The Chart from Phoenix Capital says quite a bit. As Nixon moved the US off the Gold Standard, the growing divide between GDP and outstanding debt began. What are the consequences of this divergence? Look to the US Dollar decline significantly over the next few years and the precious metals and Cryrptocurrencies to explode upwards.
Looking at my portfolio, the main reason I added commodities (i.e., gold and silver) is for a store of value. The US dollar has been strong over the last few years, but I believe this cannot continue. With all the debt that the Unites States has accumulated via Government, Business, and Consumers, it is only time where the dollar’s value diminishes. When countries discontinue lending us monies, hard assets will become in favor. Don’t get caught in the stampede out of the dollar. It will be too late.
Regarding cryptocurrencies, I do believe it is important to hold some in your portfolio. It is another option to hedge against the US dollar.
February 11th, 2018 – Update on Bitcoin and Ripple
Since my last blog in late December, both Ripple and Bitcoin have been on a wild ride. Bitcoin was up around $20,000 USD and Ripple reach around $3.60 USD. It made Christmas and the New Year quite exciting. But since then Bitcoin and Ripple have come down to earth.
As of 2/11/18, Bitcoin is trading at $8,400 USD and Ripple is at $1.05 USD. In any market this is typical. Anytime a stock takes off like this there is consolidation to its appropriate price. That’s the efficiencies of the market!
I’m still long both Cryptocurrencies. But for very different reasons. Bitcoin is similar to gold in the crypto space. It is the defacto standard and is what every other crypto is measured on. I don’t see this changing soon. I will let my readers know if my stance changes.
Now Ripple is my darling. I believe this has the greatest potential. I listened to Brad Garlinghouse, CEO of Ripple speak at the Yahoo Financial Forum. If you get a chance, listen to his presentation: https://www.youtube.com/watch?v=kyWZzgZN3wo&t=1413s. Why do I think Ripple will be a winner in this space? 1) It solves a problem unlike other cryptocurrencies. The Use Case that it solves is a trillion-dollar problem. 2) It already has real customers. 3) Google has invested hundreds of millions into the company. In this space, be careful out there.
December 24th, 2017 – Update on Bitcoin and Ripple
I am not sure I have the words to describe what is happening. It is very similar to the dotcom euphoria back in the early 90's. As of today, Bitcoin sits at just over $13,000. Ripple, which is my favorite crypto is trading at just around $1.00. Unbelievable. I will be adding some links on the potential of Ripple in the near future. Merry Christmas!
May 21th, 2017 – Update on Bitcoin and Ripple
WOW... The cryptocurrency sector has gone mad. It is the wild wild west in this new area so buyer beware. As of May 21, 2017, Bitcoin is trading at over $2,000 USD per coin. It should be ripe for a pull back. Stay tuned.
Even crazier, Ripple is now trading at .33 a share. This huge rise is due to the hot sector. However, I believe Ripple may be a leader in this space with their unique technology. Whatever company wins out to become the hub of the exchange of currencies (traditional and crypto) will do exceptionally well in their investment.
May 7th, 2017 – My first purchase of a Cryptocurrency
I did my research and it came down to 2 cryptocurrencies I liked. The first was Bitcoin. It is the most well known and has a track record I could review. It continues to gain momentum and has recently shot up to over $1500 US dollars per coin as of May 7th, 2017. I made my first purchase on April 13th around $1215 per coin.
The second purchase I made with Ripple or XRP. XRP is an independent digital asset, native to the Ripple Consensus Ledger. It has solid investment from Google, so I decided to take a shot. When you do your research the key is the algorithm the currency has backing it. I am betting that the smart people at Google did their research. Google won the search wars due to their great search algorithm. I also purchased XRP on April 13th at around .03 a Share. As of May 7th, 2017 XRP is trading at .13 a share. It is the wild west of cryptocurrencies, so enter at your own risk. But this is definitely an alternative to our US dollar and why I believe it is so popular. To purchase these cryptocurrencies, I used a company called Bitstamp.net.
April 11th, 2017 – What is a Cryptocurrency?
Up until now, MonieStorm has focused on Gold and Silver as an alternate currency as well as an investment vehicle. Gold and Silver have stood the test of time as money and will continue to do so as far as the eye can see. So this journey I am about to take you on is new to me. I will be learning alongside you. The world of cryptocurrencies…
In this series, I will look at Cryptocurrencies as an alternative to holding US Dollars. Wikipedia defines a cryptocurrency as a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Many of us a have heard of Bitcoin. While this is the most prominent cryptocurrency, it is by no means the only one out there. In the next series, we will look at the most active cryptocurrencies in the marketplace today.
Privatizing Social Security has always been off the table for Congress. First, they think we are too stupid to manage our own finances. Second, if we were to create individual accounts for each of us, they could not get their hands on the monies. Back during the Clinton years, Congress borrowed against the funds. Any money that is not tied down is free game for Congress. When you go to your broker and open an account, they don’t put you in the pool of investor. Each person has their own account. Let’s do the same for Social Security.
So let’s see what the numbers look like if we did not run this huge Ponzi scheme and we let individuals manage their own SS fund. .
Wow… If let alone to manage one’s own retire income you can see by the chart the possibilities. Obtaining a return of 6% is very reasonable. That would give a retiree 1.4M vs. 428K at retirement. I understand that Social Security is a safety net and we don’t want individuals to blow their retirement. But accounts could be setup so investments are very conservative. Give people the opportunity to invest in CD's. At least get some return on your monies…..
What are your thoughts? Is privatizing SS a crazy idea?
Here are the numbers:
I love how the media laughs when Trump says that Mexico will pay for the wall. It is not going to come from import taxes or payments from Mexico. It is going to come simply from monies we pay Mexico each year for things like Military assistance, etc. The chart below (source: Inside Government) sums it all up. In 2012, we paid Mexico over $209 Million Dollars. All we have to do is simply cutoff all payments to Mexico. That $209 Million Dollars is a great down payment on the wall.
Have we really recovered or is this just an illusion? Take a look at the 9 data points below and see what you think. These number reflect the economic trends since the recovery began back in 2008. As you can see the trends are quite concerning. What is really happening… Just like in your own family budget, if you were to keep charging up your credit card things can seem pretty great. Consumer and Government continue to accumulate more debt to smooth things over.
The shaded red identifies the Obama presidency....
Source: Zero Hedge
Let’s look at a few of the numbers:
Students loans – Some 40 Percent of Borrows aren’t making payments. The total outstanding student debt is around 1.35 Trillion dollars. That’s trillion with a T. As college cost continue to increase exponentially, look for this number to keep climbing. While it is not shown on this diagram, auto loan debt has skyrocketed. Dealers now provide 84 month loans.
Labor Participation Rate – The BLS came out with the unemployment number this past Friday (June 3rd 2016. The headline number is that we are at full employment with a 4.7% unemployment rate. Let’s pull back the onion a little bit. The proportion of adults working or looking for work dropped in May to 62.6 percent, near four-decade lows. This low level of participation is based on those individuals who can’t find jobs and quite looking. But the headline number is what people talk about.
Federal Debt – The Federal Debt is quickly approaching $20 Trillion. If you get a chance go to the debt clock website- www.usdebtclock.org. The Government continues to ignore the elephant in the room.
What are the underlying repercussions of this debt? 1) We see that neither Republicans or Democrats want to deal with it. Hence, the Presidential race is become quite entertaining. 2) Janet Yellen keeps declaring that the Federal Reserve is preparing to raise interest rates. The Fed may be able to raise the rates 25 more basis points, but that will be it. We can’t afford the interest payments. 3) Finally, the US is beholden to China, Russia, Saudi Arbia to name a few. If these countries were ever to sell some of their holdings, this oculd trigger a World Economic meltdown.
The Great Recession of 2008 was a difficult time in our counties history. However, I do not believe we have successfully tackled the issues at hand. The consequences are fast approaching. Prepare!!
Since the US dollar is used as the world’s reserve currency, does this provide the United States greater financial security?
Absolutely not…. Being the world reserve currency does not entitle us to any special treatment. I have heard some experts use the analogy that we (the US) own the casino and the house always wins. The same rules of finance and economics apply to all countries in the same manner. If a country continues to deficit spend and borrow money, the country is still obligated to payback the monies owed. I think having the world reserve currency status is a symbol of stability and strength. However, the Federal Reserve’s QE1, QE2, and QE3 (i.e., printing money) is jeopardizes this status and could be the nail in the coffin to our economic system. What are your thoughts?
If you remember the episode of Seinfeld where Jerry live in the Bizzaro world. Everything that he knew and trusted was becoming unglued. Kramer got a job. Elaine founds friends that were the polar opposite of Jerry, Kramer, and George. And so on….
So in today’s world, I feel like we are living in Bizzaro times. I have captured a few things that will make you think twice and question the competencies of our Federal Government and the times we live in.
As we debate the direction of our country, let’s see how far Cuba and Singapore have come over the last five decades. The reason I use these two countries is that they are on opposite sides of the debate. Cuba was once a flourishing country prior to the take over by Castro is a example of how Communism works. On the other side of the continuum is Singapore. A Country that has embraced a purer form of Capitalism.
Read the forbes article below to get the full understanding of what I am talking about.
So why does it matter? As we look towards policies here in the US, let’s head towards a purer form of Capitalism vs. Communism. Today, the US prescribes to a form of Socialism that all Europeans would be proud of. I would like to see our Country take some lesson learned from Singapore (i.e., lower taxes, less regulation). What do you think?
We live in a time where bubbles in the economy are commonplace. Most recently, we encountered the dotcom bubble in 2000 and the real estate bubble in 2008. Both caused havoc on the US economy and the latter causing one of the biggest financial meltdowns in our countries history. Not only did it have implications on our economy, it had global ramifications.
What’s been the underlying cause of these bubbles? Simply, it has been the Federal Reserve’s easy money policy. Keeping interest rates at zero has perpetuated these bubbles as well as its quantitative easing policy. To make matters worse, it is no secret that Central Banks across the globe have followed the US Fed’s lead and have kept their Countries interest rates artificially low too.
No time in world history have countries performed this form of monetary policy at the same time. There have been examples of one or two countries engaged in this policy, but never the number of countries currently embracing these policies. And we have evidence that the outcome is never good.
So how will wealth be transferred due to these easy monetary policies of printing money and artificially low interest rates? Once confidence is lost in our system, people will flee to hard assets. Recognizing that one’s currency is worthless will panic individuals to move to other asset classes (i.e., gold, silver, land, etc.). Wealth is never lost, just moved from one asset class to another.
Tom holds a B.S. in Economics from Florida State University and a MBA from Nova Southeastern University. Tom has over 30 years experience in investing and economics. He has strong faith, love of country, and strong desire to help others. This has lead Tom to create and promote MonieStorm.