Drama Queen and the Dragon in the Room

No doubt most people who have read this blog in the past few days think I’m a blithering idiot and I’ll admit, maybe I am. Then again, maybe I’m not.

I am not a market investor. I do not trust brokerage houses, or Wall Street, or anything to do with stocks, bonds, commodities or equities of any kind. If I cannot hold ‘it’, whatever ‘it’ is, in my hot little hand, I want no part of it.

My husband, back in 1989, quit his job to become a day trader. He began playing the market – longs and shorts, puts and calls – and we made some money. In the process, he became fascinated by the operation of the various markets: stocks, bonds, commodities. His enthusiasm spilled over onto me, willing or not. It has, for the past twenty-five years, been the primary topic of conversation in our house.

We talk at length about market manipulation and algorithms and all sorts of other shady things. Watching the markets as we do we were not surprised to hear about ‘front running’ markets. That is a trick where fund managers intercept electronic transactions and trade ahead of them via algorithm. That way they are guaranteed to have the price of their ‘whatever’ go up. Their order hits, they buy and golly gee whiz be damned, a second later another order shows up and boosts the price. Then the first guys have a choice: buy, hold or sell?

They can buy more or hold what they have if they think another order is going to come through. Otherwise they can sell and take the profit off their trade, then do it again the next time and again and again and make a whole load of money.

‘Flash Boys’ is a book on the subject that was released a while back. When it was talked about all over the financial news stations, no eyebrows in our house were raised. It was a shrug and a ‘yeah, so?’ Since then a number of other books on the subject have been released.

Naturally, a bunch of people “inside” rushed forward and tossed the BS flag. But if the guy who wrote the book, Michael Lewis, was on the inside, saw it happening and didn’t like it because he actually has a moral compass so outted what’s well known within the industry, isn’t it just possible that the naysayers are just covering their hinies?

Whatever.

The point is that I am not a complete nincompoop when it comes to markets and trading and understanding the lingo. I’m not an expert, either. I’m a person who knows more than the average person because I’ve been talking the talk for a quarter of a century. I pay attention and I graze, looking through a variety of sources and putting the pieces of the puzzle together until it makes sense and fits the overall scheme under discussion by all parties.

So, back to the economies and the news.

Up until today, what Greece is going through, the speculation, referendum and talk about a ‘Grexit’ has been overshadowing, to some extent, what’s been happening in China. With all eyes focused on the drama queen in the Med nothing was left to spare to the dragon in the room. Now, though, that focus is changing – rapidly.

Starting last night, during the early morning in China and Bloomberg’s looking up from Greece for a moment, there was an ‘oh shit’ moment. They started talking, actively and with some energy, about China and the Chinese markets.

In China over the past few years, stocks have flown high on speculative trading. Now, as usually happens, the parabolic curve has tipped over and the market is in free-fall. The government has stepped in, throwing money at the conflagration to no effect.

Since June 12 – in less than four weeks – the Shanghai Composite has lost 32% of its value. Almost $33 or €33 or whatever currency marker you want to use out of every one-hundred is gone. Vaporized because it was paper and there was nothing supporting its value.

More than one-half of all of the companies listed on the exchange have decided to pull their stocks – they will no longer offer shares for sale. That is as of this week.

The People’s Bank of China is stepping up, offering money – but it is government money. The government will print, the people will be taxed, and nothing will fundamentally change. According to Bespoke Investment Group, China’s stock markets have lost a whopping $3,250,000,000,000 ($3.25 trillion).

In China, regulators are now allowing people to put up their homes – the houses in which they live – as collateral against margin trades! I kid you not, the report about that is here, in this article (fourth bullet point near the bottom of the first page):

http://www.marketwatch.com/story/chinas-stock-market-crash-is-just-beginning-2015-07-08

I graze broadly when I’m interested in something. Forbes, CNN, CNBC, The Economist, Financial Times, New York Times, whatever. In my graze last night, reading and skimming, I saw several interesting, and alarming, points.

First, several articles and Op Ed pieces commented on the similarities between what’s happening in the world economies now and what happened in the run-up to the 1929 crash on Wall Street. Just because Wall Street has moved to the Far East doesn’t change the effects a major market crash would have on everyone and everything else.

Hong Kong, India and a number of other markets, including currencies, are already feeling the pinch, and it’s only going to get worse. As one starts to rattle, it’s going to shake the next, all the way around the world, through all of the markets. It’s just as is happening in Europe on a much smaller scale since Greece’s referendum. Only China is the elephant and Greece is the gnat.

This is the biggest problem with having things so inter-related. It’s like being a conjoined twin. If the system of one fails, the system of the second will follow suit and there’s no getting around or saving it. Same thing here. We are too tightly conjoined to be able to stand alone, on our own.

What happens in China is not going to stay in China. At 11:11 this morning local time, the Dow Jones Industrial Average was off slightly more than 180 points. This afternoon, ten minutes before the NYSE closes for the day, it’s down 231 points. It was down yesterday and I’m pretty sure it’s going to be down again tomorrow. Looking at the one month chart, it’s off about 700 points, so it’s much less than 1% of the overall market value. However, is this the start of a major bear market?

If we are a conjoined twin with China and the EU, how far down will we go?

How is the China effect going to impact business and production here, in the US? If we cannot buy cheap goods from China, our prices will go up, what effect will that have on the cost of living?

Lots of questions – far more than I have room to ask here.

Another issue is the commodities markets and, no, I’m not talking about pork bellies. It’s the metals that are interesting.

China has vast gold holdings – bullion, the hard stuff, not the paper ETFs that aren’t worth the ink with which they’re printed.

(Aside: take a tree, a single tree and make it into sawdust – that is what the gold ETFs do to gold bullion. The tree had value, until it was ground into sawdust. Then it has no value, just like the gold ETF you probably hold in your retirement account. It’s a paper IOU, a promise that cannot be redeemed even if you wanted to. Try – take your shares of paper gold and try to redeem one ounce worth. You will be laughed at and told ‘sorry, you can’t do that’ or ‘sorry, it’ll be six months before we can deliver it to you’.)

So, will China dump gold into the world market in order to cover their economic implosion? If they do, that will be a temporary punch in the gut to the price of gold. All gold prices – bars, rounds, ETFs, stocks of gold producers – everything will drop like a rock. But when the paper money reaches its intrinsic value (zero), gold will revert to its historic relevance and become ‘money’ again. Then the value of it will soar because physical gold is in limited supply. Paper gold – those ETF shares so many hold – will have value only as toilet paper.

Time will tell and guessing is simple exercise to no real purpose. So, I’ll sit here on the sidelines and watch the action unfold.

Good luck to you in this mess!

Best~

Philippa

Follow me on Twitter: https://twitter.com/philippastories

Roosting Chickens

Sunday, July 5, 2015. The Day of Reckoning for Greece and the EU. The day their chickens come home to roost.

There’s been a lot of talk about it, back and forth over which way the chips will fall. In the end, it’s not going to make a hill of beans worth of difference, I’m afraid. We'll find out what's been decided in a matter of a few hours, and then the drama will really begin.

If the Greeks vote ‘yes’ to stay with the EU and reject their government’s demand for a ‘no’ vote, it’s going to be a hard row to hoe. By voting yes, they will be declaring that they are willing to accept more austerity. That will grant the EU a win and allow the ECB and other members of the Eurozone to dictate terms to the Greek citizens. The Greek people will become, in real terms, serfs or slaves (take your pick) to the rest of the EU.

If they vote ‘no’, it is a rejection of the EU and they will then have to try and find their own way through the stinking quaking bog they’ve created.

No matter how it goes, the Greek people are screwed, and the credibility of Greece as a ‘going concern’ is non-existent.

Do you remember Cyprus and the ‘bail-ins’ of depositor’s bank accounts? Greece is preparing to do the same thing, now. This is part of an article from the Financial Times that was posted yesterday, July 4th:

“The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said.

“A Greek bail-in could resemble the rescue plan agreed by Cyprus in 2013, when customers’ funds were seized to shore up the banks, with a haircut imposed on uninsured deposits over €100,000.”

http://www.ft.com/cms/s/0/9963b74c-219c-11e5-aa5a-398b2169cf79.html#axzz3exL7UfAg
 

Because the banks have been closed for the past week, and because depositors in those banks have been restricted to limited withdrawals, the liquidity of the banks is known. There haven’t been the daily fluctuations that are typical, so they’ve had time to audit what they have, in-house, and decide how much to take – to steal from the accounts of the bank’s depositors.

In Cyprus, the bail-in affected depositors with more than €100,000. In Greece, it’s a ‘measly’ €8,000. The plan, based on the article quoted from the Financial Times, above, is that if you have €8,000 or more in your account, the Greek government will take, through the banking system, at least 30% of your worth.

This is money that the people of Greece earned and saved. It is not the bank’s money, nor is it the government’s. It was deposited in trust to a ‘trust’ institution – a bank. Now that trust isn’t worth a Tinker’s dam.

After the Cyprus bail-in idea was first floated, the G20 nations started talking about it as a broad-approach to preserve the international banking system if needed. They instituted it, made it international banking law, at last year’s G20 summit in Brisbane, Australia.

It doesn’t affect just little countries, or Eurozone countries. It affects everyone – all of the people in the world, including Americans – the U.S. Constitution and private property ‘rights’ be damned.

There is a ‘white’ paper written by an attorney from the Federal Reserve Bank of New York. It’s available in PDF form on the internet. It’s called ‘Why Bail-In? And How!’ It’s dry as dust but what’s telling is it talks about ‘creditors’ but not ‘depositors’. It goes on for twenty-two pages, justifying and explaining, talking about how the ‘megabanks’ must be protected at all costs – including the cost of you and me and the other ‘folks’ who work and put our money in their banks.

We don’t count. Our deposits are the foundation of the banks – if we and the companies for whom we all work didn’t trust our money to them, they would suffer, badly. We provide the liquidity they need to keep going, but our importance to them is the equivalent of a pimple on a gnat’s butt.

If you’re an American depositor and if you can’t believe such a communist tool has been put in place, check the fine print on your bank website. It’s boring as hell (that’s what they’re counting on) but in that fine print is a clause that says that they can, if the need is perceived, seize your money. It’s called a ‘bail-in’.

Take a look at this from the Huffington Post in January, 2015:

“Russell Napier, writing in ZeroHedge, called it "the day money died." In any case, it may have been the day deposits died as money. Unlike coins and paper bills, which cannot be written down or given a "haircut," says Napier, deposits are now "just part of commercial banks' capital structure." That means they can be "bailed in" or confiscated to save the megabanks from derivative bets gone wrong.”

http://www.huffingtonpost.com/ellen-brown/new-g20-bailin-rules-now-_b_6244394.html
 

If you want to know who Russell Napier is, what his creds are, check this:

http://www.eri-c.com/russellnapier

Or this:

http://www.valuewalk.com/2015/04/russell-napier-inflation-deflation-and-mean-reversion-slides/
 

Or check out this – my go-to for financial and monetary information:

http://www.zerohedge.com/
 

This is a site where a lot of really smart, financially savvy people write articles.

So, let’s get back to the EU and Greece and the mess there and how it could and probably will affect the rest of us.

What’s already happened in Cyprus, what is going to happen in Greece, could well happen here, in the US or in the UK or any other of the G20 members.

In all cases, the countries have issued bonds. Those bonds are worthless because there are too many of them to ever be paid back. At this stage, they have all the value of the ‘money’ in your Monopoly set on the back shelf of your cabinet or closet or wherever you happen to keep yours.

When the day of reckoning comes for the next country, and the next and the next, the banks will do what they’ve already done in Cyprus and what they’re about to do in Greece. They will steal their depositor's money in order to shore up a failing institution.

It's like stealing a kidney from you to save their kid's life. Doesn't matter if you agree, it's theirs and, by God, they're going to take it! Eventually, it will happen in your hometown, too.

At that point your money, the money that you work for, earn and try to save, is not yours if it’s in a bank someplace. If ‘they’ (those guys in the basement from Gary Larson) decide they need it more than you do, they can and they will take it. And there is not one single blessed thing you can do about it.

This is one reason why there is discussion to do away with money, as we know it, completely. A true cashless society would tie us even more closely to the banks, making us more dependent than we already are, and put us even more in their power.

Denmark will be the test case, the canary in the coalmine.

http://www.economywatch.com/news/Denmark-Announces-Plans-to-Start-Doing-Away-With-Cash-Transactions.05-07-15.html
 

“While the plan to move to a cashless economy may raise concerns about consumer access to necessary goods and services, it does appear as though this movement will gain momentum over the next several years. Sweden and several other Nordic countries have already signaled the intention to move to a cashless system, as well, even if doing so requires pushing consumers into this new way of doing things whether they like it or not.”

Think about that. You may be forced into a cashless system – whether you like it or not. Whatever happened to the idea of individual choice or freedom? Gone apparently, at least in the Nordic countries and, eventually, once it takes root and spreads, elsewhere, too.

Yeah, there are benefits. But!

Let’s say you get robbed. Your wallet or purse is stolen. Your identity is gone – along with your means to pay for anything. How will you get home if you’re traveling? What if, worst case scenario, you’re in Greece. You have no wallet, no ID, no passport, no credit cards, no nothing. What are you going to do?

Let’s say – as is happening in Greece right now – the bank closes down. Electronic transactions are stopped. How will you pay for food? How will you pay for transportation or anything else?

Beyond that, every single transaction you make – whether it’s buying a can of beans at the local grocery story or paying for your kid’s dentist bill or buying pot from the local pharmacy – every single transaction you make is tracked. Big Brother knows precisely what you did, where you did it, and what you bought. Do you really want to give up that privacy?

Let’s take it farther. You’ve just been to the doctor. Obamacare just paid for your physical. You’re overweight, you have high blood pressure, you’ve just been prescribed medication. You decide, ‘what the hell, one last time and then I’ll start my diet.’ You drive to McDonald’s, with every intention of it being your last time through the drive-through. You order, you get to the window and… You’re rejected.

‘Why?’

‘I don’t know, but I can’t accept your payment. It’s been blocked.’

Two hours later you hear a ‘ding’ from your computer. It’s a formal official notice that you have been diagnosed as having health problems that you can no longer eat certain foods or at certain places. How would you like that?

It’s not impossible. It isn’t beyond imagination – obviously, since I just imagined it, and I am pretty darned sure there are lots of smart people out there who would just love to have that much control over our lives.

So there is a danger in getting rid of cash – but that’s what the banks would like to do. It’s cheaper for government – no more printing and distribution. They get absolute control over every single last transaction you make – up to the point of denying a transaction if they don’t think it’s a smart one, or healthy or whatever other criteria they set.

Oh! And your safety deposit box, the contents of it? Those are theirs, too. Not yours, theirs and again, once the doors are locked there is damn-all you can do.

Look at Greece. People who might want or need stuff out of ‘their’ safety deposit box in the past week couldn’t get to it. The banks were closed - locked up tight with no admittance allowed.

There's an old saying: possession is nine points of the law (or nine-tenths, depending on who you listen to). It's true. If they have it in their possession, behind locked doors and gates, what are you going to do? Take them to court? Good luck with that.

It sounds crazy – like some whack-job talking but honest to God, keeping your valuables at home, under your mattress, is safer than keeping it in a bank. At least then, if you get robbed, it’s by an honest robber instead of a criminal robber.

One is honest in his stealing. He makes no bones about why he’s there, in your house, taking your stuff. The other promises your money is safe with them while holding one hand behind their back, their fingers crossed while they pat you on the head.

Buy a safe or two or three (good quality – the ones you get at Costco or the local home improvement store are a joke if someone has a circular saw), keep your money at home, where you know where it is and what it’s doing. After all, you’re not getting interest worth having if it’s in the bank. And, once the black market springs up, the one that accepts cash for that McDonald’s Big Mac that you wanted, you’ll be set and ready to go and participate.

Good luck!

Philippa

Follow me at Twitter: https://twitter.com/PhilippaStories

Humility - It's Good for the Soul

It’s Friday afternoon and I have been mulling over this post all day. Okay, that’s an exaggeration. But I have been mulling for the last five hours, since I woke up. I still don’t have any clue what to write, or what to write about. I'll just start and see where it goes...

Thinking it over and watching the news, reading about it, Greece will do what Greece is going to do tomorrow. The EU will then have to decide for itself what to do about whatever Greece does. Either way a whole lot of people are going to see a whole lot of their personal wealth disappear in a cloud of dust.

Will Portugal, Spain and Italy, all equally iffy risks, follow Greece’s lead? Either way, one way or the other, they’re going to have a day of reckoning, too. It’s inevitable.

Barron’s has a good article on this mess:

http://online.barrons.com/articles/how-a-greek-default-could-hammer-bonds-1435894311 

This all means that the bond market will suffer. Along with people who have invested in them through their retirement savings accounts. The pain will be widespread and, if the others go – the rest of the PIGS – as expected, it’ll happen again. When is the only question awaiting an answer.

That’s a primary reason I don’t invest in my company’s 401k. I don’t trust governments and I don't trust the investment markets. It's a Ponzi scheme and a shell game. Which means that I’m strictly a sideline observer in all of this kerfuffle.

Yesterday, I was looking at economic statistics on Iceland because of a discussion I was in. I had gotten into something of a debate about Iceland’s economy since they walked away from the EU and re-established their own currency.

Along the way I had a pretty hard comeuppance moment. It was because I, looking at what I was seeing from the outside, was shocked by the state of their economy.

Iceland has a median annual salary of 3.5 million after taxes? That's the average annual income? It costs an average of 260 Krona for a loaf of bread? Horrifying!

Then, after I was virtually slapped upside the head, I stopped and thought about it. Those are average prices. That is what the average person earns and pays. So the fish swimming in that pool, sharing that water, are all seeing the same thing. So it’s okay. It really isn’t that bad, particularly since the majority of Icelanders are working. They have relatively low unemployment and their quality of life is pretty good.

Following through, rubbing salt into the wound of my ignorance and arrogance, I ran some numbers and discovered that, despite its outward appearance, it really isn’t that bad.

If you take the Icelandic median annual after tax income of 3,543,935.16 Kr and divide that to the monthly after-tax income you arrive at 295,327.93 Kr. If you convert that to Euros, it results in a monthly after tax income of €2,007.87. That’s not too bad.

Maybe that’s the answer for Greece. Swallow the bitter pill. Walk away from dependency on the rest of Europe. Hit rock bottom and start to climb up again. Maybe study Iceland and what they’ve done to get things back on track.

Greece does have a problem that Iceland doesn't. It's an aging society but, with some serious effort, they still might be able to turn things around and, who knows, maybe they could become a magnet for younger people. Maybe after a few years, with the right restructuring, young people who are finding it hard to make ends meet in France or Spain or Italy might be attracted to a thriving economy and a chance to earn a decent living.

Who knows but it remains to be seen. But wouldn't that be a kick in the head if Greece, as it did several thousand years ago, became the model for future civilization, future economies?

In any case, no matter what happens with Greece and the EU tomorrow and into the future, I certainly learned a salutary lesson: Just because you think you know something, don’t assume you do. Check your facts, be careful to make sure they’re accurate and then talk about it. Otherwise the maxim ‘better to remain silent and be thought a fool, than to speak and remove all doubt’ is likely to come into play. As it did for me, yesterday.

Oh well. Humility is good. It builds character. So I’ve had some character building.

Oh – and look at that. This just about wrote itself.

Have a lovely (non-humbling) day!

Best~

Philippa

Follow me on Twitter: https://twitter.com/PhilippaStories

Oh, Yeah - I almost forgot.

The other day I threw out a great big word that is the equivalent of stealing: rehypothecation.

Then I never got around to explaining, precisely, what that is or why it’s important. However, given what’s happened in Europe relative to the European Central Bank and Greece this week, I think it’s worth examining it more closely. Particularly since we, the EU and the United States, are just like Greece, only on a larger scale.

Greece got into trouble because its government borrowed far more than it could ever hope to pay back. No one asked for collateral – except promises. Nothing was there, supporting the monies borrowed. It was air and promises, smoke and mirrors. Just like the underpinnings of the US economy – a gigantic Ponzi scheme.

Do you remember Jon Corzine’s firm, MF Global – the one that was caught out stealing investor’s assets that had been entrusted to it?  In case you don’t, here’s the nutshell version from the Wall Street Journal on April 17, 2015:

MF Global filed for bankruptcy in October 2011 after customers balked at the firm’s big, risky bets on European sovereign debt. About $1.6 billion in customer funds were found to be missing, though customers have been reimbursed. The firm has agreed to pay $200 million in civil fines. Jon S. Corzine, MF Global’s former chairman and chief executive and a former New Jersey governor, still faces civil charges from the Commodity Futures Trading Commission for failure to supervise.

The lawsuit had said MF Global used customer funds to meet the increased liquidity demands of the firm’s bets on European sovereign debt. MF Global didn’t have sufficient internal controls to deal with that, a deficiency that PwC ignored, according to the lawsuit.

http://www.wsj.com/articles/pwc-to-pay-65-million-to-settle-lawsuit-over-mf-global-1429302372

What MF Global did is what your bank does every day of the week; except on a larger scale, with a greater risk exposure. After all, your bank is federally insured. Brokerage firms are not. They took investor’s money and used it to make risky gambles – wagers or bets or whatever you want to call them – on a variety of European countries.  When the brokers at MF Global lost on the bad bets that went south, they scrambled. They took – rehypothecated – money from other investor’s accounts. They were chasing the losing bets with more money in an attempt to recoup.

It didn’t work. Instead, the money entrusted to MF Global by the individual investors was lost, gone.

So, what’s the point of this, you ask? Simple – it’s all about Greece. Greece is a microcosm of us, economically. It’s about the fact that the EU and the United States is doing precisely what MF Global did, only on a much grander scale.

We, like MF Global, are throwing good money after bad in an effort to somehow fix what’s broke.

What led to the Greek banking crisis and their most recent bail-out by the European Central Bank is the over-borrowing against non-existent collateral. This is precisely what the US and every other government on the planet has been doing for forever.

Governments borrow based on future tax revenue. It’s like commodity trading – pork belly futures and such – puts / calls, shorts / longs, all of which are common terms among commodity traders.

Governments do not make a salable good or provide a service that can be bought by a consumer. They are an entity there solely to spend and to give stuff away. In order to do that, they take in taxes and allocate it as they see fit. They’re really good at spending but God forbid anyone ever asks or expects them to cut costs. Instead, they bet on the Come, like any good craps player, anticipating the next big payout.

Greece borrowed to keep its government going and its people happy. The money was spent, they needed more. They borrowed and they borrowed and now they’ve borrowed some more. The problem is there is no chance in hell that they will ever be able to repay what they have borrowed.

Their population is aging. More people are retired or unemployed than are working. The majority of those who are working, work for the government which is in the business of giving stuff away, not of manufacturing or producing a salable item or commodity. Their Gross Domestic Product – the measure of salable goods produced to generate income for the nation – is abysmal when compared to their expenditures. In sum, they are spending profligately while earning nothing.

This is exactly what the United States and every single other government on this planet is facing and doing. Some are using the mirrors and smoke more effectively than others, but the Ponzi scheme is getting shaky.

To keep a Ponzi scheme going, the scammer starts off by convincing one or two or three people that he has a great idea. He’ll assure the marks that if they trust him and give them their money, he can make them a lot of money in return. Inevitably, in any Ponzi scheme that’s at all successful, it sounds so good it must be true. People hand over their money – sometimes everything they have – and the scammer uses that money to attract more people.

‘Tell your friends. Tell your family.’ says the scammer. And they do.

The trusting marks spread the word and, so long as more people enter the pool, the scammer can keep the illusion going by paying out the early investors and keeping them happy. Eventually, though, the house of cards gets wobbly. Payments are shorted or missed.

Enough new people aren’t signing up to keep the thing going and, ultimately, it collapses under its own weight. This is precisely what is happening in Greece.

Not enough young people are coming up and working to pay their taxes to support their elders who are retired and have government guaranteed pensions. Because the pensions are guaranteed, the government has to keep making payments on them, and on the other social services that have been promised and are expected. Because the government can’t generate enough of its own revenue, and the people aren’t generating enough in taxes to support the Ponzi scheme, they have to borrow.

They borrowed and they borrowed and they borrowed some more. Now, where is that money coming from? It is coming from the governments of the European Union and the United States of America – through the Central Banking system and the Federal Reserve.

Where is that money coming from? Why, it’s coming from your bank and the sweat of our collective brows.

The little kids – Cyprus, Greece, Iceland and Ireland – have already fallen and scraped their knees. Mommy and Daddy in the form of Germany (at the head of the EU) and the US were there to pick them up, dust them off, kiss them and make it better. So it’s (temporarily) all good for them. But what will happen when it’s us, as in US – the United States? Who will be there to pick us up, to kiss our cheeks and dust us off? It’s worth thinking about because, eventually, the buck will stop and the only question will be: who’s holding it when it does?

Once the buck does stop, and paper money because what it’s worth – zero – what will happen? How will you, with paper that is worth no more than its intrinsic value, pay for the goods and services that you need to survive?

Will it be like Weimar?

Will it be like Zimbabwe?

Will it be like Iceland that told the EU to get stuffed, reverted to their Krona currency, and is now in a hyperinflationary state?

Cost of Living in Iceland - Updated June 2015 

Whatever else it will be like, it is worth thinking about because, if you aren’t prepared when the time comes, you will be in a world of hurt as you try to figure out how to buy food or pay for things you need to survive.

Me, you ask? Nope – I’m fine, thanks. I’ve already given it a lot of thought. I started in 2006 when I sat up and started to pay attention. In 2007 my fears were confirmed. In 2008 it was hunker down and start thinking – hard. So I’ve already made my plans. If it never happens in my lifetime – great! If it does, as I expect it will, I’ll be ready.

When? Hmm, that’s hard to predict.

In 2007 I predicted something bad would happen between 2015–2016. I said, at the time I made that prediction, that by 2016 our standard of living would look like ‘Somalia on a good day’. Things here have worsened noticeably since then. Unemployment is still high despite what the Bureau of Labor Statistics is saying, salaries are still low, there’s still a huge shadow market of foreclosed properties hanging out there, so it’s not as bad as I anticipated but it’s still not yet peachy.

However, I didn’t count on the determination and resilience of those in charge. Now I’m guessing 2017 – 2018. Maybe so, maybe not but time will tell. In the meantime, think about it. Consider your options and figure out what you’ll do if the value of the dollar goes to zero.

Based on this happy chat, I'm not going to say 'have a lovely day'. Instead, I'm going to suggest you think about what you'll do if the currency crashes and the house of cards comes tumbling down around our ears.

Best~

Philippa

Follow me on Twitter: https://twitter.com/PhilippaStories