Resources on Economic Collapse
Out of all the issues in the world of politics, finance, and sports, the one thing that I cannot stop worrying about is the state of the United States economy and how the continuing meddling of the Federal Reserve Board and the government that send America into not only a recession, but a hyper inflationary depression where the dollar will lose nearly all of its value. This is bad news for all Americans as the future of the nation and your livelihood is at stake. Adding an Obama presidency to the current Democratic congress, the higher taxation an increased spending on social programs will only add to the hard times. This has mainly been caused by the Fed’s abuse of expanding the money supply (see Fig. 1) and the inflation that results from it (see Fig. 2).
So what should individuals do in such hard times:
1. Educate yourself on Economics: Read some of recommended reading (or Wikipedia articles on basic economics and various economic concepts). If you are too lazy to read, listen to podcasts or check Youtube.
2. Sell bad assets: The current American economic system is built on inflation, debt, and over consumption. America needs to make a long and hard transition to a consumer society to a society that saves its money to create wealth. With a negative national savings rate, this may take a while to accomplish and many people will suffer tremendous losses (especially banks and Wall Street).
Bad assets that one needs to get rid of and sell:
US stocks: A weakened consumer will hurt earnings of all American stocks. Also the dollar’s value will plummet to foreign currency, so a stock with a value in US dollars will real value even if its price holds up or slightly increases.
The US dollar: The dollar has a temporary rally right now, but with all of the excess dollars in the world and foreign debt in the form of trade deficits and government national debt will implode the value of the dollar once America’s Chinese, Saudi, and Japanese creditors realize the inability of getting their loans paid back by the government. As a result, these dollars will get flushed into the domestic economy and cause massive amounts of inflation.
US Housing: Housing prices will continue to significantly fall due to the inability of people getting a mortgage. Sell now before housing prices completely crash so you can buy the land at a much cheaper price in a few years later.
Banks and Retail Companies: The biggest beneficiaries from the current economic system were banks because people needed loans for consumption and the retailers that sold consumer goods. With people not being able to afford to buy consumer goods outside of staples and the inability for people to get loans (credit crisis and already being too much in debt) will slowdown sales and crush the values of these companies. I mean who is going to buy over priced rags at Abercrombie and Fitch when they struggle with theit mortgage payments and the higher prices of food and energy. For advanced traders it is a good idea to short sell these companies if the government does not ban it.
3. Save your money and buy assets that preserve your wealth:
America has lived over its means for too long. It is time to spend less money than you earn and build up savings. However, with high inflation, it is not just to keep your money in the bank. Here are some things you can do to hedge the value of your money
1. Buy Foreign dividend paying stocks: Foreign economies in the long term benefit from a weaker US because they can sell their products to their own people rather than export their good to the states. As a result, foreign currencies will appreciate due to US inflation and people in Asian countires will have a much higher standard of living creating a new market to replace the American consumer.
2. Buy precious metals. Unlike America’s fiat currency, precious metals such as gold and silver have intrinsic value. During inflationary and recessionary times gold and silver prices skyrocket as a hedge against inflation and as a means to preserve wealth. Despite economic conditions, gold is highly valued in all societies across the globe.
3. Keep some cash and convert into a foreign currency: Eventually American and international stocks and housing will fall to levels that make them incredibly and a great buy. In order to capitalize on this, you will need some cash available. By keeping this cash in a foreing currency (such as the Swiss Franc), you can still have cash while avoiding the devaluation of the dollar.
4. Buy oil companies. The price of oil will increase in the long run because there have been no major new oil discoveries or refineries have been built within the past 30 years. With a shrinking supply and increasing demand oil prices will continue to rise and oil companies profits will rise with it. Also, oil companies pay high dividend yields to their shareholders.
5. Stock up on future supplies. Things will become increasingly expensive within the next year, so buy anything you will need in the future now to avoid higher prices.
Figure 1: Growth of Money Supply since 1980: Our dollar has lost 60% of its value since 1980. However, we have increased our money supply by over 500% since 1980 (due to the government withholding M3 numbers since 2005, we don’t know how much money the Fed has actually printed). Once foreigners wise up to this and flush the dollars into the system, it will come back in the form of massive inflation.
Figure 2: Blue Line: Inflation numbers using the originial consumer price index (CPI) Orange Line: Government inflation numbers that Alan Greenspan fiddled around with to conceal the true inflation rate. Real inflation is probably higher than both of these.
Recommended Reading/Media:
Books:
Crash Proof by Peter Schiff
Revolution: A Manifesto by: Ron Paul
Human Action: A Treatise on Economics by: Ludwig von Mises
The Road to Serfdom by: F.A. Hayek
Atlas Shrugged by Ayn Rand
Basic Economics by: Thomas Sowell
Podcasts:
Rational Rants with Nick Pardini (especially Episodes 24 & 25)
Mad Money Machine with Paul Douglas Boyer
Thinkfuture Radio with Chris Future
Movies:
I.O.U.S.A.
Youtube:
Check out videos featuring Peter Schiff, Glenn Beck (relating to economic issues), Ron Paul, and Jim Rogers
Rational Rants #25: Defending Yourself from the Crash
With the dollar collapse and a struggling economy, how can the average person/investor protect themselves. Due to the chronic errors from government intervention, the solutions seem to extreme. Buy: gold, foreign stocks, foreign currency; Sell: US dtocks, financials, retail, and housing.. Nick also explains whether moving out of the country can benefit you and also how the Democratic party has lost its interest in protecting your civil liberties.
Episode 24: The Demise of the Dollar
What has happened to the economy and what is the real extent of this slowdown? Nick explains the truth behind these problems lies in a 95 year history of the US government debasing the dollar. It’s good that this bail out did not pass, but years of printing money from nowhere has come back to get us. Also Nick explains what this means for the average American and how high inflation will change your life. Nick also goes into what you can do (before the government bans it) to hedge your bets against a falling economy. If you only listen to one episode of Rational Rants, this one is most important.
College Football Weekly Roundup Week 6: Here Comes Alabama
With a tumultuous week filled with upsets and nine ranked teams losing. Who now leads the national title race and who gets the BCS shovel?
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Missouri Tigers Football
Due to the losses of USC and Florida, Missouri moves up to number one in my poll after a bye week. Chase Daniel is the best quarterback in the nation and great quarterback play is essential for national title. -
Alabama Crimson Tide Football
Nick Saban has proven his worth by turning the Crimson Tide into a national title contender in only his second season. Alabama has had the most impressive set of wins of any team in the nation. First they blowout Clemson 34-10, and have a dominant 41-30 win over Georgia that includes a 31-0 halftime lead. Alabama is loaded with young talent and they will continue to get better as the season goes. -
Oklahoma Sooners Football
Oklahoma passed his first major test with flying colors. Lead by 411 passing yards from Sam Bradford, the Sooners dominated a ranked TCU team and look like a potential BCS title team. -
BYU Football
This may seem a little high for a Mountain West team, but BYU has been dominating its competition since escaping from Washington. Quarterback Max Hall has been putting up the best numbers in the nation and the Cougars defense has been able to keep up with their high power offense. -
Penn State Football
With Wisconsin losing to Michigan, Penn State looks like the best team in the Big Ten. They also won their first tough game against Illinois. -
Texas Tech Football
Despite their great offense, Texas Tech still has an unproven defense. That side of the ball will determine whether the Red Raiders win anywhere between 8-12 games. -
South Florida Bulls Football
Due to the Big East’s weakness, South Florida has a great shot to go undefeated and sneak into the title game. The Jayhawks’ success ultimately may determine how South Florida appears in the BCS title game. -
LSU Football
Despite quarterback problems, LSU still has continued to win with top talent at every other position. Their upcoming trip to the swamp will determine whether this year’s Tigers can defend their title. -
USC Football
USC shocking loss at Oregon State spells trouble for the Trojans, but they are not out of the national title hunt. With the nation’s best defense and their only road challenge being at Arizona, USC can easily run the table. Pete Carrol, however, needs to be able to keep his players motivated against inferior teams. -
Texas Longhorns Football
Texas may be one of the most over ranked teams in the nation. They are unbeaten, but they have not played anyone of any merit either. The Big XII season will expose Texas’s suspect secondary and an interception prone Colt McCoy. -
Georgia Bulldogs Football
Unlike the Trojans, Georgia and Florida are pretty much eliminated from national title contention. First they must play each other and a two loss team will most likely not make a title game. Also Georgia must play at Auburn and LSU and will probably lose at least one of those games. -
Florida Gators Football
A loss at home one of the worst teams in the SEC (Ole Miss) has killed the Gator’s title hopes. However, they are still a top team with elite talent and that is why they hang on in the top 15. -
Boise State Football
Can two non-BCS schools crash the BCS party. With the strength of the Mountain West and Boise finaly beating a BCS school on the road with their victor against Oregon, the Broncos schedule sets up for another Fiesta Bowl appearance. The Broncos only remaining challenge is a home game against Fresno State which has not won on the blue turf this millennium. -
Ohio State Football
Beanie Wells came back on Saturday to aid Ohio State’s victory against Minnesota. Terrel Pryor’s composure ultimately will determine Ohio State’s standing in the Big Ten. -
UConn Football
Uconn has not had any impressive wins, but similarly to last season’s Huskies, they find ways to win. With a soft Big East schedule, UConn can amass a win total that is much greater than their talent level. -
Wake Forest Football
Saturday’s loss at home to Navy has exposed Wake’s struggles with their running game with only 43 yards that game. Wake Forest is going to need to improve its running game for the rest of ACC play if they want to be an Orange Bowl contenders. -
Virginia Tech Football
A win over Nebraska at Lincoln puts Virginia Tech back in the rankings. However, their loss against East Carolina continues to look worse -
Ball State Football
Since no other team outside the rankings deserves to be ranked, Ball State will cap out the top 25 due its impressive 5-0 start that includes wins over Navy and Indiana.
Why Don’t Commentators Ever Run for Office?
Commentators across the media from talk radio to television constantly rant about political issues and what is wrong with society. Critics such as Larry Elder, Glenn Beck, Bill O’Rielly, Keith Olbermann, Sean Hannity, and a boatload of others rant on television and radio, write columns and books, and exopress complaints to politicians claiming that they can do a better job. If they believe that their viewpoints can really help solve the problems of American society, than why don’t any of these commentators run for office?
Although there are legal issues related to participating in the media simultaneously holding an office, but if these people really put country first, than why do they not try to actively pursue in Congress or the presidency. They have more than enough media notoriety Possibly in modern society pundits have more influence on both governmental policy and the American people than an individual congressman. It also might not be worth the pay cut that these people must take in order to participate in government. The partisan nature of these people also may also hurt their chances. Overall, due to the lack to back up their supposed concern about the country of these commentators by refusing to enter politics themselves, these people show hypocrisy by not taking action. This is more of a question than a full length article. Please comment your opinions of why pundits do not run for office.
Coming up Monday: Common Sense Explanation of Current Economy, the Bailout, and what these economic conditions bring in the future.
Rational Rants with Nick Pardini Episode 23: Vote With Your Pocket Book
When it comes to voting what issues do politicians actually take action on? What decisions on political issues actually a citizen’s life as an individual? Nick explains why one should vote on fiscal issues and about how the culture and how a politician’s social issues are meaningless. Vote with your pocketbook; social issues are meaningless in the big picture.
Rational Rants with Nick Pardini Episode 22: Indian Inquiries
In this episode, Nick talks about his trip to India and what he learned about during his ten days on the subcontinent. Topics about India include global poverty, economic development, religion, and infrastructure. Also Nick reacts to the recent government bailouts of financial companies and why it is unconstitutional, irresponsible, and how this practice violates and threatens the existence of the free market.
Impressions from India Part I: Economic Development
The reason I have not been updating the site or Rational Rants recently is because I travelled to India to ten days and got sick for three days after. My experiences on the other side of the world have provided new perspectives and insight about India and its society. By visiting Delhi/New Dehli, Jaipur, and Agra I have learned about the nation’s past, present, future when it comes to economic development, geopolitics, and culture of India.
In terms of its economy and global standing, India’s perception as a future global and economic superpower is undeserved. Despite a GDP growth rate of 9.6%, India has an inflation rate. of 12.4% that erodes the countries growth. Economists look to India’s large middle class market (200 million people) as the reason for India’s success. However, the middle and upper class only consist of 20% of India’s population and 80% of the country lives in poverty. 74% of Indians earn less than two dollars per day. Throughout my travels poverty was a prevalent. Out of all of my travels, India had the most visible and disturbing levels of poverty. People urinate on the streets, live with cows under bridges or makeshift shacks, and attempt to beg and/or pickpocket visitors at every time they leave the hotel. Security guards must blockade every shop and restaurant to prevent robberies and soliciting. Overall, India may not rise to the ranks of a developed country, but the Indian economy is on the rise and can reach the levels of more developed third world nations such as Mexico.
Indirect factors of the economy India also has a multitude of societal issues. With over a billion overpopulation currently plague India. India only has one third of the landmass of the United States, but over three times the amount of people. Problems associated with overpopulation include shortages food and water, the spread of disease, and the over division of farmland. India is the most disease ridden country on the earth. Diseases that have been eliminated in the developed world such as typhoid fever, polio, malaria, and dysentery flourish in India. The poor lack treatment and live in their filth and that supplements the spread of disease. The Indian government needs to instill disease control to provide relative safety for both its people and visitors to improve health and international business.
In order for India to make next step in becoming a developed nations, the Indian people must address the following issues:
1. Overpopulation
2. Suspicion
3. Oversized and Corrupt Government
4. Proximity to enemies/Islamofascism
Overall India is a country in the rise, but it will not reach superpower levels until India reforms its struggles.
Rational Rants with Nick Pardini Episode 21: Taxation=Theft
In this episode Nick discusses how taxation is simply a legal way for government to steal your hard earned money. The reason the tax burden has increased so high beause of the demands of the entitlement mentality by the left and the lazy. Also Nick explains the extent of “East Coast Bias” in sports and what causes it.
