YOU DON’T HAVE TO WORRY ABOUT THE RISING COST OF LIVING, SO LONG AS YOU DON’T EAT
Yes indeed, America’s golfer-in-chief has recently left his cycling & fund-raising vacation at his Martha’s Vineyard luxurious rented home, to temporarily return to Washington so that he can, uhm, continue to vacation & fund raise – this time at the luxurious mansions of wealthy Democratic donors all over America (but especially in Hollywood)
In the meantime, though, he continues his narcissistic victory laps, immodestly proclaiming how he and his White House acolytes have turned around the economy – allegedly leading Americans to a new era of enduring prosperity.
Of course, there appears to be a muted response to this message, especially when the president attempts to hustle millennial audiences at the very few selected colleges (or even high schools) where America’s anointed one still feels free to speak [without being driven out of the institution of higher (or lower) learning by constant booing].
Recent leaks from the White House indicate that the president and his chronically mendacious and corrupt consigliore, Eric Holder, are baffled by this apathetic response.
How could these (millenial) ingrates be so disloyal to the very men (and female uber-mensch Valerie Jarret) who brought them a true minimal unemployment rate of 11%; soaring federal, state & local taxes; escalating tuition fees (even at state-funded colleges); and the indignity of having to move back into mom & dad’s basement to survive financially?
BUT WHAT ABOUT ALL THE GOOD THAT BARACK OBAMA RECENTLY TOLD US HE’S DONE FOR MINORITIES?
And of course, most disgraceful of all, is the unemployment rate for young blacks … for whom America’s golfer-in-chief proclaimed himself their savior:
For example, the unemployment rate of black male teenagers in the city of Chicago is a shocking 92%.
Think about it: this means that only about ONE in THIRTEEN Chicago black males, aged sixteen to nineteen, hold some form of LEGAL EMPLOYMENT, even though it’s usually employment with FEW HOURS & LOW PAY!
AND WHERE DID YOU ACQUIRE SUCH RIGGED ANTI-GOVERNMENT STATISTICS FROM?
The source of these mind-blowing statistics is an official U.S. employment survey: “The BLS Labor Force Statistics, Current Population Survey (Unadjusted)”
And if you doubt me, and you’re still a died-hard Democrat apologist, please target your Web browser to the following Web link:
ANY NATIONAL STATS?
An equally unsettling statistic — released in this same employment survey — highlights the similarly dire employment crisis for this demographic NATIONWIDE – with 83% of black males, aged sixteen to nineteen, being unemployed.
In fact, there are fewer & fewer jobs for these teenagers to fill — as more adults with families — often with four-year college degrees — seek out “teenager jobs” in the food service, retail and hospitality sectors of the American economy — because of the current absence of jobs in their own traditional fields.
Last year “The Bureau of Labor Statistics” reported that the number of COLLEGE GRADUATES working minimum-wage jobs in 2012 was 71% more than in 2002 (before the many job-destroying initiatives of economic-illiterate Obama advisers such as Valerie “I never met a rigged economic report I didn’t like” Jarrett, and David “Mr. Greedy” Axelrod).
SO WHAT’S GOING ON HERE?
The overall problem is dropping incomes for America’s declining middle- and working-class voters.
AND WHY IS THAT?
And why are their incomes declining?
Because the cost of living for most Americans is rising precipitously, as a result of the following trends: (1) increasing food & housing costs; (2) rising federal, state & municipal taxes; and (3) “crony capitalism”, meaning that wealthy donors – to the Obama administration — get tax-advantaged tax breaks from the IRS, as well as lax enforcement of illegal offshore financial investments (step up to the plate, George Soros).
BUT MOST MEDIA PUNDITS SAY THERE IS NO INFLATION IN THE UNITED STATES
And yes, despite what the folks at MSNBC & CNBC are telling you, American inflation is a very serious problem.
For example, everyone’s favorite chocolate maker, Hershey ($HSY), just raised its prices 8% across the board, because of rising sugar & cocoa prices.
Now admittedly, it would be a healthier choice for many Americans to eat a less chocolate…
But unfortunately, the same global economic forces — that drove Hershey to raise its prices — impact almost everything we eat.
Inflation is starting to punch us (forgive the pun) right in the stomach!
The Federal Reserve and Wall Street constantly reassure us that inflation is NOT a problem in the U.S., but Hershey says otherwise:
Hershey’s management expect “significant increases” in ALL their “input” costs – including ingredients (like milk & cocoa butter), packaging materials (such as paper & aluminum foil), and electric power expenses for the many factories that churn out the company’s many chocolate products.
But contrary to the misnomer advanced by the mendacious hustlers on Wall Street & in the White House, businesses can’t simply burden helpless customers with rising costs, so that those businesses can survive the current recession (economic slowdown) created by the bungling Obama administration.
INFLATION IMPACTS BUSINESSES TOO
For example, recently the government released its June “Producer Price Index” report covering June:
Economists expected a 0.2% increase from May. The data showed wholesale prices jumped 0.4% — twice what the “experts” had forecasted.
MORE ECONOMIC BAD NEWS?
And considering the current soaring price of ALL commodities (including energy) — thanks to the growing crises world-wide (Issis beheadings, Middle East wars & the capture of Nigeria’s oil fields by Islamist fanatics) — it’s not irrational to expect the next U.S. “Producer Price Index” to soar too!
IT’S THE DEMOGRAPHICS STUPID!
In the end, though, its primarily INDIVIDUAL demographics that impact inflation statistics.
Personal inflation ultimately depends on your particular spending patterns:
For example, seniors spend more on healthcare; millennials spend more on education; and suburbanites spend more on gasoline (to get to work & to nearby shopping malls).
But the one expense which all North Americans share is FOOD:
Unless you’re willing to starve, the usual staples — bread, milk, eggs, butter, fruits, vegetables and meat – are required for ordinary folks to survive.
And in most grocery stores, you pay MORE for all those items than you did a year ago … and a LOT MORE than you did five years ago.
Yet everyone, from the Federal Reserve to Wall Street analysts, insist that inflation is not a problem.
In fact, some economically-illiterate & left-wing Keynesians — including a particular reality-challenged New York Times columnist (Paul Klugman) — insist that we need more inflation.
LET’S GET REAL HERE
But let’s face facts here: the reality-challenged elitists, who champion these foolish economic policies, tend to be in THE TOP INCOME CATEGORY. They don’t feel the pain like working families, because FOOD & FUEL BILLS EAT UP SO LITTLE OF THEIR USUALLY AMPLE WEALTH.
Another answer is that the “headline” inflation numbers routinely omit food & energy costs because those costs can be so volatile, and the many fluctuations in these costs could allegedly distort the official government statistics on inflation.
In theory, any sustained rise in food and fuel will show up as higher prices for most consumer goods.
And guess what: Hershey just raised wholesale prices.
The theory is now reality!
The next move is up to the distributors who sell Hershey chocolate to your local stores:
When they raise their prices, the next victims will be the rest of us!
Of course, the crony-capitalist elites of Washington D.C., New York City & America’s “Left Coast” don’t have to worry about inflation or food prices:
They can afford to live comfortably anywhere (even in such low-tax offshore havens as the Turks & Caicos Islands, Aruba & Switzerland).
BAD NEWS SOUPCOFF
And what are the long-term implications of the general rising cost-of-living increases which I have just documented?
Well, based on what I have learned about historical stock-market & economic cycles, through past research, I expect imminent global economic & stock-market crashes of significant proportions – which, in turn, will create even more increases in the cost of living — in the United States in particular — along with declining incomes AND soaring tax burdens for most citizens.
And based on what did happen, historically, during previous economic implosions like I’m predicting, we could possibly expect a rise in anti-government sentiments — expressed in extremist movements on the left & the right of the political spectrum.
WILL THE LAST AMERICAN TO FLEE THE COUNTRY, PLEASE FLUSH
So there now exists — in my mind anyway — a crystal-clear clarity about where current dangerous — but previously perceived “benign” political/economic trends — are heading — unless there is a change in direction by those who are collectively in command of America’s ship of state (which now increasingly floats on an ocean of DEEP DEBT).
PLEASE STOP … YOU’RE STRESSING OUT YOUR READERS … AND YOU’VE HARDLY BEGUN
Throw in the riots & looting that have accompanied similar past economic disasters like this – along with the rise of armed extremist militia groups and/or radical college protest movements – and you have: the perfect recipe for social anarchy and a “push back” by government through:
(1) Repression of “dissenters” via background checks;
(2) Intimidation of these “dangerous” elements by the IRS and other “justice” agencies;
(3) Wholesale expansion of the government’s monitoring of suspected domestic “opponents”.
In other words, we’re talking about a world in which President Richard Nixon, of Watergate fame, would have felt quite comfortable.
Not to mention President Barack Obama’s kitchen cabinet (can you say “Eric Holder & Valerie Jarrett, boys and girls?)
GLOBAL DOOM & GLOOM
Indeed, all my recent investment research has convinced me that global stock markets are going to be metaphorically clobbered as soon as the “Fed” is forced to raise interest rates (when the Fed ends “monetary easing”, as economists call it).
And if recent reports in the “Financial Times of London” are correct, it could be sooner than later!
Yet many of America’s voters have now been sucked into the Obama administration’s intended (socialist) largesse:
Whether it’s extended unemployment insurance, food stamps or free health care, more & more American’s are hooked on this metaphorical crack cocaine of government assistance.
Not only that but many of these same citizens – who happen to be members of what were once the nation’s prolific middle class — are now been destroyed by a plethora of minor and major tax IRS regulations (& payable regulatory fines).
And all of these measures also hamstring the efforts of most small businesses which operate (and create employment) in the real-world economy – and do NOT operate in the algorithmic government statistical world of rigged government reports on economic-growth AND on unemployment statistics.
And it’s my strong personal opinion (based on prior research) that when the stock market eventually ends its clueless & reality-challenged Obama-like vacation (currently signified by what seem like never-ending soaring share prices), this is when ALL investors in the American stock market will be impacted by the greatest wealth destroying tax of all:
And I’m talking about a horrendous unanticipated stock-market crash, and then likely fiscal bankruptcy by the current U.S government – which is already drowning under the enormous debt created by the reckless over-spending of the Obama administration in the last eight years (as it applied the ultimate corruption of Keynesian economics — more unfettered government spending).
IN MY OPINION, THERE IS SIMPLY NO REASON TO FEEL SECURE ANY LONGER
And yes, please don’t be lulled into a false sense of security any longer.
There are a number of warning signs that global economic (and political) stability is starting to deteriorate already:
For example, the GDP of Europe’s strongest economy, Germany, fell significantly in the most recent quarter.
And, course, various acts of aggression – by new competitors for the military supremacy once enjoyed by America – have recently broken out all over the globe.
For example, we all know about the barbarous acts recently carried out by ISSA (now known as ISA) in the Middle East.
And as America’s community-organizer-in-chief continues to dither & delay — in coming up with a strategic plan to battle this increasing militant Islamist challenge — the threats to America’s allies in the region — and to the American homeland — are only likely to INCREASE.
And, of course, we’re all now familiar with Vladimir Putin’s cynical acts of aggression against the Ukraine;
Not to mention increasing challenges to American military might in South East Asia, by China.
And of course, on the economic front, there is the recent outbreak of “corporate inversions” by overtaxed corporate behemoths, like Burger King, finding safe refuge – from Democrat tax persecution – in Stephen Harper’s tax-friendly haven of Canada.
America’s “founding fathers” were against all forms of direct taxation by the federal entity, and preferred leaving these powers in the hands of the original “states” that banded together to form the “United States of America”.
But now Americans are bedeviled by the oppressive tax tyranny of the IRS, and its attempts to bully the “not-for-profit” political groups which its Democrat Party masters don’t approve of.
And just to refresh your memory, does the name Louis Lerner sound familiar?
And what about the nefarious monitoring of the phone calls & Internet chats of ordinary Americans by the NSA, to ferret out possible political “enemies” of the paranoid Obama White House?
MY ‘DOOM & GLOOM” LITANY IS FINALLY NOW ENDED … BUT WHAT ARE THE IMPLICATIONS FOR INVESTORS?
My apologies for rattling on for so long; but there is a reason for filling this commentary with so many depressing observations:
Just a reminder that my constant warning recently – in my Twitter investment “posts” (http://stocktwits.com/MurrayS) – has been that a massive stock market crash is inevitably coming in the United States.
And that’s despite all the great profits currently experienced by today’s foolish & reality-denying U.S. stock-market investors — profits occurring only because of the continued “artificial” low-interest-rate policies created by the “Fed” (first by Dr. Bernanke and now by Ms. Yellen):
For example, at the end of last year, the Fed announced it would buy $45 billion month of U.S. Treasury debt.
Not only that, but it will also continue buying $40 billion a month of agency mortgage-backed securities (“junk bonds”, in more familiar parlance).
These purchases will be made with dollars created out of (metaphorical) thin air. And they are expected to balloon the Fed’s balance sheet to 4 TRILLION DOLLARS – five times what it was in 2008 – by late autumn.
The important thing about the Fed’s “dollars” is that they’re not real – since the Fed is constitutionally enabled to print as much “phony-baloney” currency as it wishes.
If we’re lucky, this money-printing initiative will be merely ineffective.
More likely, it will bring the sort of catastrophe that you can only get from determined central planning from government entities.
After all, with this new “stimulus” program in place, the Fed will increase America’s monetary base at three times the rate of GDP increases.
That is: for every dollar’s worth of extra output, the Fed will add 3 dollars to its balance sheet – and trust me, that isn’t a good thing.
This is the kind of money printing more typical of the Central Bank of Zimbabwe!
ANY PREDICTIONS REGARDING THE CONSEQUENCES OF SUCH INITIATIVES?
So my cautionary warning: Hold onto your hats & wallets, folks, because this is going to be one bumpy ride!
Because, in my opinion, Fed “quantitative easing” will necessarily be just around the corner (perhaps as early as late winter); and that’s when the proverbial (pardon the expletive) SH*T hits the fan!.
AND THEN WHAT HAPPENS?
And when Ms. Yellen metaphorically jams on the brake pedal on quantitative easing, here’s what I think will inevitably happen:
Global stock markets will crash; and HYPER-INFLATION will wipe out the savings of everyone but greedy Obama-allied “crony capitalists” – like George Soros, Valerie Jarrett and the rest of the green-energy gang (who brought you the government-subsidized Solyndra bailout in the U.S.).
Hence, thanks to Barack Obama & Harry Reid, there will finally be INCOME EQUALITY in America…
But it will be EQUAL impoverishment for ALL Americans, except the privileged & spoiled elitists who inflicted this economy policy on the rest of us.
Of course, as I’ve repeated so often -– in so many of my recent investment posts:
There is only one political solution to this current politically-created economic status quo — a “status quo” that now specifically includes (1) rising costs of living; (2) rising taxes and rising unemployment among America’s disadvantaged youth; and (shockingly) (3) a meager .01% annual GDP growth rate, accompanied by repeated TRILLION dollar deficits:
Throw out the Democrats bums who created this economic mess!
After all, even a six year old could probably have done better, in managing the U.S. economy, than America’s “economic-challenged” community-organizer-in chief!
Black Swan author Nassim Taleb has new book out which gives us a clue as to how to protect our wealth. It’s called “Antifragile”
As Taleb notes, when you subject things that are fragile to a shock, they break.
Yet in his words, things that are “antifragile” actually get stronger.
Regarding the ‘fragile”, Taleb particularly expounds on the very human fragility which he calls “fool’s confidence”.
Being human, these kinds of “fools“ — suffering from this all-to-common malady — find causes and effects where there aren’t any; and this, in turn, leads them to believe they know things which humans simply can’t understand or predict.
Based on my social-research experience, I agree; and I submit that the social & economic dynamics that comprise the stuff of human society are simply too interlaced, intertwined and unpredictable for mere humans to comprehend (no matter how much smarter and superior those individuals perceive themselves, as compared to social inferiors like “the rest of us”)
Emboldened with what Taleb calls a fool’s confidence, these “decision makers” make decisions that ultimately prove disastrous.
Certainly, based on the evidence of recent history, most of the cures of modern-day economics are destructive and a waste of time.
Taleb notes that the study of economics is what he calls a quasi “epiphenomenology,” where things that APPEAR to be scientifically related are linked by a causality that does NOT really exist.
Then, based on causal connections that are largely IMAGINARY, economists clumsily intervene with their economic cures (and these days, it’s usually misguided recommendations for Kenesyian-style government overspending)
A PLAIN-ENGLISH BACKROUNDER
In fact, a main source — of today’s current economic crisis — started in 2007.
And the roots of this economic mess-up lies in the iatrogenics [Ivan Illich’s nomenclature for describing doctor-created infectious outbreaks in hospitals] of economists, like Alan Greenspan:
In particular, their initiatives ultimately led to massive mortgage forfeitures by gullible mortgage purchasers, and (additionally) to widespread bankruptcies by the financial institutions holding those mortgages.
The end result?
A massive economic implosion, and a date at bankruptcy court for millions of Americans!
Greenspan didn’t know what he was doing. But that didn’t stop him from doing it. And now a new well-meaning — but just as clueless — new team is in control at America’s central bank (the Federal Reserve).
They are making the same basic mistakes, believing that they understand cause and effect better than they do … and therefore thinking that they can manipulate the system so that it produces the economic results which they desire.
SO WHAT ABOUT TALBEB’S PRESCRIPTION FOR DEALING WITH ALL THIS “ANTI-FRAGILITY”?
So what does Taleb recommend for mere mortals — like the rest of us — to do, to combat this mess?
Well, using Taleb’s “lingo”, it’s logical to say we should all want investments, families & businesses that are “antifragile.”
For example, regarding such anti-fragile actions, Taleb asserts that — on a personal level – we should all strive to raise families that can absorb shocks… that can bounce back after reversals… that can rise to the challenges which the future brings.
NEVER MIND THIS FAMILY STUFF … WHAT ABOUT INVESTMENTS?
In our investments, he strongly recommends, we also need to watch out for possible “fragility”.
And, in plain English, what does this mean?
Well, first of all, we don’t want to own stock shares in companies that have too much debt; they simply won’t survive a prolonged stock-market downturn.
And, perhaps most important, we don’t want to bet the farm on the ideas of commission-obsessed stock brokers — no matter how foolishly confident they are.
So if you want to be most cautious, my advice is to forget filling your portfolio with too many stocks (especially those with too much debt and possibly with unsustainable annual dividends)
Instead, in my opinion (and I am opinionated on these matters), the best “antifragile” holdings right now are likely GOLD and CASH.
If the crisis is unexpected inflation — or worse hyperinflation – the price of gold will go up.
If deflation appears on the horizon, cash will be king (because the price of everything else you own will likely go down … perhaps even the price of your home).
ANY MORE DETAILED RECOMMENDATIONS?
And finally, in more detail, here are some of the stock sectors in which I would recommend you slowly start accumulating (buying) shares whenever any significant stock-market price dips occur:
(1) Blue chip gold investments in gold bullion, gold ETFs (Exchange Traded Funds), and mining shares.
(2) Silver bullion — or platinum and palladium – and related mining shares and ETFs.
(3) Energy investments in blue chip oil & gas companies.
(4) Food and agriculture investments, including farming conglomerates – as well as manufacturers & distributors of consumer food products.
(5) And finally, you might want to think about investing in debt-free companies which are in the water business — perhaps the most neglected natural resource of all (and yet the most essential).
And, of course, there is a political solution to this “made in America” economic crisis:
In the 2014 & 2016 elections, Americans should permanently vote out of office all those Democrat Party bums who created this economic mess!
YES AND EVERYBODY KNOWS
And now in honor of all those distanced, corrupt Washington dunderheads, let’s break out in song, singing Leonard Cohen’s classic musical tribute to global corruption, “Everybody Knows”:
“Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
“Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
“Everybody knows that you love me baby
Everybody knows that you really do
Everybody knows that you’ve been faithful
Ah give or take a night or two
Everybody knows you’ve been discreet
But there were so many people you just had to meet
“Without your clothes
“And everybody knows
“Everybody knows, everybody knows
That’s how it goes
“Everybody knows, everybody knows
That’s how it goes
“And everybody knows that it’s now or never
Everybody knows that it’s me or you
And everybody knows that you live forever
Ah when you’ve done a line or two
Everybody knows the deal is rotten
Old Black Joe’s still pickin’ cotton
For your ribbons and bows
And everybody knows
“And everybody knows that the Plague is coming
Everybody knows that it’s moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But there’s gonna be a meter on your bed
That will disclose
What everybody knows
“And everybody knows that you’re in trouble
Everybody knows what you’ve been through
From the bloody cross on top of Calvary
To the beach of Malibu
Everybody knows it’s coming apart
Take one last look at this Sacred Heart
Before it blows
And everybody knows
“Everybody knows, everybody knows
That’s how it goes
“Oh everybody knows, everybody knows
That’s how it goes
AND HOW ABOUT THE ACTUAL AUDIO RENDITION BY LEONARD COHEN HIMSELF
And if you’d like to hear Canada’s troubadour of trouble, Leonard Cohen, sing this cynical song, please open the Web link immediately below, or cut & paste it into your Web browser’s Internet navigation pane:
Nuff said, I would think.
[Murray Soupcoff was editor and co-author of “Good Buy Canada” and author of “Canada 1984”.
He was a founding member (and senior partner) of Ian Sone & Associates Ltd -- Canada’s first independent social-research company specializing in the evaluations of federal, provincial & municipal government projects in Canada.
He is also the publisher of the “Soupcoff Report” investment newsletter, whose distribution is partly subsidized by paid subscriptions from former research clients.]