The End of Money

iVillage Member
Registered: 10-04-2008
The End of Money
5
Thu, 10-16-2008 - 9:38am




"We are one bankruptcy away from the collapse
of the FDIC. When that happens, look out for the
Mother of all bank runs."
—Young Research



THE END OF MONEY


The global revolt against paper money melts down
the U.S. financial system.







The U.S. is, in dollar terms, bankrupt. How did this happen? Well, there are $800 TRILLION dollars in over-the-counter derivatives floating around in the market.






In Praise of Risk

Our Founding Fathers were adventurers faced with overwhelming odds. Yet they signed a document pledging “our lives, our fortunes, and our sacred honor” in pursuit of a brighter future.


They knew from risk.


America’s founders calculated the risk, estimated a probability, made their bets. And ever since, America has attracted the world’s talent, ready to make the same bet again and again.


Modern finance has promised miracles: all the profit, none of the risk. It has failed so spectacularly in recent months as to leave the U.S. on the brink of another Great Depression and the people of the world in deep revulsion against central bankers and their paper money.


This wasn’t another boom, another bust, my friend. The global financial system became so hedged and opaque that risk became incalculable. No wonder even bankers won’t lend to each other.


The Federal Reserves’ only recourse is to devalue money even further. But if no one will lend, money stands for nothing and more of it is no cure. It’s simply more of the disease.


There’s Another, Better Way


There’s a way to invest that calculates risk and adjusts for it. Understood rationally, risk doesn’t mean danger but the avoidance of danger. Leave that murky world to the bankers—it’s what they deserve.


That’s 10 times the GDP of the WORLD. These dollar-denominated paper assets are likely worthless or close to it.


Which means that the dollar is already…effectively worthless.

The Fed will pump and pump, but the credit crunch is the pin that sends this bubble economy into recession in the next 3 weeks.


All that money being pumped in to the balloon will ignite inflation as surely as a spark ignites hydrogen, sending the dollar into freefall and driving investors worldwide into inflation hedges like gold, natural resources, and safe-haven currencies.


But at the same time, the credit crunch will put the ax to consumer spending. And consumer spending now accounts for 72% of our GDP, a record.


A Lethal Cocktail


NOT SINCE 1933 have housing prices nationally fallen as sharply as in 2008. Consumers will have to depend on income, not borrowing against assets. And this happens in YEAR ONE of the Great Boomer Retirement Adventure.


Will consumers in developing countries pick up the slack? Americans spend five times more than all of India and China combined, so I don’t count on it.


Who’s to blame? The central bankers created a steroid-driven market with their derivative creations, and the Federal Reserve signed off on the lethal cocktail.


How do we profit? High-dividend stocks, companies with significant non-U.S. exposure, hard assets and natural resources and, for those equipped with oven mitts, some smoldering briquettes you can pick out of the rubble for pennies on the dollar.


More on that later.


My FIRST question to you is this: How will you prepare for what every financial conservative believes is a nightmare?



  • Do you own bonds?
  • What about healthcare or defense stocks?
  • What about banks?
  • And gold?
  • Or oil stocks?

Do you have a plan? Are you prepared for the worst? In a winner takes all world, you’d better have a good answer to such questions.


Try this:


Help Yourself

The biggest mistake you can make now is: wait. Wait for the market to come back, for the credit crisis to resolve. WORST OF ALL: wait for the election.


You don’t have time. Not at this point in your life. And what you must do is best done TODAY.


Prosperity is within your grasp. But yes, you do have to reach out for it. Younger Americans have become so used to prosperity they take it for granted.


That’s not my case and I believe that it is not yours.


Prosperity will continue to elude more and more Americans after this election. Barely one taxpayer in 200 will experience real income growth in 2009, according to Young Research.


I want you to be one of those who are bold enough to reach out for prosperity.


Do it now.


No need to wait on THAT.

iVillage Member
Registered: 10-08-2008
In reply to: carolitt
Thu, 10-16-2008 - 9:40am

What?


 

iVillage Member
Registered: 10-04-2008
In reply to: carolitt
Thu, 10-16-2008 - 9:47am
small business and investment.
iVillage Member
Registered: 10-08-2008
In reply to: carolitt
Thu, 10-16-2008 - 9:53am

You know, it is rather difficult to attempt a conversation with someone who posts something with no explanation, then when asked gives an incomplete sentence as an answer.


 

iVillage Member
Registered: 10-08-2008
In reply to: carolitt
Thu, 10-16-2008 - 9:53am
Unnecessary alarmism, that's what.
iVillage Member
Registered: 10-08-2008
In reply to: carolitt
Thu, 10-16-2008 - 9:54am

So it would appear....