Investment Rarities founded by an advocate of Austrian economic theory...

[galtgulch]

I have subscribed to the newsletter entitled Market Report which includes condensed commentary on financial matters in the US.

James Cook is the founder of Investment Rarities and has been warning of the coming crisis for over forty years attributable to the egregious money printing by the Federal Reserve and which has been emulated all over the world.

The voice of the newsletter has always sounded as if the collapse were just around the corner but the hyperinflation has yet to manifest itself.

This time though we are closer than ever before given the magnitude of the unsustainable debts of so many influential countries including China and the USA.

The Fed has brought us to this point and has no effective way to prevent the inevitable outcome as predicted by Ludwig von Mises years ago.

Some of the commentators in the latest issue of the newsletter are explicit in their description of what life would be like once the collapse is upon us.

Curiously a discussion of the outlook for the economy and the stock market in the latest Barron's found every member of their discussion, each of whom works for various Wall Street firms, was optimistic basing their forecast on predictions of increased earnings.

On the contrary, the discussants James Cook's newsletter are predicting imminent collapse of the economy, failure of the dollar, frightening drop of the stock market, increased unemployment, overreaction by the Fed with Yellen instituting another round of QE as the deflationary depression hits leading to a hyperinflation.

You can call Investment Rarities and ask to receive their Market Report newsletter. www.investmentrarities.com

Pleasant dreams.

[Peter]

Agree. The difference now is that so many countries have ruined their currency. We are riding on a bubble. I remember the stories of the German mark being worthless before WWII and people using wheel barrels of cash to try and buy a loaf of bread. But now too many countries are overprinting currency including some of the largest economies. And too many times a financial collapse leads to a worsening, totalitarian government.

[Brant Gaede]

No national debt issued in a sovereign country's own currency is much of a problem qua debt. The US national debt is next to nothing to the United States. Puerto Rican bonds are a problem to Puerto Rico; it cannot push a button and make dollars to pay them off.

German hyper-inflation in the early 1920s was due to war reparations not payable in German currency which was destroyed as one consequence. The German government came with a new currency backed by German state assets--so said backed--which was accepted by the Germans and life started to get back to normal. Then the Great Depression came in from left field. That's another story.

This raises the question of what gives a currency not convertible into anything but more of itself--gold and silver are now off the table or the national debt would be on the table--its value? We need dollars to pay dollar debts including taxes. We need dollars to buy goods and services. If you give me a dollar today there is presently a good reason or reasons to expect that a year from now it will buy about what it can today. Value and valuing is always what is in and goes on in someone's head, even for gold. There are, of course, ways to protect yourself from any possible gross fluctuation in dollar value--diversification. Gold, a house, other assets, productive work and skills, love, good health, planning for the future, equities, etc., etc. Some of these listed are for psychological strength and grace only, for they aren't fungible. Take equities. If the dollar goes to hell they will go up in dollar value (over time and through fluctuations which may seem to be out of synch) or repriced in a new currency. An investment in the S & P 500 over the next hundred years will be worth exponentially more than an equivalent amount of gold held for the same time, assuming the next 100 years will be like the previous in terms of wealth creation. That doesn't mean there is no place for gold, just a different place for somewhat different reasons.

--Brant