Switzerland the Exception?
QUESTION: Except in Switzerland, unemployment rate is at a low 3% despite the high costs.
ANSWER: Why? Capital INFLOWS. Switzerland is the #1 place to live and it is outside of EU and USA. There is concern that so many Europeans are trying to get in and this drives up inflation because they increase the money supply by importing cash. The same is true in Singapore where the housing costs have risen because of all the importation of capital.
The economic decline with rising costs is indicative of a shrinking capital formation that is also often associated with (1) hoarding of capital domestically, or (2) capital flight (exports).
DEMAND Boom v COST Boom
QUESTION: “You have said in your blog that stocks and real estate (tangibles) are the place to be but you also mention deflation. … Can we really have inflating asset prices and deflation at the same time — or are you saying the deflation comes down the road,after 2015.75 (when we will pray for hyperinflation)?
ANSWER: We are experiencing DEFLATION as the cost of government rises and is squeezing out excess cash from the economy. The higher costs of taxes and regulation (such as Obamacare) will force prices higher. This isSTAGFLATION where prices rise not from a DEMAND boom, but from a risingCOST BOOM. This is similar to what took plave during the 1970s with OPEC.
The assumption of hyperinflation is that they will print money to meet obligations. Governments in deflation will attack the people and cannibalize the economy trying to meet the costs with taxes rising and courts ruling in favor of government. In part, government is also creating DEFLATION by keeping interest rates low their robbing from the elderly as they are unable to live off of their savings. The artificially low interest rates are also sending the pension funds into default (the next crisis) while they try to prevent their own expenditures rising. The inflation we will see with RISING interest rates. That is when you will see gold start to rise and sustain its gains
The major economies have NEVER gone into hyperinflation that is for new revolutionary governments or ones without sovereign debt. Mature governments instead attack their own economies and destroy them with taxes and the collapse in the rule of law in search of money to survive. Americans cannot have accounts outside the nation and government greed is creating a shrinking global economy that will manifest in higher unemployment, lower economic growth, andSTAGFLATION (rising costs with declining economy growth).
When a currency collapses, it is replaced with a new one, then ALL tangible assets become the means to transfer wealth from one to the next. Germany backed its currency with real estate to stop the hyperinflation. Real estate loses its value if you go too far as will gold and you move into a Dark Age. Then it becomes food and that is the origin of money – back to square one. Hopefully, we can stop that before it is too late.
You will pray for hyperinflation because that way at least the government is not becoming aggressive hunting down money – they print it. Unfortunately, they are coming after everyone. They will be raising taxes dramatically once interest rates start to rise.
European Political Mindset Remains the Same Since WWII
José Manuel Durão Barroso is a Portuguese politician and Member of the EPP . Since the end of November 2004 Barroso became President of the European Commission. On September 16, 2009 he was elected by the European Parliament for a second term of five years. He is indicative of why politicians should not be allowed near economic policy. Barroso is on TV predicting a strong Euro in the face of an ongoing debt crisis. Barroso is still caught up in the idea that a strong euro proves the politicians have confidence yet he cannot grasp that a strong currency defeats exports by making them too expensive. This also masks the problem of Europe dependency on Russia for energy because a strong euro makes imports cheaper yet exports more expensive.
This was the whole idea behind creating the G5 (now G20) back in 1985 at the Plaza Accord. It was James Baker who wanted to lower the value of the dollar by 40% to reduce the trade deficit since a strong currency makes imports cheaper than domestic products. European politicians are still plagued by World War II since they have argued that a strong currency proves they have done a good job rebuilding Europe. Unfortunately, the comment of Barroso illustrates that this fundamental thinking process from WWII is still present. Europe should want aWEAKER Euro so they can create jobs and export goods rather than import. They will never tackle the high unemployment among the youth with a strong Euro,
I am in Switzerland. At Starbucks a Venti Skinny Vanilla Latte is 8SF or $8.797976 compared to the States where it is $4.76. The cost of everything in Europe is just so much higher it is no wonder unemployment if so high. Europe needs to see the Euro collapse by 50% to even begin to turn the dark corner in the economy. It is cheaper and far more efficient to manufacture in the USA than in Europe.
The Intent of the Law Means Nothing
Unfortunately, we are as far away from a Democracy today with little difference from a dictatorship. Congress passes a law for a specific reason. However, judges get to say what they “think” that law means and prosecutors get to stretch it to fit anything they desire. Once a law is enacted, everything they can fit into the words to justify a desired power they do. The latest example of this form of tyranny has been the IRS is trying to use an 1884 ‘dead horse’ law from the Civil War to now justify regulating all tax preparers/accountants. What they are trying to do is make it mandatory that your accountant turns you in to the IRS if they think you owe money you have not paid them their pound of flesh.
See – this is all about them spending your money and having to pay the bankers. Welcome to the land of Socialism where you may retain the title to property, but they get to confiscate it and tell you what you are allowed to do with it whereas Communism they assume the title as well. The NSA has taken your privacy. Then Congress has virtually outlawed Americans from having bank accounts outside the USA, and now they are setting the stage to make it MANDATORY that your accountant will be compelled to report you to the IRS. They cannot sleep at night worrying you found a dime in a parking lot and did not give them their cut.
NSA Has Undermined the World Economy
Snowden deserves the Medal of Honor because the NSA in their greed to be able to hack everyone, has undermined the entire economy globally. They created intentional weak links in security software that they could break and placed at risk the entire world economy because they were too stupid to realize that leaving back-doors open for them means others will find them as well.
EMC Corp, told current customers of its RSA, the security arm of storage company, that a toolkit for developers had a default random-number generator using the weak formula, and that Snowden revealed that the National Institute of Standards and Technology was in league with the NSA.
This need to know what everyone is doing everywhere is insane. They are following the same pattern that marks the fall of every empire, nation, or city-state from the time of Athens, Rome, Venetian Empire with its Mouth of truth, to the very issue of Writs of Assistance issued by the King of England that sparked the American Revolution. The Supreme Court itself described precisely what the NSA has been doing and how evil it truly is contributing to the spark that ignited the American Revolution:
In order to ascertain the nature of the proceedings intended by the Fourth Amendment to the Constitution under the terms “unreasonable searches and seizures,” it is only necessary to
recall the contemporary or then recent history of the controversies on the subject, both in this country and in England. The practice had obtained in the colonies of issuing writs of assistance to the revenue officers, empowering them, in their discretion, to search suspected places for smuggled goods, which James Otis pronounced
“the worst instrument of arbitrary power, the most destructive of English liberty, and the fundamental principles of law, that ever was found in an English law book;”
since they placed “the liberty of every man in the hands of every petty officer.” [Footnote 3] This was in February, 1761, in Boston, and the famous debate in which it occurred was perhaps the most prominent event which inaugurated the resistance of the colonies to the oppressions of the mother country. “Then and there,” said John Adams,
“then and there was the first scene of the first act of opposition to the arbitrary claims of Great Britain. Then and there, the child Independence was born.”
The Writs of Assistance allowed the King’s agents to just enter your home and search through everything just to see if there was anything they could find to use against you. This led to the Fourth Amendment whereby the government can search only on Probably Cause, meaning they must have something defined in advance to search for – not just random let’s see what we can find. Judges have gutted the Fourth Amendment whereby today the government claims they found something and that outweighs the Constitution. If gold was illegal to own and they searched your house randomly today, kiss it goodbye for you will be hard pressed to find a Federal Judge uphold the Constitution any more. Today – the ends truly justifies the means. The Feds kidnap people in foreign countries and bring them to court in the USA. The standard reply from a federal judge about illegal kidnapping – whatever happened in a foreign land is not their concern – only that the person stands in front of them now. This is the purpose of appointing former prosecutors as judges. There can be no rule of law left.
The NSA has achieved the same thing as the old Writs of Assistance and just randomly search anyone and everywhere they desire. They are bugging Europe, the UN and communications between heads of state such as Brazil and Mexico. This has nothing to do with terrorism. This has to do with their obsession to know what everyone is doing at all times. They are the American Stasi.