Financial, Economic and Social Mood Update (November 1, 2017)
The US stock market continues to be very robust – the Dow Jones 30 Industrials Index reached a new record nominal high of 23,518 on November 1, 2017. The NASDAQ Composite Index hit a new record nominal high of 6760, the S&P 500 Index did likewise (2,588) as did the Wilshire 5000 “Total Market Index” (26,801) on the same date. Keep in mind that these records are “nominal” high values, but NOT real purchasing high values. In other words, the real purchasing power of all global fiat currencies continues to fall. You might be making “good” money – but you might not necessarily feel rich.
The power structure, or the “corporate state” in many countries all over the world is in the process of collapsing or imploding – due to corruption and over-extension (i.e., drowning in debt, unfunded liabilities and in “hedged” derivative financial instruments). Here is an interesting summary of the present-day liability balance sheet of planet earth (US Dollar figures listed in MILLIONS):
US-Dollar denominated financial derivatives: ($4,000,000,000)
US Dollar-denominated debt (UN): ($223,000,000)
US Total Unfunded Liabilities: ($150,000,000)
FMV of all global equities (08/27/2014): ($66,000,000)
EU Pension Liabilities: ($39,300,000)
Japan Total Debt and Unfunded Liabilities: ($19,921,661)
United Kingdom of Great Britain and N. Ireland: ($10,157,000)
Federal Republic of Germany: ($5,674,000)
French Republic (France): ($5,632,000)
Public Sector Pension shortfall (USA): ($4,700,000)
Italian Republic (Italy): ($2,600,000)
Netherlands: ($2,590,000)
Kingdom of Spain: ($2,392,000)
Ireland: ($2,260,000)
Kingdom of Belgium: ($1,457,000)
Swiss Confederation: ($1,332,000)
Commonwealth of Australia: ($1,283,000)
Hong Kong (Peoples Republic of China): ($939,830)
Hellenic Republic (Greece): ($546,920)
Portugal: ($511,940)
S&P 1000 Unfunded Pension Liability (USA): ($435,000)
The financial derivatives listed above are thus worth US $4 QUADRILLION. Please note that the entire global stock market is miniscule by comparison. Derivatives are a sort of “funny money” whereby people (especially large financial institutions) can bet upon the performance of very many diverse assets classes, some of them quite strange in nature. Banks like derivatives, which are off-balance sheet items (they appear in the footnotes of most financial statements) due to the fee income they generate. If you are on the right side of the bet, you will be fine. But if a bank finds itself on the wrong side of a bet, the bank can go under. Derivatives far outvalue the nominal value of “real wealth,” which is a very dangerous thing – this has only been “legal” within the last decade or so. The world would be better off if it were NOT legal. After all, if you only have a Dollar to your name, why should you be allowed to bet 10, 100 or a thousand Dollars? That is the best analogy I can give.
A “reset” of the global economy is coming, and it is very necessary. Crony capitalism is not the answer, but then neither is socialism. A real free market with the absence of government is the answer – a real free market with millions and even billions of competitors on a much more even playing field. Have you ever wondered why some individuals at the top of the economic totem pole are in favor of socialism? It is because they fear free competition, and because they do not want the large mass of humanity to challenge their position of power, privilege, monopoly or oligopoly. Socialism has never worked, it does not work now and it never will work. And why is this? Simply put, socialism has a backward system of incentives – i.e., success is punished and failure is rewarded. Those individuals who would perform well see no point in doing so because the fruit of their labor & talent is confiscated, and those who do nothing see no point in doing anything because the government promises them a certain minimum level of subsistence regardless.
And by “confiscation” I refer tall forms of taxation and “mandatory” insurance, because insurance behaves exactly like a tax. This “mandatory confiscation” of income and wealth includes income tax, payroll tax, healthcare tax / insurance, pension contributions, sales tax, property tax, estate & gift tax and the like. The amount of money involved here is enormous. In some European countries with the most advanced social welfare states, those at the top of the economic ladder will pay up to 99 percent of what they earn and/or receive in the way of income. In my own case, it is a whopping 83 percent.
Steve Forbes is correct when he says that if governments around the world had real free market policies in place, and if this had been the case for the past few decades, the amount of wealth on earth today would easily be ten times what it now is. Unfortunately, very few leaders in business or government support such policies. In the USA, I would think of individuals such as former Congressman Ron Paul, his son Senator Rand Paul, and former New Mexico Governor Gary Johnson. The most recent American President who at least subscribed to these ideas in theory is the late Ronald Wilson Reagan, and before him Herbert Clark Hoover. There are a number of so-called alternate news sources one can visit to obtain a different (and more accurate) picture of the world compared to the so-called mainstream media – the latter dying out in any case. I like to read sources such as Bob Prechter (Elliott Wave International), Safe Wealth Group of Switzerland (a global partner of EWI), Fabian 4 Liberty (Fabian Calvo), Michael Brown (Spirit Daily), Mark Mallett, Benjamin Fulford and Nancy Lieder (Zeta Talk). Some of this is financial, some religious and some spiritual or new age – one needs to discern and sift through all news to determine what is accurate and what is not.
Yet another 800 pound gorilla in the room is the problem with imploding (collapsing) global demographics. It is for this reason that economies are doomed, tax revenues are doomed and pension systems are doomed. Frankly put, the population is becoming far too old – i.e., the population pyramid is in many cases upside down. A perfect example thereof is the public pension system in the USA, wherein the number of retirees & their beneficiaries (recipients) outnumber the population of active employees currently contributing into the same pension system. Families worldwide are now much smaller, very broken, highly dysfunctional, short term in nature, and they simply are not producing enough children.
Demographics are collapsing all over the world, regardless of continent, country, ethnic group, race, linguistic group, religious affiliation, political leaning or level of income & wealth (be it rich, poor or anything in between). Right now, sub-Saharan central Africa has the highest level of human fertility – meaning that the average female will give birth to anywhere between 4 and 8 children in her lifetime. In much of the world, fertility rates are so low that the local population (not including net immigration) is in rapid decline. Included here are North America, Brazil, Chile, Colombia, Uruguay, Bolivia, Guyana, Nicaragua, Costa Rica, Cuba, all of Europe (except for France), the former USSR, both Koreas, Japan, China, Taiwan, Australia, Vietnam, Thailand and Iran.
One small update on our investment in the Bitcoin Investment Trust (GBTC). This is up by 148% since July 13 for an annualized yield of 486 percent. It looks like the central banks of the fiat currency world will be forced to raise their “fund” rates in December, which is very good news for the savers in this world. Retail interest rates for savers have already risen by 75 percent since November 2014. Remember – central banks DO NOT control interest rates………..they merely follow the market much like the tail of a dog.
Civility (or lack thereof) in the Public Forum
One of the many things we can lament in the present day is the lack of civility and lack of respect among people in general, especially when they find themselves on opposite sides of the fence, so to speak. Especially now with social media, many people, especially many younger people, commonly use profanity and commonly attack other people verbally just because those other people have a different point of view. The mainstream media likes to talk about “hate” or “bullying,” but when you come right down to it, most people are guilty of this to differing degrees. People find themselves demeaning (or excluding) others due to a number of factors be these factors race, ethnicity, language, national origin, gender, age, income level, wealth level, faith, religion, or political point of view. The mainstream media enjoys attacking historical figures such as Adolf Hitler or “Nazism,” but did you realize that both Joseph Stalin and Mao Tse Tung were responsible for many more deaths than Hitler? Demeaning others for reasons of race (Hitler) or political ideology / social status (Stalin / Mao) or for FOR ANY REASON IS ALWAYS WRONG.
The only way we can break that cycle is respect one another, regardless of our differences.
