The June 6, 2011 message entitled “Are we 30 days from Economic disaster” looked, with some concern, at the negative global economic consequences a downgrading of US sovereign debt could bring if Congress did not increase the debt ceiling.
Many feel that US debt has grown so high that it cannot be repaid. The chart below from zFacts.com shows that US debt as a percent of national income has been higher in the past.
Another graph shows that if taxes were raised… the wars in Afghanistan and Iraq stopped, that the debt could be dramatically cut.
Long term debt problem is solvable if a deeper concern is shown beyond the immediate debt. Even if Congress gets its act in gear (history suggests that this is likely) and a US debt downgrade does not come now… there are some other pitfalls worthy of a global economic stumble.
One of these economic pitfalls is a collapse of an institution that is guaranteed by the US government that could trigger a crisis and bring too much of America’s unfunded debt out of the future into the here and now.
Excerpts from a June 6, 2011 USA Today article entitled “U.S. funding for future promises lags by trillions” by Dennis Cauchon shows the problem: Federal government’s financial condition deteriorated rapidly last year, far beyond the $1.5 trillion in new debt taken on to finance the budget deficit, a USA TODAY analysis shows.
The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.
This gap between spending commitments and revenue last year equals more than one-third of the nation’s gross domestic product.
Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.
Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.
The $61.6 trillion in unfunded obligations amounts to $527,000 per household.
“The (federal) debt only tells us what the government owes to the public. It doesn’t take into account what’s owed to seniors, veterans and retired employees,” says accountant Sheila Weinberg, founder of the Institute for Truth in Accounting, a Chicago-based group that advocates better financial reporting.
Here are calculations by USA Today on some of the unfunded debt below:
Medicare: $24.8 trillion. Obligation per household: $212,500
Social Security: $21.4 trillion. Obligation per household: $183,400
Federal debt: $9.4 trillion. Obligation per household: $79,900
Military retirement/disability benefits: $3.6 trillion. Obligation per household: $31,200
Federal employee retirement benefits: $2 trillion. Obligation per household: $17,000
State, local government obligations: $5.2 trillion. Obligation per household: $44,800
These obligations are very likely to create inflation… a falling US dollar and erosion of purchasing power. The big question is “When?… sooner or later?” and “How much?”
To help readers diversify out of the dollar, I have started a series of “Cash in Crash “reports available through Amazon.com’s Kindle store entitled “Cash in Crash”.
The first report in this series is Cash in Crash – Brazil. Here is an excerpt from that report.
Cash in Crash – Brazil
It looks as if another economic crash is coming… one that could cause some of the greatest economic shifts we have known, three times bigger than anything since WWII.
These shifts can make some rich beyond belief… others much poorer.
There are seven ways to profit and cash in during this crash.
#1: Cash in on the crash 0pportunity: Be a Multi Currency Investor
#2: Cash in on the crash 0pportunity: Invest in US, Ecuador and other emerging real estate
#3: Cash in on the crash opportunity: Invest in Wellness & Alternate Energy
#4: Cash in on the crash opportunity: Invest in Water & Agriculture
#5: Cash in on the crash opportunity: Invest in Commodities
#6: Cash in on the crash opportunity: Utilize Frequency Modulation
#7: Cash in on the crash opportunity: Create Micro Businesses
This report focuses on Cash in Crash Opportunity #1 and reviews how and why small investors can easily make multi currency investments in Brazil without going to or opening accounts in Brazil.
The real (the plural is reais) is the currency of Brazil. Its sign is R$ and its ISO code is BRL. It is subdivided into 100 centavos (“hundredths”).
In Portuguese (Brazil’s official language (Portuguese) the word real means both “royal” and “real”.
The real became the official currency of Brazil 1994 as part of monetary reform to end a history of heavy inflation. Initially the real was worth 1 real per 1 US dollar and eroded in parity over the next five years dropping as low as 4 reais per 1 US dollar.
In 2002 the real began to recover and the parity as of May 20, 2011 was 1.61 reais buys 1 US dollar or a real is worth about 61 cents US.
Our publications have been reporting (and I personally have been using this strategy for over 40 years) on multi currency investing… clear back into the 1970s long before this became a fashionable idea.
The strategy is really simple. Most currencies rise and fall in their parity versus other currencies. As they rise, their interest rate tends to fall. When weak their interest rate, tends to rise. Markets rarely judge and value the interest rate relationships correctly. They tend to overvalue strong currencies and undervalue weak ones.
The goal in multi currency investing is to sell low interest paying, strong currencies (that should not be so strong) and invest in high interest, weak currencies (that should not be so weak). The first profit in this process is the higher interest earned.
Also eventually currency fundamentals such as government deficits and debt, interest rates, trade balances and current acocunts overrule market sentiment; and the weak currency strengthens versus the strong as well so there is a forex profit to boot.
Take for example the US dollar versus the Brazilian real.
This chart from www.economist.com (see http://www.economist.com/node/18713776?story_id=18713776) shows that the US trade balance is -3.6% of America’s Gross Domestic Product. This means more money is flowing out of the US than is coming in. When this happens, dollars must be converted to other currencies which then pushes the greenback down versus the currencies of the countries where the money goes.
The US also has a huge negative budget balance… -9.1%. Deficits, if financed by loans, create money that is not backed by production. This causes inflation which weakens a currency, versus currencies in countries with lower inflation.
Finally, the US dollar has a really low interest short term interest rate 0.13% and low 10 year bond rate 3.13%. The interest rate of a currency is what usually attracts investors. If fundamentals of a currency (like the dollar’s current account and deficit above) are lousy… the interest rate usually rises.
On the other hand, we can see that the fundamentals in Brazil are much better. The current account deficit is much lower (-2.8& of GDP versus the US -3.6% and the deficit is only -2.3% versus the US -9.1%. However the interest rates available for the Brazilian real at 6.16% (vs 0.13%) and 11.92% versus (3.13%) stomps the buck’s return.
In short the Brazilian real is fundamentally a much stronger currency than the US dollar. The market has made a living proof of this fact.
You can order the entire report “Cash in Crash – Brazil” for your computer or your Kindle from Amazon.com by clicking here. Cash in Crash – Brazil at Amazon.com if you live in the US.
Those living in other countries may need a different link. Amazon.com provides specific URLs for 3 stores (US, UK, DE) and the rest locate from the closest store to them or in the US store.
Cash in Crash – Brazil Amazon.com Link in UK
Cash in Crash – Brazil Amazon.com Link in Denmark
If none of these links work… go to Amazon.com and in the Kindle store type in “Gary and Merri Scott”.
Other Gary and Merri Scott reports at Amazon.com for computer and Kindle:
7-Steps Radiation Report:
Let’s keep looking at ways to avoid all of these economic pitfalls.
Belong to the International Club
The Huge 2020 RiskHere is a huge risk that could explode in 2020.
I hope I am wrong… but the numbers are clear.
According to Treasurydirect.com, (1) as of December 26, 2020 the total US public debt was 23 trillion and 845 billion dollars.
This is not a theoretical problem for the future. This is not something that our children and grandchildren will have to deal with. This is a problem in the here and now for you and me.
Rising interest rates create a massive problem for every American.
Look at how the interest costs alone have risen to over a half trillion dollars a year.
The bad news is that the (US federal debt) is getting bigger….harder to miss. The Congressional Budget Office (CBO) projected in 2010 (the debt then was a bit over 14 trillion) that, under law at that time, debt held by the public would exceed $16 trillion by 2020, reaching nearly 70 percent of GDP.
The $7 Trillion Error.
They sure goofed on that. Here we are… only in 2020 and debt has shot past 23 trillion.
How could the CBO be so wrong?
The CBO screwed up because they could never imagine that the Fed would push interest rates so low… and keep them there. The interest rates are so low that the government has been able to borrow more than imagined and still afford the interest.
For example, US Federal government interest last year amounted to around $573 billion. Yet in 2008 on debt of only $9 trillion + the interest that year was $451 billion +.
Interest payments in 2017 were 27% higher than they were in 2008. Yet the debt is over 250% higher.
Very low interest rates have helped the government borrow. Low interest has also helped the US stocks reach all time high prices.
The government will resist raising rates because it will ruin their budget, cause a collapse of the stock markets and destroy the US dollar.
Rising interest rates, will create an almost unimaginable debt crisis. If government interest doubles it is like the $23+ trillion national debt rising to 46 trillion! Unless there are some huge tax increase the interest payments are not sustainable.
Learn how to have more freedom and time, less stress, better health care, extra income, greater safety and profit in your savings despite America’s deficits, debt and currency risk.
Fortunately there are secrets that will allow a few to live much better, free of debt and worry despite the decline in the dollar’s purchasing power. My wife, Merri and I, have traveled, lived, worked and invested around the world for nearly 50 years to gain this information.
Let me share the basics of this data and how we can be of help through 2020.
The first fact behind this secret is that things are really good in the western world. Despite many problems, we are surrounded by more abundance and greater opportunity than almost anyone has ever enjoyed, anywhere, ever. To enjoy a fair share of this wealth, all we have to do is understand human nature and learn how to invest in the new economy, as it changes and becomes new, again and again.
Merri and I have made seven huge transitions in the 50 years. Each has allowed us to always stay ahead of losses that the majority of Americans suffer. We are in another transition right now and want to share why and what to do so you can stay ahead and live a richer, independent life through 2020 and beyond.
A falling US dollar is one of the greatest risks we have to our independence, safety, health, and wealth, but also brings a window of huge profit as I explain below. Though the greenback has been strong for a number of years, its strength is in serious jeopardy. The growing federal deficits increase the national debt and this with rising interest rates propels a growing debt service.
While the Dow Jones Industrial Average passed a record high, the U.S. national debt passed the $20 trillion mark.
The problem is that the Dow will come back down. National debt will not fall.
The double shock of money fleeing Wall Street and US debt skyrocketing, will destroy the purchasing power of the greenback.
Go to the store even now. Statistics say inflation is low, but buy some bread or, heaven forbid, some fresh vegetables like peppers or fruit. Look at the cost of your prescription or hospital bills. Do something simple like have your car serviced at an auto dealer. Look at the dollars you spend and you’ll see what I mean.
The loss of the dollar’s purchasing power erodes our independence, our freedom and our savings and wealth as well.
At the same time, low interest rates by big banks and higher health care costs soak up the ever diminishing income and savings we have left. According to a Gallup poll, the most unpopular three institutions in America are big corporations & Wall Street banks, HMOs and Congress.
Yet there is little we can do because these institutions are in control.
Over the last 50 years the average income for 90 percent of the American population fell. Our health system is restricted by a Kafka-esque maze of legislation and insurance regulations that delay, frustrate, and thwart attempts by patients and doctors from proper medical care. Big banks and corporations restrict our freedom of choice. The business customer relationships are no longer transactions between free equals.
Banks can trap us in indebtedness at every age from student loans to mortgages to health care costs. They pay almost nothing on our savings. They hide unexpected fees and payments in complex and unreadable documents. Banks and big corporations routinely conceal vital information in small print and then cheat. Weak regulations and lax enforcement leave consumers with few ways to fight back. Many of these businesses ranging from cable TV to phone and internet service to health insurance have virtual monopolies that along with deceptive marketing destroys any form of free market.
These same companies control the credit-scoring agencies so if we don’t pay unfair fees, our credit scores will plunge and we could lose the ability to borrow money, rent an apartment, even to get a job. Many consumers are forced to accept “arbitration clauses” in lieu of legal rights. The alternative is to lose banking, power, and communication services.
Big business has also usurped our privacy. Internet companies sell our personal data. Personal information is pulled from WiFi and iPhones track and store our movements. The government can access this information, sometimes without subpoenas. There’s a lot that we don’t know, often withheld under the guise of “National Security.”
The glow on Western democratic capitalism has dimmed… or so it seems. The US, leading the way, is still a superpower with economic, innovation and military might, but the institutions that should serve the people have become flawed or broken.
America’s infrastructure is in shambles. The nation’s bridges are crumbling, many water systems are filled with toxins, yet instead of spending more to fix this, we build more prisons. The 2.2 million people currently in jail is a 500 percent increase over the past thirty years. 60% of the inmates belong to ethnic groups. Not just non-white ethnic groups are suffering. Annual death rates are falling for every group except for middle-aged white Americans. Death rates are rising among this group driven by an epidemic of suicides and afflictions stemming from substance abuse, alcoholic liver disease and overdoses of heroin and prescription opioids.
America’s middle class is shrinking. Nearly half of America’s income goes to upper-income households now. In 1970 only 29 percent went to this group. How can we regain our freedom, our happiness and our well being in such a world?
What can we do?
Gain a better, freer life is to combine better health, higher income and greater savings for a happier, more resilient lifestyle.
Merri and I will celebrate our 50th year of global living, working, investing and researching to find and share ideas on how to have simpler, low stress, healthier, more affluent lifestyles. Our courses, reports and email messages look at ways to gain:
#1: Global micro business income.
#2: Low cost, natural health.
#3: Safer, more profitable, investments that take little time or cost to buy and hold… so you can focus on earning more instead
Many readers use our services for just one of these three benefits. They focus only on health or on earning more or on better, easier investing.
28 years ago Merri and I created the International Club as a way for readers to join us and be immersed in all three of these benefits. The International Club is a year long learning program aimed at helping members earn worry free income, have better affordable good health and gain extra safety and profits with value investments.
Join us for all of 2020 NOW.
The three disciplines, earning, health and investing, work best when coordinated together. Regretfully the attacks on our freedom are realities of life. There is little we can do to change this big picture. However we can change how we care for our health, how we earn and how we save so that we are among the few who live better despite the dollar’s fall.
We start with better lower cost health care.
Club membership begins by sharing ways to be free of the “Secret Hospital Charge Master”. Just as governments hide truth behind “National Security”, big health care businesses hide medical truths behind “Charge masters”. Most hospital charge masters are secret because big business does not want us to know how much hospital costs have risen. Motivations beyond our good health, like corporate greed, want to keep us in the dark about health care cost.
Despite rising health care costs, a report from the Centers for Disease Control & Prevention shows that hospitals are the last place we want to be for good health. One report shows that hospital-acquired infections alone kills 57% more Americans every year than all car accidents and falls put together.
Often, what patients catch in the hospital can be worse than what sent them there. Governments and health care agencies agree – antibiotic resistance is a “nightmare.” An antibiotic-resistant bacteria may be spreading in more hospitals than patients know. About one in every 25 hospitalized patients gets an infection and a report from the Journal of Patient Safety showed that medical errors are the third-leading cause of death in the country.
Along with the risk of hospital acquired illness and medical errors, the second huge threat to our well being… is health care costs, especially at hospitals. This is why charge masters are so often secret. There are few risks to our wealth that are greater than a hospital stay.
I have created three natural health reports are about:
Each report is available for $19.95. However you’ll receive this free as club member and save $59.85.
Club members also receive seven workshops and courses on how earn everywhere with at home micro businesses. We call this our “Live Well and Free Anywhere Program”. The program contains a series of courses and reports that show ways to earn and be free. These courses and reports are:
- “International Business Made EZ”
- “Self Fulfilled – How to Write to Sell”
- Video Workshop by our webmaster David Cross,
- The entire weekend “Writer’s Camp” in MP3
- The report “How to Raise Money Abroad”
- Report and MP3 Workshop “How to Gain Added Success With Relaxed Concentration”
- The course “Event-Full – How to Earn Conducting Seminars and Tours”
This program is offered at $299, but is available to you as a club member free. You save $299 more.
Next, club members participate in an intensive program called the Purposeful investing Course (Pi). The purpose of Pi is finding value investments that increase safety and profit. Learn Slow, Worry Free, Good Value Investing.
Stress, worry and fear are three of an investor’s worst enemies. These destroyers of wealth can create a Behavior Gap, that causes investors to underperform in any market good or bad. The behavior gap is created by natural human responses to fear. Pi helps create profitable strategies that avoid losses from this gap.
Lessons from Pi are based on the creation and management of a Primary Pi Model Portfolio, called the Pifolio. There are no secrets about this portfolio except that it ignores the stories from economic news (often created by someone with vested interests) and is based mainly on good math that reveals the truth through financial news.
The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets using my 50 years of global experience and my study of the analysis of four mathematical investing geniuses (and friends).
There are seven layers of tactics in the Pi strategy.
Pi Tactic #1: Determine purpose and good value.
Pi Tactic #2: Diversify 70% to 80% of portfolio equally in good value developed markets.
Pi Tactic #3: Invest 20% to 30% equally in good value emerging markets.
Pi Tactic #4: Use trending algorithms to buy sell or hold these markets.
Pi Tactic #5: Add spice speculating with ideal conditions.
Pi Tactic #6: Add spice speculating with leverage.
Pi Tactic #7: Add spice speculating with forex potential.
The Pifolio analysis begins with a continual research of international major stock markets that compares their value based on:
#1: Current book to price
#2: Cash flow to price
#3: Earnings to price
#4: Average dividend yield
#5: Return on equity
#6: Cash flow return
#7: Market history
We combine the research of several brilliant mathematicians and money managers with my years of investing experience.
This is a complete and continual study of what to do about the movement of international major and emerging stock markets. I want to share this study throughout the next year with you.
This analysis forms the basis of a Good Value Stock Market Strategy. The analysis is rational, mathematical and does not worry about short term ups and downs. This strategy is easy for anyone to follow and use. Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.
The costs are low and this type of ETF is one of the hardest for institutions to cheat. Expense ratios for most ETFs are lower than those of the average mutual fund. Little knowledge, time, management or guesswork are required. The investment is simply a diversified portfolio of good value indices. Investments in an index are like investments in all the shares of a good value market.
Pi opens insights to numerous long term cycles that most investors miss because they have not been investing long enough to see them.
The Pi subscription is normally $299 per annum but as a club member you receive Pi at no charge and save an additional $2299.
Profit from the US dollar’s fall.
In the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich. Some of my readers made enough to retire. Others picked up 50% currency gains. Then the cycle ended. Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview. He said: Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!
Club members receive a report about opportunity in the current strength of the US dollar is a second remarkable similarity to 30 years ago. The dollar rose along with Wall Street. Profits came quickly over three years. Then the dollar dropped like a stone, by 51% in just two years. A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.
This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago. The trends are so clear that I created a short, but powerful report “Three Currency Patterns for 50% Profits or More.” This report shows how to earn an extra 50% from currency shifts with even small investments. I kept the report short and simple, but included links to 153 pages of Good Value Stock Market research and Asset Allocation Analysis.
The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000). There is extra profit potential of at least 50% so the report is worth a lot.
This report sells for $29.95 but when you become a club member you receive the report, “Three Currency Patterns For 50% Profits or More” FREE.
Plus get the $39.99 report, “The Platinum Dip 2019” free.
With investors watching global stock markets bounce up and down, many missed two really important profit generating events. The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV). The second event is that the silver gold ratio hit 80 and has remained near this level, compared to a range of the 230s only two years ago.
Now there is a new distortion ready to ripen in the year ahead.
These two events are a strong sign to invest in precious metals.
I prepared a special report “Platinum Dip 2019”. The report explains the exact conditions you need to make leveraged precious metal speculations that can increase the returns in a safe portfolio by as much as eight times. The purpose of the report is to share long term lessons about speculating in precious metals gained through 30 years of speculating and investing in gold and silver.
The low price of silver offers special value now so I want to send you this report because the “Platinum Dip 2018” offers enormous profit potential in 2018.
The report “Platinum Dip 2019” sells for $39.95 but club members receive it free as well.
The $39.95 new “Live Anywhere – Earn Everywhere Report” is also free.
There is an incredible new economy that’s opening for those who know what to do. There are great new opportunities and many of them offer enormous income potential but also work well in disaster scenarios.
There are are specific places where you can reduce your living expenses and easily increase your income. Scientific research has shown that being in such places actually make you smarter and healthier. Top this off with the fact that they provide tax benefits as well and you have to ask, “Where are these places?”.
Learn about these specific places. More important learn what makes them special. Discover seven freedom producing steps that you can use to find other similar places of opportunity.
The report includes a tax and career plan broken into four age groups, before you finish school, from age 25 to 50 – age 50-to 65 and what to do when you reach the age where tradition wants you to re-tire. (Another clue-you do not need to retire and probably should not!)
The report is very specific because it describes what Merri and I, our children and even my sister and thousands of our readers have done and are doing, right now.
Live Anywhere – Earn Everywhere focuses on a system that takes advantage of living in Smalltown USA, but earning locally and globally.
This report is available online for $39.99 but International Club members receive it free.
Save when you become a club member.
Join the International Club and receive:
#1: The $299 Personal investing Course (Pi). Free.
#2: The $299 “Live Well and Free Anywhere Program”. Free.
#3: The $29.95 report “Three Currency Patterns For 50% Profits or More”. Free.
#4: The $39.99 report “Platinum Dip 2019”. Free
#5: The three $19.99 reports “Shamanic Natural Health”. All three free.
#6: The $39.99 “Live Anywhere – Earn Everywhere” report. Free.
#7: A year’s follow up subscription to the Purposeful investing course… Plus more.
Join the International Club for $349 and receive all the above online now, plus all reports, course updates and Pi lessons 2019 at no additional fee.
Read USA Today article U.S. funding for future promises lags by trillions