THE ECONOMY IS STILL SLUGGISH

I've said it many times before, the US economy is headed to a severe downturn or recession. There are a number of reasons for this, but ultimately it boils down to consumer choices and spending patterns. The biggest problem the US voter faces is the rate of inflation, it is completely out of control and constantly rising. Basis economics tells us that the greater supply of a recourse, the less value it will hold. For example, gold is expensive because it's hard to find and difficult to mine. However, if every stream and river were filled with gold, then gold would become worthless. The same rules apply to money; the greater the supply of money, the less value it has. With a weakened dollar, prices will appear to rise. The Federal Reserve went on a money printing spree called Quantitative Easing after the 2008 recession, in the vain hopes that it would spur economic growth. Their scheme failed

This CNN article attempts to paint a rosy picture of the economy and it's very sluggish growth; however, the article's author as well as many economists failed to account for the underlying factors that have resulted in the current situation.
 http://money.cnn.com/2017/01/27/news/economy/us-gdp-2016/index.html


Continuing the discussion of supply and demand. The amount of printed US currency is currently estimated to be about $1.5 Trillion by the Federal Reserve, but the amount of total us debt is about $47 Trillion. Of that $47Trillion in debt, $19 Trillion is US government debt, $14.6 household debt, and $13.4Trillion was business debt. Of the $14.6Trillion household debt, $1.2Trillion was due to student loans. What do all these giant numbers mean? The amount of debt is money that has already been spent and must be paid back. Let's consider, the greater the supply of money the less it's value. Therefore, if taken to it's logical conclusion, the amount of debt is also adding to the rate of inflation. People are beginning to ask why the cost of higher education has risen so quickly over the past twenty years. The answer lies in plain sight: the Student Loan programs are a guaranteed source of revenue for schools. Colleges can keep raising their prices because they are certain that their customers (students) can borrow the money and pay the costs. The medical care industry is operating in the same manner. Hospitals and doctors can keep raising prices because someone: the patient, insurance, Medicare, or some other program will eventually pay.

The US economy will continue to be sluggish, right up to the point that it begins fall into a recession. Regardless of who won the election, these problems will not go away without an extended period of economic deflation that will correct the many imbalances in the economy.

DOW REACHES 20,000 SELL, SELL, SELL!!!!

This should have been the top headline in every news website; instead they put all their focus on the comings and goings of Donald Trump. CNN did not even bother mentioning this on their website! The Dow Jones Industrial is supposed to represent the condition of the US economy, but any direct correlation between the two disappeared long ago. The US economy has been a shambles for over a decade, yet the Dow Jones has continued to rise at a rapid pace. This can only mean one thing: the growth of the Dow Jones is based on inflation, false fantasy, investor excitement, and smoke and mirrors. It’s a bubble, and like every bubble, when overinflated it will burst. At the risk of sounding like Jim Cramer, my only advice to anyone owning stocks, RIGHT NOW IS THE TIME TO SELL, SELL, SELL!!!! Get out of the Market, before the bubble bursts!!!

https://www.bloomberg.com/news/articles/2017-01-24/asian-stocks-to-extend-global-rally-as-yen-weakens-markets-wrap 

ITS BEEN A LONG DAY

Its been a long and difficult day, our family restaurant was very busy. Running around a busy kitchen is for young folks. I think I have a few more good years left in me, and then I'll have to give serious thought to doing something else.

SEE PREVIOUS POST

I hope everyone liked my previous post. It was a bit rushed and light on technical jargon, but I think it hit all the important points in regards to the giant derivative market. The grand research paper I'm working on is still in process, I want to make sure that one is 100% when I send it to formal publishers. In the meantime, we can entertain ourselves by watching videos of the Trump Inauguration and the accompanying protests and riots. I don't care who you voted for or currently support. Regardless of who won the election, the Global Elite are still in power, and the US economy is still headed for an extended period of deflation.

OUR MONEY IS NOT SAFE, HUNGRY SHARKS ARE EAGER TO TAKE IT

The next economic recession will be like no other in history. It will be much worse than the Great Recession of 2007, and it may be worse than the Great Depression of the 1930's. How was this conclusion reached? The amount of monetary inflation in the economy is beyond belief; it has become a super-sized bubble waiting to burst. When the inflation bubble finally bursts, the Federal Reserve will scramble to find enough cash to keep the banking system "liquid". During the 2007 Recession, Congress stepped in and put hundreds of billions of dollars in to the system in order to keep it moving. Basically, taxpayer money was used to prop up privately owned businesses. The taxpayers will never see that money again; it has disappeared into the TARP program. Over the past ten years, the Federal Reserve has pushed Trillions of dollars into the economy hoping it would stimulate a bit of economic growth. Their plan failed.

In his book "The Road to Ruin", author James Rickards discusses several facets of the financial markets, the Treasury Department, and the Federal Reserve. The author spent many years working on Wall Street, specifically in hedge funds, and thus acquired inside knowledge of the derivative market. Derivatives are a best described literally as a form of financial gambling. The system can be explained using football terminology which is familiar to everyone. Company A bets Company B that the Redskins will beat the Cowboys next week. They agree to make a bet worth billions, using margin accounts and being financed by large banks. However, in order to hedge their bet, Company A makes another bet with Company C that the Cowboys will score at least one touchdown, thus protecting themselves in case the Redskins lose. But, Company B also wants to hedge their bet, so they make a bet with Company D that the Redskins will score at least one touchdown. And Company C hedges against their bet with Company A, with Company E, and it goes on and on with all the above named companies. All of these bets are worth billions, all are on margin, and all are financed by the same big banks. If just one of these companies defaults on their bets, and has their margin called, the entire system will collapse. The hedge fund companies will scramble to borrow money in order to satisfy their margin requirements, and the banks will scramble to find enough capital to keep operating while billions of dollars’ worth of unpaid hedge funds debt starts piling up. The derivative market is currently valued at over $100Trillion dollars, if that would suddenly collapse the results would be catastrophic. During the recession of 2007, the system almost collapsed. Wall Street had invested billions of dollars into mortgage derivatives, and as soon as the mortgage industry started taking losses from homeowners that defaulted on their mortgages, the Federal Government was forced to take action to keep the system from collapsing. This time however, the derivative market has grown even larger, and the Government does not have enough money to mount a rescue attempt.

Moving beyond the financial markets, the banks will be in terrible jeopardy. The Federal Reserve will not be able to lend the banks the Trillions of dollars needed to keep them afloat. Therefore, the banks will take whatever cash they can find. Money in bank deposits accounts, 401k and IRA accounts, investment accounts, or any other type of account will be confiscated by the banking system with the full support of the US government. In the January-February issue of "Foreign Affairs" magazine, Timothy Geithner the former Secretary of the US Treasury and former governor of the Federal Reserve Bank of New York uses language that reconciles to the exact terminology used by author James Rickards. Secretary Geithner describes how the Federal Government and the banking system led by the Federal Reserve have been given the authority to take drastic action during the next financial crises. That drastic action will be to take the public's hard earned money, and use it to save the sharks on Wall Street from their own stupidity.

THE MORE I WRITE, THE MORE I REMEMBER

While writing this lengthy research document on the future of money, I've been looking at books and materials I haven't touched since grad school. Most of my information is historical in nature, thus it can be found in books at the local bookstores. Over the years I've acquired a great many books on business, finance, and economics, and I've read through most of them. Some of the books written by the great economists of the past are a bit difficult to read, a lot of complex theories coupled with archaic language. John Maynard Keynes included a great many formulas and statistical equations within his crowning achievement "The General Theory of Employment, Interest and Money". I'm not a mathematician nor am I a trained economist; however, I know enough to be dangerous and to keep up with a conversation.

I'VE MADE A DECISION

I've decided to write the "money" post in MS Word, and include all the nuances of a proper research paper. When it's complete, I'm going to try to get it published in a scholarly journal. However, it will be posted here on the blog first. So stay tuned, because it will be awesome!