In Touch Financial—William Lenderman, III Financial Mentor
Email: WL3@whc.net /Website: keepingintouchfinancial.com
“Experiencing Success One Good Idea at a Time”
Everyone who has spoken to me of such things will remember that I have been saying the world has entered the greatest depression in all of human history as of March of the year 2000. We have been in the deflationary phase of this world’s greatest depression for approximately 14 years now. This trend is likely to continue and grow gradually worse for as much as another 5 to 10 years.
Facts You Need to Understand
Inflation is simply the increase in the money supply. Deflation is the decrease in the money supply. The Federal Reserve admits that it is creating at least 85 billion dollars per month. This money is created on a computer keyboard. In reality, there are only approximately 4.5 million American dollars in print anywhere in the world. The economy is slowly crumbling. The same is true in virtually every country around the world. In order to keep interest rates low, the Federal Reserve is not only likely to continue creating the 85 billion dollars per month ,but will probably significantly increase it in the near term. The irony is the fact that money is being lost faster than it is being created. As a result, there is a net reduction in the amount of money available. That is the definition of deflation.
As the depression deepens, you can expect people from other countries to flood money into this country in order to buy government bonds. This is exactly what happened during the great depression of the 30’s. Since the government is issuing less and less debt, compared to previous years, the demand for the diminishing supply is likely to raise the value of bonds considerably. As the price of these bonds continues to rise, the yield will continue to drop. This means we are likely to be in for a long period of very low interest rates, which are continuing to drop over time. It is also important to the Federal Reserve that the trend should continue. If interest rates should rise significantly, interest on the national debt would overwhelm the Governments’ tax receipts and create a crisis of enormous proportions.
An Overview of Unemployment
Depending on how many illegal aliens are counted as American citizens, there are approximately about 325 million people living in theUnited States. Ninety million of these individuals are either unemployed, underemployed, or living on the income from Social Security Disability. Many of this later group have applied for disability because they have lost hope of finding a job and they have run out of unemployment benefits.
Every month approximately 1,200,000 additional people apply for unemployment benefits. The government says that 200,000 jobs are created. The truth is that 77% of the jobs actually created but are low wage, part time jobs that cannot pay the bills. The bulk of these 200,000 additional jobs are purely imaginary. The government simply assumes that small businesses are hiring individuals. As a result, it automatically adds a number of ficticious new jobs every month. The net loss of jobs is approximately 1 million per month as a result. This means that 90 million Americans are out of work and a million new Americans join the unemployed every month.
As more and more individuals lose their jobs and sink into poverty, you can expect a number of significant developments to continue and to grow worse.
- The price of homes and property around the country are likely to continue to drop in a manner similar to what happened several years ago during the recent” housing crisis”.
- At some point, we can expect the stock market to suffer a severe crash, like the crash of the Nikkei stock market in Japan approximately 24 years ago.
- Commodities and precious metals are likely to continue a drastic drop in price as economies slow and as individuals are forced to sell valuable assets to keep afloat financially. Regarding silver and gold, you may remember that I sent a letter to all clients in August 2011 indicating this trend was likely to start. August turned out to be the highest month for the price of silver and gold to date. You will recall, I thought the trend might last approximately a year. The trend has continued for two years now. The recent increase in prices for silver and gold is likely to be short-lived, and is apparently driven by the war we are now creating in Syria. It is reasonable to expect silver and gold, as well as other commodities, to drop substantially in price shortly after the invasion of Syria– if the effort is successful.
- For the next several years, it is important to have plenty of cash on hand “under the mattress”. This is important as a protection against a possible general failure of the banking system, which could lead to a “bank holiday”. The recent bank crisis became apparent in the 2008-2009 time frame. It is still a constantly worsening crisis as the banks continue to gamble and lose trillions of dollars by betting in the stock and derivatives markets, instead of lending the money to individuals and businesses to help revive the economy. The larger banks are likely to buy up the smaller banks in substantial numbers since the smaller banks are being heavily burdened with regulations and administration requirements. Then, at some point, the larger banks will probably fail enmass.
Our government now has the capability to monitor every telephone call, every email, and every other form of communication. Even the companies that offer encryption as a way to keep private information private are being attacked. Several of the best of these companies have closed their doors because they refuse to compromise the private information they were dedicated to protect. The remainder have been forced to provide the codes necessary for government agencies to access all the private information of American citizens under threat of being forced to close their doors or face prison with a charge of treason.
The invasive powers of our government, which are being actively employed, would have made Hitler and his Nazi party drool over the prospects. The chilling effect of all these developments will be to silence anyone who would dare to criticize the government. Two prominent examples of this development are Edward Snowden, who is temporarily under the protection of the Russian government, and Private Bradley Manning, who has just been convicted and sentenced to 35 years in prison. The crime both of these men committed was to reveal government corruption. The present administration has punished more “whistleblowers” than all the other administrations in the history of American combined. We can be justifiably proud that there are still men such as these who have such courage, and are willing to sacrifice everything to alert the public to the criminality of government officials.
Pending Tax Increases
The government is working hard to produce a massive increase in the number of illegal aliens who can be accepted as American citizens. A substantial number of these illegal aliens will apply for government benefits of all kinds and will join the vast number of Americans receiving benefits directly or indirectly from the government. This means that individuals who expect to be elected to positions at every level in government will be those who promise the biggest handouts to the voters. This means every wealthy person —anyone who is working for a living or has any savings—will be heavily taxed to provide benefits for the rapidly growing number of people who are financially dependent on the government. The likelihood is that taxes will go to 70%, 80% or even 90%. This is simply a return to the past, when those high tax rates existed in this country, and is a match to the tax rates of many countries inEuropeas well. Sadly, hard working people who have chosen to defer their taxes using vehicles such as IRA’s, 401k’s and pension plans are likely to see a substantial portion of their funds confiscated as tax rates rise substantially. Confiscation is also a possibility. Eight countries have already confiscated or taxed into oblivion plans of similar nature. These countries include France, Argentina, Poland and Ireland.
Individual Americans and American companies have invested heavily in countries where they believed they could receive a higher return and also avoid some of the confiscatory taxes they face in this country. As other countries around the world experience financial collapse, with China being the greatest example, venerable companies like Ford, GM, Caterpillar, and John Deere are likely to take an awful beating.
Get out of every qualified plan wherever possible. Even if you are forced to pay taxes and a penalty to do so, you can take control of your own funds and avoid significant tax increases, which are very likely to occur in the near future.
As I mentioned, set aside a comfortable amount of money “under the mattress”, so that you will have buying power in the event of a crisis.
Take advantage of the “Bank on Yourself “concept as a way to keep your money safe, enjoy a respectable return, and have full access to the money regardless of circumstances that may develop. In addition, the death benefit involved with these accounts can prevent disaster for a family in the event a death should occur.
I am no longer licensed to give investment advice, however, I am always glad to share my personal opinions with those who may be interested. CHANGE CREATES OPPORTUNITES, which could provide significant gains during the kinds of circumstances I have described. Those of you who have safely stored money using the “Bank on Yourself “ concept are more and more prepared to take advantage of such opportunities. Others who are unprepared are exposed to the possibility of great loss.
The Reason for Hope
In my next newsletter, I will try to relate much more positive information concerning exciting developments, which are occurring in this country. Many of these developments hold the promise to provide opportunities to prosper and to increase the quality of our lives.