How Government Spending Can Make You Rich This Year
Mar 25th, 2009 | By CSA Research Team | Category: Abundance |
|
How U.S. Government Spending Can Make You Rich I want you to ask yourself two questions:
If you get the answers to these questions right, you will have ample opportunity to profit as the current collapse continues. It’s not widely broadcast. But the systematic global economic collapse is actually a gift from the market gods to make serious fortunes. Just think about Jess Livermore, Cornelius Vanderbilt, George Soros, Sir John Templeton, Jim Rogers, Floyd Bostwick Odlum. These great investors made their fortunes from economic crises, not when times were good. Of course, most investors just lose their shirts in times like these. Panic drives them to take irrational positions in a seemingly irrational market. Meanwhile, rampant fear grips 99 out of 100 investors. And this creates massive oversold positions in every asset class imaginable. Most investors simply fail to grasp the new rules a crisis thrusts on the markets. And this proves fatal to their investments and to their wealth in general. A Fatal Addiction to Debt The answer to the first question that I posed earlier is simple. We got into this crisis by borrowing too much. We borrowed too much as a nation. And we borrowed too much as individuals. We borrowed too much… and then one day couldn’t pay our debts back. The answer to the second question is a little less obvious. But careful thinking reveals that Washington is not going to get us out of this mess because it is acting as though the cause of this crisis is also its cure. Have you noticed that Washington isn’t even considering making this country a great economic power again? Instead, Washington is committed to propping up failed companies and simultaneously printing and borrowing more money in an attempt to “reinflate” the economy. But think about that for a moment. Up until roughly August 2007, when the subprime mortgage debt began to collapse, the U.S., led by the Federal Reserve and fostered by a record trade deficit, had puffed the biggest and most dangerous credit bubble the world had ever seen. The Bush administration, aided and abetted by its central banker lackeys Alan Greenspan and Ben Bernanke, created the bubble for the same reason that all politicians play fast and loose with nations’ money supplies – to win votes. The Cause Is Not the Cure So, rather than allow the 2001 recession to happen and the tech bubble to deflate, Greenspan did his bidding and jammed down interest rates to historically low levels in preparation for the 2004 presidential election. Of course, the combination of historically low interest rates and historically high levels of personal and public debt worked… in the short term at least. From 2001 to August 2007, we lived through a bubble economy. Some of us even believed that we were experiencing a real boom. Now the writing is on the wall. The boom was unreal. And not only was it unreal, it was also highly explosive and capable of bringing the global economic system to its knees. It was based on a wall of debt – a combination of Americans’ willingness to sacrifice long-term economic stability for short-term gain and a willingness of foreign creditors, notably China, to fund America’s spending. And as such it was unsustainable and as bogus as Bernie Madoff’s Ponzi efforts down on Wall Street. Given the obvious insanity of this system, you might imagine that the new guard in Washington, enjoying meteoric approval ratings and a genuine mandate for change, would work hard to create a phoenix from the ashes of this collapse. In this parallel world there would be an honest admission of guilt from those who perpetuated the myth of “something for nothing economics.” And there would be a “back to basics” program of renewing the industry and commerce that made America great in the first place. But no. |
|
Special
Claim a gram of FREE GOLD today, plus a special 18-page PDF report, and find out: * What’s been driving this record bull-run in gold? Get this in-depth report now, plus a gram of free gold, at BullionVault here… |
|
Don’t Be Fooled: This Game Is Rigged Instead, the Fed promises to do “whatever it takes” to reinflate the bubble economy. (Most recently, it said it would provide another “kick-start” by printing 1.15 trillion new dollars on top of the $5 trillion or more it’s already rustled up.) Meanwhile, the Treasury is busy borrowing astronomical sums to fund over $1.5 trillion worth of federal fiscal ‘stimulus’ programs (first the ill-fated TARP, then the Obama ‘stimulus.’) And “we the people,” so accustomed to the “something for nothing” system quietly go along with Washington’s plans – even being so good as to fund it with higher taxes and higher deficits. The reality, of course, is that the game is rigged. No matter who is in control of the levers of power, there’s only one game in town. Don’t forget that the Bush administration spent more public funds over its eight-year term than all previous administrations in history. Republicans don’t have a leg to stand on when it comes to fiscal responsibility. The two haven’t been on speaking terms this century. Let’s just spit it out, shall we? Governments, regardless of which side of the political divide they sit on, rig the economy with easy money to win votes every four years. And when they “over do it” - when they kill the golden goose of the American consumer – with too much debt, they simply try to spend their way out of the problem. (Not without first making sure that the so-called ‘stimulus’ is spent to further political power.) How to Profit from This Mess So where does that leave you, the real forgotten men and women in this stage-managed economy – the taxpayers and the savers, the American’s who played by the rules and got burnt by Washington’s and Wall Street’s debt addiction? Well, believe it or not, it leaves you with a great big opportunity in your lap. And it leaves you with a rare chance to get even . That’s because Washington’s “whatever it takes” mentality to spending its way out of this economic crisis is a trend that you can profit from. Very rarely in an investor’s life does such a trend as clear and dependable as this emerge, and when it does it pays to act… just as Livermore and Templeton and Odlum did when the last trend of this kind opened up to investors. Every investor needs a trend to make money. It’s what allows you to book I believe the trend of the next several years will be for higher government spending, higher taxation, further “quantitative easing” (money printing) by the Fed and higher Treasury borrowing. The Bush administration and the current Congress hardly blinked before approving the sprawling, pork laden Troubled Assets Relief Program (TARP) at a cost of $700 billion to the taxpayer. And the Obama administration crossed the fiscal Rubicon by immediately passing a second federal spending program of over $800 billion, most of which is being funnelled into Democrat pet projects, such as the National Endowment for the Arts. Staggering as it may be, the U.S. government has so far committed over $11 trillion borrowed or printed dollars to prop up failed companies and reinflate the economy. Will it stop there? No. Obama is now committed to the biggest Keynesian spending program in history. And the Fed has embarked on a highly experimental Japanese-style “quantitative easing” programme involving over $6 trillion. The only way to pay for these efforts will be to borrow, print or tax. And the results of this will be a weaker dollar, inflation and, ultimately, higher interest rates, as the bottom drops out of U.S. Treasuries. Chris Hunter, Abundance |
|
© 2009 Abundance Letter All Rights Reserved Nothing in this e-mail should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Abundance Letter . P.O. Box 925, Frederick, MD 21705 USA |