Economic Renaissance or SHTF?
Economic Renaissance or SHTF?
Ali Velshi of CNN’s “Your Money” has been speaking of an economic renaissance. He has sited that housing seems to have bottomed and that the stock market is approaching an all time high. I am a little bit more skeptical than Ali. Last week we had two very bad economic indicators. The first was the jobs numbers for January. Unemployment ticked back towards 8%. The already sugar coated U3 number came in at 7.9%. This number, of course, doesn’t count people who have quit looking for work or are working part time because they cannot find full time employment. The number that includes those individuals is called U6 and is currently at 14.4%. As bad as that news is, the next is still worse. The fourth quarter GDP for 2012 was negative .1%. Even with the historically low interest rates, we had negative GDP. Even with the Federal reserve devaluing our currency at the rate of $85 billion per month or $1.02 trillion annually, we had negative GDP growth. What, pray tell, do you think GDP would have been without the intervening monetary stimulus? Simple math would suggest that if we subtract the $1.02 trillion of current stimulus from last year’s GDP of $15.8 trillion, we would have negative 7% GDP! But, even with all of the market intervention, we find ourselves one quarter of negative GDP from a new recession.
Credit Supernova
I wish I could say that summed up the bad news for the day. Bill Gross, Pimco’s CEO and the largest bond manger in the world, said in the company website that we are facing a “Credit Supernova”. You don’t have to be an astrophysicist to know that equating an imploding star with the bond market is not a sign of confidence. In fact, Mr. gross said fractional reserve banking, which is the foundation of our current financial system, is at risk. he went on to say that we should position ourselves for slow growth, continued quantitative easing, zero percent interest rates and inevitable inflation. He recommended purchasing real assets. Bill Gross said ” buy something you can sink your teeth into – gold, other commodities, anything that can’t be reproduced as fast as credit.” This is the equivalent of the CEO of Coke telling people to drink Pepsi. In other words, he thinks it is about to hit the fan.
Speaking of something you can sink your teeth into, shelf stable food has turned out to be a great investment over the last year. By simply buying a little extra food on each trip to the grocery, you can hedge against a loss of availability due to unforeseen economic crisis, weather or civil unrest. Additionally, inflation all but guarantees a gain on your investment of storable food. I also like Bill Gross’ recommendation to purchase gold. I like silver as well because of the smaller denomination of wealth that it represents. I always use JM Bullion as they have the lowest price over spot for gold and silver. If you haven’t implemented a plan to prepare yourself for the trouble on the horizon, the time is now. Check out our 7 Step Survival Plan to start building a foundation in readiness.
Happy Prepping!
