Weekly Article 07-18-2018
The big news this week seems to be the Trump/Putin meeting in Finland. While many are making a big deal about Mr. Trump’s comments I have a bit of a different take on this.
While the mainstream media is fixated on “Russian interference” in our election the big story, in my opinion, is that this meeting took place and possibly reduced the risk of World War 3 between the world’s two top nuclear powers.
I expect that the Russians likely did try to have an impact on our elections but let’s not forget that, according to the Russian Times and Information Clearinghouse.com, the USA spent $5 billion to overthrow the elected government in Ukraine and has been “interfering” in foreign elections at least since the 1950s in Iran and throughout the rest of the world. Maybe we are getting a taste of what we have been doing for decades. Hopefully, we won’t get a taste of our “nation-building” antics in the future.
Of course, in the media’s portrayal of Russia “taking over” Crimea-(tell a lie often enough and it becomes the truth) Russia has had a deep water port in Crimea since the 1800s. The Crimeans VOTED to side with Russia and LEAVE Ukraine where I believe a Western puppet government was installed and would have likely taken Crimea over. Look it up!
It appears to me that the media, the military-industrial complex and their allies in the US government are showing their true colors. How in the world could the USA and Russia getting along not be good for all of us? Any war between these two powers will not produce any winners. Of course, peace may produce some losers in the profit-margin category of some of America’s biggest defense firms.
It is fairly obvious to me that these profits are more important to these people than the planet itself.
All I could think of when I heard Arnold Schwartzeneger call our President a “wet noodle” is that Arnold must think this is some kind of an action movie. He expects that we should disrespect and show up an equal on the world stage? Get a life Arnold- this is no movie and we don’t need your useless 2 cents anymore.
I can’t help but think how much better all of our lives would be if we put our ambitions to work on creating tangible wealth rather than producing articles of war that is produced, in many cases, with “money” created out of thin air and increased debts that are getting impossible to carry without additional credit creation and money “printing”. Let’s not forget that these articles of war are designed to DESTROY wealth and assets. On the other hand, to rebuild often takes more debt and “printing”. Quite a vicious cycle. Since the central bank’s job is to create debt it appears this could be a large part of the plan.
While my main thesis has not changed- that when you start “printing” money and buying assets the “printers” become the markets. While they can move the markets to a point there will come a time when their interventions fail to work. It could be that they own ALL of a certain asset. What do they do then? “Print” more currency and rebuy it at a higher price? Or do they recognize they are getting close to a cliff and stop? Of course, without the artificial stimulant of fresh cash from nowhere the asset prices will likely experience a drastic drop in value and could even go no-bid in short order.
While the scenario of either massive inflation or deflation still has to play out in my opinion the fact that world leaders seem to be getting together and discussing problems and, hopefully solutions, could lead to some wonderful days ahead after the shock that I believe will take place shortly.
If we can all work together globally- which the central banks have done since 2008- letting the market determine winners and losers rather than money “printers” we have an opportunity for a great awakening and a great future led by new technologies that will enhance our quality of life, health and our pursuit of happiness.
I still believe that the illusion of paper wealth is likely to be shattered when major bankruptcies start to take place and counterparty risk comes back to bite those who thought they had a hedged position because someone was on the hook to pay them if a large trade goes wrong. The counterparty has to have the ability to pay and may be suffering large losses at the same time.
In addition, the Robo-traders all seem to be using the same algorithms and when the need for liquidity is highest there may be none as the machines all say “SELL!” In my opinion, the machines know the price of everything and the VALUE of nothing. Good luck with passive investing when the tide turns. Good luck with many debtors paying you back with a currency that is worth anywhere near what it was when you purchased a bond in the past. Good luck to the pensioners who, at the current time may be aware of underfunding, but keep in mind the main assets in these funds are at or near all-time highs (stocks, bonds, real estate) and many plans are still severely underfunded.
Just maybe it would be prudent to take some responsibility for yourself and your family and get ahead of what appears may be headed our way.
If people will be demanding real assets for real goods it may make sense to have some real assets and not paper assets on hand. This would include food, toiletries, water, etc.
Also keep in mind that gold and silver have been used as money for over 5000 years and it appears that at the present time they are grossly undervalued and may provide a hedge, something to barter with and possibly purchasing power to acquire undervalued assets when the opportunity arises.
The only thing that is assured on this planet is: CHANGE.
Mike Savage, ChFC, Financial Advisor
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