The fact that I’ve been able to accurately predict the significant stages of this ongoing crisis for over 3 years has nothing to do with intelligence or my ownership of a crystal ball. It merely has to do with the fact that I have understood from the very beginning of this crisis that the origin of this crisis was rooted in our global monetary system. It really is that simple. The “experts” that parade around TV and in the media have consistently been egregiously incorrect about their assessments regarding this crisis not because they are incapable of reaching the same conclusion as I. To the contrary, as insiders at the highest levels of the US Treasury, the US Federal Reserve and Wall Street, they almost certainly understand the mechanisms of this crisis even more than I do. However, they have been consistently wrong about the direction of this crisis because most of them have ulterior motives that are better served through the deliberate and systemic concealment of the true nature of this crisis.
Ever since I was a child, I was fascinated by factors that dictated that different monetary values should be charged for the exact same goods merely based upon the global currency that was being used to consummate its purchase. After I graduated from college and truly began to travel around the world, I noted that during certain years, my travel expenses would be significantly higher than in other years, primarily due to the strength or weakness of the US dollar. As I continued to spend a great deal of my adult life residing and traveling in many different countries, the weakness of the US dollar was always much more apparent to me than to other Americans that never left the United States for business or holidays. Thus, it was infinitely easier for me to predict the 2007 global stock market crash, as I did in this September 2007 article, “Why the Fed’s 0.50% Interest Rate Cut Won’t Save the US Markets“, even when appearances on the surface were rosy.
A mere six months after I wrote this article, financial “pundits” continued to sucker retail investors with predictions of stock market bottoms, with one such pundit predicting in March of 2008 that the US Dow Jones index would skyrocket from 12,361 to 20,000 by March of 2009 (by the way, this particular pundit was touted as being famous for accurately predicting previous historical market bottoms) . Many times after such ludicrous predictions are made to pump an industry, it’s quite difficult to find them as financial sites remove them from their websites due to their embarrassing nature. Fortunately, for your reference, I was able to find an existing link to that absurd article here. To give you an idea of how ludicrous that prediction was, the US Dow Jones stands at 8,422 today.
The strength of a nation lies in the strength of its currency. That phrase has always stuck with me. Thus, during the early fall of 2007 when the US market bubble was being inflated to a tipping point by the US Federal Reserve, I never bought into the lies being propagated in the mass media that the bubble was sustainable. Why? Throughout my various business travels in different countries as US stock markets continued to climb higher late in the third quarter of 2007, I noticed that the US dollar’s purchasing power was still declining strongly and barely more worthy than monopoly money. Thus, given the huge disconnect between the strength of the American currency and all the “experts” on TV that were applauding the strength of the US economy, I positioned myself to benefit from a crash instead. In fact, now that I spend more time in Asia than in the United States, my only saving grace is that I started converting dollars into gold years ago and have since converted my business model into a gold standard, which I believe many other businesses worldwide will emulate in future years as this crisis deepens.
Today, the situation is no different than it was back in October of 2007. CEOs from every industry imaginable are saying that the global economic crisis has bottomed and that the recovery will definitely be recognizable and reach a sustainable status by the latter half of this year. But in my opinion, every single one of these CEOs falls into one of either two categories. (1) CEOs that have zero understanding of this global crisis; or (2) CEOs that understand this crisis yet will unethically lie to the masses.
Today, in my business travels throughout Asia, the US dollar is still only nominally stronger than monopoly money. Two years ago, when I spoke to a friend of mine whose family owns a large construction business in Dubai, when I asked him if his family business accepts US dollars for payment, his response was laughter.
The truly ugly US dollar chart below also confirms the stance I take in this essay. It does not surprise me at all that the banking elites continue to lie about the true state of this crisis. In fact I would expect no less from this sector of society that former US President Andrew Jackson once labeled as “vipers” and “thieves”. However, I am still, at times, astounded at how easily the masses allow themselves to be manipulated by their nonsense. Just a month ago, in this article here, when again, some currency experts called for the US dollar to break out higher, I predicted the end of the rally with a break downward instead, which is the scenario that indeed materialized.
US dollar approaching a dangerous stage above.
Additionally, everything I have mentioned in this article applies to any country in the world. If the economic and financial leaders in your country are telling you a recovery is on the way, but your Central Bank is in the process of flooding your country with hundreds of billions or trillions of local currency to jump-start the economy, then you can be assured that your leaders are full of nonsense as well. In the past, the tactic of flooding markets with free money has cut short prolonged recessions (i.e. think the dot com crash in America), and for this reason, analysts believe they can re-create this scenario today; however, bubbles can only be re-inflated over and over and over a finite number of times before this tactic fails. Unlike Keynesian economists believe, this is not a tactic that can be employed indefinitely without dire consequences. If it could be, then this crisis would have been nipped in the bud in 2007, just as the effects of the US dot com crash were quickly stifled through the artificial creation of a US real estate market bubble, the consequences of which we are paying for now.
The most appealing part of an investment strategy that is based upon an understanding of the faults of our global monetary system is the following: As long as one positions assets to benefit from a monetary crisis, clients will profit despite an occasional prediction about the direction of traditional stock markets that may turn out to be incorrect. How can this be? I explain the answer to this seeming conundrum in this article here, Monetary Inflation: How Increased Paper Wealth Can Translate into a Lower Standard of Living.
Bear market rallies that are created by imminent monetary inflation will leave investors poorer in terms of real wealth. Thus, investing in traditional stock markets is not a suitable wealth creation strategy right now. It will be in the future, but just not right now. This is why I maintain an aversion to all traditional stocks in US and European markets unless it is to play the downside when these markets reach an irrational, overbought status. However, I guarantee you that the following two statements are true. (1) There is no wealth management professional, anywhere in the world, that has been profitable over the past several years without understanding that the origins of this crisis is a monetary crisis and appropriately positioning assets based upon this belief (unless he or she has been exceedingly lucky); and (2) There will be no wealth management professional in the world that will be profitable over the next three years without understanding that this crisis will deepen in future years because we are still firmly in the throes of a monetary crisis.
Disclaimer: The above is my opinion and one based upon many dedicated years of detailed and continuing research. One should never blindly form an investment plan without understanding the complexities of our current monetary crisis and without understanding the link between nimbleness and success in today’s investment environment. An investor needs to understand that in today’s environment, the timeline for successful investing strategies has become greatly condensed.