a Crash Could be Coming...
just wanted to share some of my thoughts on the
economy, markets and how this affects real estate,
the U.S. dollar, gold and silver, oil and your
wealth. I am just sharing my thoughts
and my opinions. DISCLAIMER: This is
not investment advice but just a commentary on how
I see things at this point and time. It
could be right or wrong and my outlook could
to SUBSCRIBERS: We also are going to change
the format our of newsletters to give you
up-to-date information as we move into what I call
the 'wealth shift' phase of the economy.
this phase (which we have been in for at least 3
years now) you will continue to see the U.S.
dollar decline substantially
and inflation rise. This is hidden transfer
or shift of wealth from 'savers' (people with
savings) and the middle class (not mutually
exclusive). As the cost
of food, gas, services rise, the value of
our money (U.S. dollar) is slowly being eroded.
This 'wealth shift' phase will continue for the
next 5 to 10 years. As the U..S.
dollar devalues other assets will rise
you can see the dollar has declined substantially
in the last 100 years. Approximately 20% of
the purchasing power of our dollars have been lost
in the last 10 years!
Wednesday (4/26) the Federal
Reserve chairman Ben
Bernanke held a press conference. This was
the first Fed press conference ever!
Hopefully many of you already know that the Federal
Reserve (the 'Fed') is NOT part of
the U.S. federal government. It is a private
central bank that has a quasi-corporate structure.
The Federal Reserve is owned by private
shareholders both domestic and foreign.
from the Fed Press Conference:
indicated that the Fed would leave rates unchanged
until the end of its stimulus program. This
program is referred to as 'quantitative
easing' or QE. QE2 is still scheduled
to end June
30th, 2011. The effects of QE2's end should
concern us all.
this Affects You:
rates: The Fed has kept rates at
essentially 0 percent. This has been
done to increase the velocity and liquidity of
money. It appears that the Fed will keep
rates low for a while. We might see a rise on
June 30th after QE2 ends.
Prices: Gas prices will probably continue
to rise. The rising gas prices are a
function of the decline in the dollar, demand and
supply lines. I believe they are more a
function of the dollar decline and OPEC
than anything else. Look at this
this way: Essentially, one gallon
of gas is still one gallon of gas. However
it takes more dollars to buy that gas because each
dollar is worth less. The Fed's 'loose
money' policy will continue to devalue the dollar
in the coming months. Requiring you to put
out more dollars for the same gallon of gas.
Its called 'inflation'.
Market: The stock market continues
to gain. I believe this is an illusionary
bubble that will deflate when the Fed begins to
end its QE 'stimulus' programs. I would
consider moving out of pure equities unless they
are tied to the commodities
market. For example, during times of
high inflation (like the 1970's) stocks or
commodities linked to oil, gas, gold, silver, food
and other 'tangibles' go up. We could be in
a very similar place today.
example here is the Dow Jones Industrial average
up to today:
is a chart of the value of the Dow
Jones industrials priced in gold:
can see that there is a decline when you ACTUALLY
price this market in terms of REAL things like
gold, oil, etc. The reason is that the purchasing
power of money during an inflationary time
goes down. Price can go up (like the Dow)
but in terms of real money the market is down.
know that may sound confusing but in later
articles I will explain more.
this: Stocks may be rising the but the
dollars you get from selling those stocks
continues to buy you less and less. This results
in a LOSS OF WEALTH. This is
what I call the 'Wealth Shift Effect'.
and Silver: Gold and silver
are now at record highs. This happened during the
1970's and culminated in 1980. Silver hit
around $50/oz. and gold peaked at around $825 to
gold is topping $1,500/oz. and silver is over
$48/oz. Notice that silver is still below
its 1980 high. Can you name any other assets
you can buy at a price cheaper than its 1980 high?
will have more information coming as we move
closer to the full apex of this 'Wealth Shift'
paradigm. However I still believe that gold
and silver will be the PRIMARY assets for wealth
preservation during this decade. I
also believe that we could see $250/0z. silver and
$5,000/oz gold. However, I also think we
will see some significant price drops along the
no mistake: Silver and gold are again gaining
massive purchasing power during this 'wealth
shift'. In other words, these
vehicles will likely increase exponentially in
value as paper money, debt instruments, bonds, indentures,
and other 'paper assets' continues to decline.
the Fed Raise Rates High Enough to End Inflation?
don't believe the Fed will raise rates high enough
to stop inflation and the weakening dollar in
June. Remember that the Fed funds rate is
now at 0%. The Fed would have to raise rates
at least 4 basis
points above the 'real inflationary rate'
to quell inflation.
real rate of inflation is around 7 to 10%, despite
the 3% inflation rate Washington is claiming.
See - John Williams Shadow Stats: (http://www.shadowstats.com/alternate_data/inflation-charts)
inflation at 10% the would have to raise interest
rates 4% over the real inflation rate to slowly
stop this inflationary bubble. If the Fed
rasises rates to 14% this would be disastrous
to our economy and the national
debt load. Also Paul Vocker did this
in 1980 almost overnight. It took 2 years to
slow down inflation. So how long will
inflation be around - a while.
interest rates will make our national
debt payments each year much higher.
Consider this: around 20% of Treasury debt is due
every 4 years. This means 20% of our
treasuries re-cycle and will adjust with higher
interest rates. The debt burden with 14%
rates would be crushing. So inflation will
get a lot worse.
so what does this mean to me?
are a few points to consider. I will have
more updates as we move deep further into the
'Wealth Shift' economy:
Inflation will continue to erode the
of the dollar. Buy extra food and
household items when you can because its a savings
to you now.
If the Fed ends QE2 June
30th 2011, we could see a
substantial decline in the stock market.
Plan accordingly. Please read this article: http://www.markatch.com/story/2008-crash-deja-vu-well-relive-it-and-soon-2011-04-26?pagenumber
Gold and Silver may also drop substantially during
this time. For many of us this
represents a big buying opportunity. I
will keep you up to date on what I am doing and
how I am buying. Again, this is just my own
commentary on what I am doing. This is NOT
Real Estate: I see real
estate hitting a double dip. Real Estate in
many markets is still way above the 100 year Case
Shiller Index. This means that values
are still inflated and will come down further.
I would not acquire property unless you can get it
really cheap (50% of FMV) and its located in a
stable area that is good for rentals.
Because of the foreclosure levels, droves of
people are now renting. However, the area
you choose for rentals must have a good job
outlook -so choose carefully.
Short term Real Estate: I still
like wholesaling for cash generation. Very
low risk and countless
properties are changing hands. Why not earn
some money on this?
Price of Gas: I think we
will see gas continue to rise as we move into the
summer months. If we see riots and regime
change in Saudi
Arabia then prepare for a HUGE jump in
prices. One fund that I have been investing
in is: United States Gasoline Fund. (ticker: UGA).
It tracks the price of gas and as gas rises you
make money. Again this is just demonstrating
what I am doing to preserve and grow wealth during
this time NOT a recommendation for you.
If we see regime change in Saudi Arabia then I
will be issuing a special set of WARNINGS because
this could mean the 'Wealth Shift' is set to speed
up exponentially - MORE TO COME
Taxes: The U.S. is scrambling for
cash and I would expect to see audits increase and
taxes go up on the middle class (people like you
and me). Make sure you have things set up
correctly. If you need help take a look at
are including our 'audit proof' presentation along
with each purchase of the program. Also for
20% off just include the code at check
last point: This 'Wealth Shift' will move
slowly and then dramatically faster and faster.
In other words as we move closer to 2012 and then
2013 the shift will move faster and faster.
At some point it will move at almost unimaginable
means the inflation will rise quicker and the
wealth moving into other assets will
Because of this we are going to be bringing you
weekly updates and a new format and interactive
website to continue to be your partner during this
look forward to raising the standard of education
again and again to help you maximize the 'Wealth
Shift' effect that is going on. A handful of
people (like you and me) are going to become very wealthily
during this time. Many others will lose a
huge part of their nest egg.
spread the word and save all those we can.
Information and information sharing will be key
during this time.
love and peace and May God Bless America!
M. Barazandeh, Attorney and Counselor at
Law / MBA - Finance
- if you enjoyed this information write me back
and let me know: firstname.lastname@example.org
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