddenly devalues the dollar?
It could drop very quickly. That’s what happened when Nixon suddenly devalued in 1971. My wife and I bought a new (imported) Volvo just before the devaluation, for $4,000, and if we had waited just a few weeks longer, it would have cost $4,400. So, in terms of imported goods, in just those few weeks, US dollars lost ten percent of their value.
And, the dollar continued falling for the rest of the decade. By 1980, a similar Volvo was $11,000.
Today I believe we are back to where we were in 1971, which was the last time US officials had used up all their arrows except the devaluation one.
Governments have once again plunged the world into chaos. Financially, there is no safe place to hide. One simple piece of long-term advice I can give everyone, which I’m sure will hold for at least a few years is, own precious metals and other assets that cannot be created out of thin air, as currencies can. The world is back to the 1970's. Governments are kicking the can down the road in the only way they have left, via devaluation.