As we all know--in 2006, if you've listened to a radio, watched TV or read a newspaper---while nobody was looking---America's economy went south! This abrupt change was brought about by a complacent democratic party operating in a partisan tea party envioronment manipulated by Grover Norquist aided by recent Supreme Court decision, Federal Reserve, U.S. Treasury and a partisan Congress run by Congressional members of tea party who've taken over republican party.
Tea party members of republican party have no intention of giving in but do intend to push until they have destroyed Democrat party and they will rule the world---because they think their way is right. They don't care whose hurt during the next 10years as long as they win! It is a "politics-of-destruction---one party's hurry to downsize federal government & other party's leaders always playing defense.
Grover Norquist got the ball rolling twenty-five or so years ago by announcing all elected officials must sign a pledge of no-tax-increase or face consequences. Majority of republican candidates got in line signing pledge to not represent their constitututiens but follow Norquist's demand.
During Bush second term Norquist was given unparrelled access to America's first ever appointed President allowing Norquist to exert heavy influence on America's economic policy to destroy economic value of middle class to weaking democrat party. His failed economic policy aimed to destroy unions, pensions and replace with the mantra of the rich...I only want what's mine---and that's all of it!
In 2006 the beginning of the end of America's strong economy of the past suddenly and without much fanfare was in trouble. The appointed President & his Treasury Secretary (a former employee of wallstreet) hurriedly pushed through Congressional legislation designed to "bail out" a bankrupt wall street, including Treasury Secretary's old wallstree company.
That didn't work because the world economy had been poisoned by America's greed.
December, 2009 the economic devastation became crystal clear, when GLOBAL housing & stock markets lost $30 TRILLION dollars of wealth in 13 months and over the same period U.S. housing & stock markets lost $12 TRILLION!
This record loss of wealth was a wage cut since devaluation of America's currency came about as related to other currencies. Credit markets, banks and bond market desiccated and unemployment soared.
America's economic "scorched earth" policies implemented acquiesed by appointed president's administration was strictly designed for a political end; i.e., to destroy political base of democratic party! Part of the plan was to reduce size of federal government by record spending creating massive federal deficits.
States coffers due to Norquist no-tax-pledge had been emptied and now along comes downsizing fed throwing it's fed programs it can't afford onto backs of state governments.
This snowball effect perpetrated national misery not seen since America's Great Depression. All of a sudden a society spoiled with easy credit hearing "bad economic news" whereever they turned.
It threw American society into a paralyzing uncertainty! How did Grover Norquist, Newt Gingrich, G.W. Bush, Hank Paulson, Karl Rove, Dick Cheney, Harry Reid, Nancy Pelosi acquiescence with such failing economic policies? Why were voices of reason silent?
Well. There was republican Peter P. Peterson!
In 2006 voices of reason were clamoring, including Peter G. Peterson, but no one was listening as they were making money!
Maverick economists---Bob Wiedemer, David Wiedemer and Cindy Spitzer along with republican stalwart were saying bad times were coming but 2006 stock market surge blinded investors as real estate prices were soaring---worked tirelessly to spread the word about the impending dangers threatening our great nation.
Bob Wiedemer, David Wiedemer and Cindy Spitzer were writing their prediction, with startling accuracy, what would happen when America's easy-money party ended . . . but no one was listening. They were going against a tide of financial optimism.
These economists sounded the alarm about a chain reaction of crashes that were to come in real estate, the stock market, private debt, and consumer spending.
They predicted by 2013 two more massive bubbles---dollar and U.S. government debt could burst. Indeed the dollar continues its dangerous downward spiral.
Meanwhile America's unsustainable federal debt keeps surging. Maverick economists economists kept shouting a few simple individual decisions by American citizens can be the difference between personal economic obliteration and financial prosperity. As far as the country they say it's too late to stop the large financial snowball that has unstoppable energy!
In the past most economists looked at these situations as independent occurrences.
They didn't take a broader view to see the chain reaction that could unfold.
They reasoned by using example of a balloon.
You start with a dramatic and artificial increase in home values and the stock market . . . This basically puts all the air in the balloon.
Why do you say it was artificial? Because people weren't making the kind of money needed to justify these increases.
From 2001 to 2006, housing prices accelerated much faster than our income. Now, we all know the housing price growth was due to the mortgage madness where people could easily attain loans with no documentation. "Liar loans" they were called. So some lenders blatantly looked the other way. And others repackaged those garbage loans into toxic investments---begging question where were federal regulators?
From the 1980s until 2001, home prices rose in step with inflation.
And then in 2001 they exploded. But nobody stopped to think about what would occur when home prices weren't rising 10, 20, even 50 percent a year anymore.
And, you saw a similar problem with the stock market right? It was very susceptible to a massive correction because, just like housing, the rapid rise didn't match the underlying fundamentals economists chose to ignore. It's pretty simple.
From 1928 through 1982 you had about a 300 percent rise in the Dow. That's a 54-year period. Yet from about 1982 through 2005 it rose another 1,400 percent. That doesn't sound like a bad thing though? That would be fine if our economy grew 1,400 percent too. But it didn't.
Personal income only grew about 10 percent over this time period and company
earnings about 300 percent. So the foundation beneath these market gains was very fragile. And the balloon became massively inflated. So now you've basically got this economy that's completely full of hot air, right?
Now the real estate market collapse applied enormous pressure on an already overly inflated stock market. And as foreclosures began to grow in numbers, and the banks became weaker, it became harder to get credit. Which was a shock to the system, because Americans had become very spoiled by this easy money.
Between 2001 and 2005 an estimated $2.4 trillion in wealth was created from
the refinancing of mortgages and home equity loans. This money was only available because of artificially escalating housing prices.
When the easy money spigot was shut off, a private debt crisis was
created.
Why? Because Americans grew their debt faster than their income.
So a real estate and Wall Street collapse dried up the easy money, and this
led to a massive correction in consumerspending! That's seven-out-of-ten wage earners having their income stymied. U.S. economy is made up of 70 percent of consumers spending their money! The "perfect economic storm" happened when appointed President inherited a balance federal budget but 2001Congress passed legislation implementing "scortched earth economic policies" spending America into record debt: This began "perfect economic storm":
dramatic artificial increase in home values and stock;
dramatic artiificial increase in stock market
personal income did not keep up with increases in home values & stock market;
American dollar falling;
2009 dollar dropped 21%
Government debt becoming ussustainable;
$3.7 trillion federal debt including medicare and social security grew and estimated $75 trillion under current administration
China holds $3 Trillion of U.S. securities
Japan holds $900 billion of U.S. securities
Bill Gross says America will default on its debt
inflation---"too much money after small amount of goods"---will "pop" when federal reserve releases $300 billion of "new dollars" into 2011-2012 economy
interest rates skyrocket to 10%+
Maverick economists predict
100 percent annual inflation for a three-year consecutive stretch
most damage will be felt between 10, 20, maybe 30 percent inflation
Once you hit 10 percent inflation, 10-year Treasury bonds lose almost half of their value. And by 20 percent any value is all but gone. Interest rates have to be dramatically hiked up at this point, which causes real estate values to collapse. And the stock market will plummet as a consequence of these other problems. So after 10, 20, even 30 percent inflation, the vast amount of damage has been done. Conclusion is raising interest rates after the big inflation has kicked in is dangerous because it devalues dollar further. That's a wage cutter for Americans without their knowledge!
These four bubbles bursting created one massive American explosion. And, we all know what happened next; i.e., $16.4 trillion in household wealth disappeared.
These losses were felt in our investment portfolios, retirement savings, real
estate holdings, and salaries. It is still just stunning our Washington leaders along with a minority of voices did not see this travesty unfolding. Hardly anyone was waving the red flag besides a few economists.
In 2009 maverick economists warned Americans of dollar and government debt bubbles that were set to expand from 2009-2012 and burst around 2013.
Economists warn against ignoring a problem this large is not the way to stay safe from it. Economists predict a hidden bubble that is being ignored by everybody.
What's in store for our economy? To put it simply, we now have a situation where the medicine has become the poison.
Beginning in 2006 Feds---Bush Administration+Federa Reserve have done everything it can to give Americans the appearance of a recovery.
This action kept interest rates at historic lows while federal reserve increased money supply by 300%.
However, it is August, 2011 and Much of it is sitting in excess reserves at the Fed and with the big banksT.hese funds haven't made it into the markets and the economy yet.
We will all soon see that while printed money has been the medicine of the so-called recovery . . . That medicine is about to become poison when the dangerous side-effects kick in. But this doesn't seem to be hurting the stock market.
Since bottoming out in March of 2009, it is up as much as 94 percent and many are saying that it could top pre-recession levels in the near future. Couldn't that be a sign of a possible recovery? Maverick economists say that is an illusion.
Stock market initial gains shadow the money-printing trail. And, it won't be very long before this money from heaven becomes a path to hell. That hell being inflation.
You see that 300 percent increase in the money supply we've experienced . . Much of it is sitting in excess reserves at the Fed and with the big banks .These funds haven't made it into the markets and the economy yet.
But it's a mathematical certainty that once this dam breaks, and this money passes through the reserves and hits the markets . . .Inflation will surge.
So why don't they just stop printing money? Because they don't think it's a bad idea. They've seen how it has propped up the stock market and a good portion of the
economy. And they believe they are fighting off deflation.They aren't worried about inflation. And, some of the more liberal-leaning economists are calling for even more aggressive money printing. For example, Paul Krugman has stated he thinks the Fed might need to print $8 trillion to $10 trillion to save our weak economy.
Maverick economists predict by end of 2012 Americans will see first signs of aggressive inflation! They're suggesting 10% which is based on Fed's calculation which usually is underestimated.
In fact, the economists caution American's not to listen to any economist who says it'll get that bad for us. The 's say we absolutely could see
100 percent annual inflation for a three-year consecutive stretch. Which of course would be a complete disaster for those who are not prepared. 100 percent for three consecutive years? That seems unfathomable. Isn't that extreme? For Americans, it is.
But what many don't know, is that the most damage will be felt between 10, 20, maybe 30 percent inflation. After you get past 30 percent, it'll just be bad all over. You eventually become numb to the effects, because there isn't much left to take from you at this point. How can 10 or 20 percent be a harder hit than 100 percent?
But that's what President Reagan and Paul Volker did during the stagflation of the late 1970s early 1980s. So why can't the White House, Fed, and Congress do it right now before inflation gets out of hand? Interest rates will absolutely be going up in the future. The market will see to that. Feds have been buying our own bonds and calling in favors across the globe. The United States and other countries will make dramatic efforts to save the dollar and unsuccessfully stave off serious inflation. Especially the Chinese central bank.
In fact, August 15, 2011 Vice President visiting China. Want to bet this is what the trip is all about? They've bought over $1.1 trillion of our Treasury debt to prop up the dollar's price so they can boost their exports to us. On top of that, they've got about $3 trillion of U.S. securities when you add in their other U.S. bond and physical dollar holdings.
Japan is sitting on $900 billion in U.S Treasury debt. And since 1980, the percentage of U.S. debt held by foreign investors has more than doubled.
Frankly, past and current Washington leaders H.W. Bush, Bill Clinton, Reagan, G.W. Bush, Grover Norquist, Dick Cheney, Karl Rove, Nancy Pelosi, Harry Reid & Obama allowed America in a position where America owes some very powerful countries---like China---a lot of favors, which is not good for us.
Imagine if we start leaning heavily on the oil-rich countries in the Middle East to prop up our dollars? These countries aren't really pro-America. That doesn't sound like smart foreign policy. It's not. And it will end, whether the U.S. wants it to or not.
Now for what you don't want to hear.
It is fairly certain foreign investors will begin to significantly lose confidence in their U.S. holdings sometime during, or shortly after, 2013. China is already beginning to worry.
But this will get much, much worse when we hit 10 percent inflation. And, by 2016 a mass exodus of foreign investment could very well occur in the United States. And, whether we like it or not, we need foreign investment in our stock and bond markets to keep them strong.
From a purely economic standpoint, hiking the interest rates as Volker did would end inflation quickly. But remember, back in the 1980s interest rates on loans for businesses and people were hitting over 20 percent. You had massive protests. Farmers actually drove tractors through D.C. because they were outraged that they couldn't afford to operate their businesses. So it's a politically brave move. But it's not one without public backlash. But the biggest reason we can't aggressively spike the interest rates is it's economically impossible, given our current government debt situation. Right now America collects about $2 trillion a year in taxes. Washington is spending almost $3.5 trillion.
That means more than four out of every $10 the government spends comes from borrowed money. And, government debt is mostly short term in nature. About 36 percent of it is in loans that last under a year. So Washington has to constantly roll this debt into new loans at the new interest rates. So what if rates rose to 10 percent? We would have a hard time just paying the interest! So they will start with small raises in a futile attempt to curb inflation. But at the same time they will print more money to help keep from drowning as the interest rates hike the annual deficit.
So modest interest rate hikes are coming in the near future, but it will not curb inflation. But, still Washington will exhaust all other possible options because they know that aggressive interest rates will crush real estate, stocks, and bonds. And, it will pop the bubbles they've inflated through reckless economic policies.
So instead of acting now, they'll wait until there is no choice and the devastation is unfolding before they make the uncomfortable and unpopular decision to dramatically spike the rates. Do you think one of those revenue-boosting options will be to raise taxes?
Unfortunately, yes. And, it won't matter who's in the White House in 2013.
And, it's not the only problem Americans are going to have to worry about.
Let's discuss one of those problems. Housing.
Recently The Wall Street Journal announced that national housing prices fell for 57 months straight. What lies ahead for homeowners? In the immediate future, we will continue to have a slow fall. Median housing prices dipped 8.2 percent in the last year.
In fact, the beginning of 2011 brought about the worst single quarter in real estate since the recession began. But some people may get their hopes up once our market improves or at least flat lines. But mid-term, foreclosures are expected to jump 20 percent this year.
So I believe people will lose, on average, about another 5 percent to 8 percent of their home's value in 2012.
Some places will be much worse, some will be better. And, long term we are going to witness a massive collapse, I believe even worse than the first.
Right now, research shows that more than one out of every four homeowners is willing to walk away from their homes. Once the inevitable interest rate hikes set in and the values of people's homes drop even further, that figure will jump even higher. Because paying off a mortgage won't make as much sense as simply walking away and renting right? The scope of the damage will be determined by how high interest rates eventually go.
Famed housing expert Robert Shiller believes home prices could fall 25 percent in the next five years. I think it could be even worse. Consider this, if mortgage rates hit a reasonable 7.5, it'd basically mean home prices would have to decrease by as much as another 32 percent. And 7.5 percent is very reasonable. My parent's mortgage in 1968 was 6.5 percent. When I graduated college it was 15 percent. Economists say there always incredible opportunities in the markets, no matter how bad it gets. You just have to know where to look.
In the short term, the massive printing of money Federal Reserve has done over the last few years will continue to prop up the stock market.
But starting in 2013, and growing worse and worse through 2015 and 2016, the medicine will become the poison on Wall Street.
High inflation, rapidly rising interest rates, and the heightened risk of U.S. debt will create a poisonous cocktail like we've never seen.
So government investments and those tied closely to them will become pretty dangerous bets. But these higher interest rates will hit the overall stock market just as hard too.
Companies will also be spending more money on borrowing costs as opposed to business expansion costs. That means lower profit margins, lower dividends, and less hiring.Plus more layoffs. OK, so put a specific number on the impact this will have on the stock and job markets.
Economists laid out a situation where America could see as much as a 90 percent drop in the stock market and 50 percent unemployment rate. That is the worst-case scenario.
However, economists predict regardless of how bad it gets, this will be temporary. America will recover from all of this eventually.
Just remember. Even if Americans lost half of their money, they would not starve in the streets. Compared to most countries, America, and Americans, are still very rich. Even if our GDP dropped in half, we would still be a $7.5 trillion economy. However, many Americans' savings could be drastically lower.
The maverick economists suggest in 5 years:
About everyone's home will be worth much less;
Bonds backing pensions and insurance policies will be destroyed;
Pensions will become unstable;
Some forms of life insurance could be eliminated;
Stock market will plummet;
Creating more job losses;
And, this is all because America's 2001-2011 leaders adopted "scortch earth economic policy" opposed by Republican Peter G. Peterson's in 2001. He said "In just two years there was a $10 trillion swing in the deficit outlook. Coming into power, the Republican leaders faced a choice between tax cuts and providing genuine financing for the future of Social Security. (What a landmark reform this would have been!) They chose tax cuts." Both parties has not learned that, as you've put it, money from heaven is a path to hell.
Look at it this way . . .If you had pneumonia, and all your doctor did was tell you to not fret, take two aspirin, and you're cured, would you still use that doctor? Of course you wouldn't. This situation is no different.
People need the honest diagnosis concerning our economy and the best medicine for keeping their money healthy and safe. Question? How does one protect their wealth in these forecasted times?
First and foremost, stay away from real estate. Real estate has not hit bottom. Higher inflation, mortgage rates, and unemployment will suffocate the few breaths remaining in the housing market. In my opinion, strictly from a financial standpoint, people should consider selling their homes while they still have a chance, and rent instead. But I understand that's not practical for most people.
And, the emotional attachment to a home goes beyond financial matters.
So if you are stuck in an adjustable rate loan, I advise you to immediately refinance into a fixed rate. And I mean, right now.
Should people staying in their homes, who have a fixed-rate mortgage, look to pay it down faster? Absolutely not. Higher inflation in the future means you will be repaying a cheaper mortgage since the dollar will be weaker. So stick to the minimum payment for now. Use that extra money for shrewd investments and paying down more important debt.
What about non-real estate loans? The most important one is your car loan. Especially if you are still working. An average car loan for Americans now is about $12,600.
So it's not a small chunk of change. But a repossessed car is no good for you now, or when you need to secure financing for another one in the future.
What about credit cards? Well many credit cards are simply adjustable-rate
loans. Even the fixed-rate credit cards have loopholes that allow them to hike your
rates. So when interest rates rise, so will the rates on many of the cards you are
holding. So pay these off as soon as possible.
Paying minimum on your mortgage now, you can use the newfound extra money to pay your credit cards down faster.
How should our viewers approach insurance? Once inflation hits 10 percent, all life insurance policies will be susceptible to very big losses due to their heavy exposure to long-term bonds, commercial real estate, and stocks. Some insurance companies could even crumble. So given our current situation, in my opinion, it does not make good financial sense to own whole life insurance. If you do, you may be able to take out a lump sum payment now. This will be much more valuable to you to properly invest now, than when inflation really kicks in. Check to see your policy details. You can also focus on term life insurance instead, since it's much cheaper.
It seems people are putting off retirement until later and later in life. Wells Fargo recently released a survey that says people in their 50s on average only have $29,000 saved up for retirement. And with Social Security, Medicare, and the unreported tens of trillions of dollars in future costs pressing down on our economy, the safety nets many have relied on may not be there in the years ahead.
So. For those Americans who may still be working and do not have enough saved up for a comfortable retirement, if we have a serious spike in unemployment, what careers will be the safest in the years ahead? This is truly a sad epidemic. Given the pullback in income growth as well as other economic factors like inflation and a weakened dollar, the retirement age would now have to be raised to 73 for average Americans just to maintain the same standard of living as in the 1940s. Since the average life expectancy is currently about 78, millions will now have to work until they drop dead, instead of enjoying their golden years. Plus, Washington seems incapable of having an adult conversation on the entitlement issue. Economic facts seem to suggest people will be working later and later into their lives, because they have no other choice.
However, jobs will be tight, especially for people over 55. So for those seeking job security during the coming crisis, the necessities sector is the place to be. This is composed primarily of healthcare, education, utilities, basic food, basic clothing, and government services. Unfortunately, these aren't the highest paying jobs.
Whether people are still employed or living off their investments, they are worried about the government taxing away more of their money. So what can Americans do to help protect themselves from higher taxes? Well, we need to see how this one will play out, and obviously Americans should really build a specific strategy with their accountants.
But, I'd quickly recommend looking into estate planning, regardless of your net worth.
Because for tax reasons, giving gifts to your children and grandchildren now can be very beneficial. And, you can get creative here by selling assets to buy gold to gift to your heirs now as opposed to in your will. This will be much more valuable than cash or real estate when inflation hits hard. That's a good segue into investing advice. So it seems you are a fan of gold still, even though it's been soaring in value.
Yes! I'm not a "Gold Bug" by any means. But I know what investments are right for
different conditions. Gold will continue to be a favorite safe haven for countries across the globe. Right now, only 10 percent of the world's total gold is purchased by the United States. Which puts us right in line with Turkey. India currently buys more than 20 percent of the world's gold, China 18 percent, and other countries will increase their stakes in this precious metal as confidence in the U.S. wanes. But gold is just like any other bubble.
It will burst eventually. When do you see that happening? I could see gold's bull-run lasting another decade or more before the bubble bursts. And, we'll see truly remarkable prices during that time.
As an alternative to carrying physical gold, you can buy it from a gold depository.
With a depository, you have legal ownership of the gold, but don't have to take physical possession. You can take it anytime you like to though.
You can also buy gold ETFs that are 100 percent backed by physical gold, which we discuss in the book. We've seen many billionaires and hedge funds begin to pour more and more of their wealth into gold over the last few years. Gold mining stocks.
In fact, gold mining stocks have been outperforming physical gold recently. But not all gold mining stocks are created equal, so get professional assistance. What about other investments? Other precious metals like silver and even platinum are good choices over the long run.
Until serious inflation hits, short-term bonds are OK. After inflation really sets in, you will need to keep cash in short-term investments such as money markets, TIPS, and Treasury's. Their low returns don't exactly make them very attractive, but they will protect you against inflation much better than longer-term debt.
Long term bonds not good in such times. Avoid long-term, government bonds.
What about some unconventional investments like foreign currencies. Today they are a great play right now for investors. Canadian dollar, Swiss franc, and the Nordic currencies, such as the Norwegian. Trading currencies directly can be pretty risky so that isn't for everybody. But you can buy ETFs on the major foreign currencies, like the euro, yen, Canadian dollar, and Swiss franc. You'll want to hold them as longer term investments that'll appreciate as the dollar continues to fall.
You can actually buy an ETF called the UDN that trades all of the currencies
in the US Dollar index against our currency.So the weaker the dollar, the higher the UDN goes up. And, the more money you make.
And what about advice for our more seasoned investors? How to properly take advantage of U.S. agricultural commodities. Because when the dollar weakens, lots of countries will be buying our commodities with their stronger currencies.
DIRE PREDITIONS FOR AMERICA'S ECONOMY by Maverick economists'
predict Americans' homes will be worth much less in five years.
Bonds backing pensions and insurance policies will be destroyed.
Pensions will become unstable.
Some forms of life insurance could be eliminated.
The stock market will plummet.
And, all of this equals more job losses
Maverick economists scenario above is just as good as any and assuming in 5 years federal ecoonomy will take the predicted form above, states like Kentucky should make their 2011 plans placing plenty of weight on what maverick economists have predicted---especially since they predicted the 2006 record World recession & feds decision to make drastic cuts and reform fed taxes questionable due to grid lock it is safe bet for Kentucky to take the recommend preferred action below to further protect future Kentucky solvency:
CUT $890 MILLION STATE EXPENSES
$350 MILLION STATE TAX EXPENDITURES
$400 MILLION CORPORATE TAX SHELTERS
$140 MILLION NON-MERIT PERSONNEL PAY
+CUT $1.2 BILLION MORE
STATE TAX RESOURCES (TAX REVENUE)
COLLECT $300 MILLION OF MOTOR VEHICLE TAX EVASION
ELIMINATE TRUCK WEIGHT-DISTANCE TAX
PASS VERSION OF FARMER/WAYNE TAX REFORM BILL
INCLUDE "SELECTED" SERVICES IN KY OBSOLETE TAX BASE
RELIEVE STATE BUDGET PASSING LOCAL TAX OPTION
RELIEVE STATE BUDGET AMENDING H.B. 44 MAX TAX RATE TO 5%
