Global economic tension has been building for 40 years as US and Western European economies increased debt, saw their populations age and created huge, unfunded future obligations in pensions, medical care. This all took place as the rest of the world industrialized offering low cost labor. Technology that diminished time and space allowed this evolution but also broke apart family ties and caused a disintegrating, global social cohesion. The same technology that connected the world and delivered low cost goods from afar also altered the terrain for terrorism… revolution and internal strife.
All the events over four decades have brought global economic temperatures to a boil. Now two flash points threaten to create huge losses in the US dollar and euro’s purchasing power. The first was the inability of Greece to meet its debt obligations. The second flashpoint has been America’s debt ceiling and a Congressional inability to agree how to raise it and reduce debt.
I normally don’t stay up late but waited to see if Congress would reach an agreement so America’s ability to borrow will not run out. They say they have, but this is not likely to solve the long term debt and dollar problem.
So what can we do?
Here are three tips on how to protect your purchasing power.
* Tip #1: Realize that even if the debt ceiling is raised, the underlying global economic problem is not solved.
A BBC article (see link to full article below) last week entitled “Apple holding more cash than USA” says: Apple now has more cash to spend than the United States government.
Latest figures from the US Treasury Department show that the country has an operating cash balance of $73.7bn (£45.3bn).
Apple’s most recent financial results put its reserves at $76.4bn (£46.9bn).
The US House of Representatives is due to vote on a bill to raise the country’s debt ceiling, allowing it to borrow more money to cover spending commitments.
If it fails to extend the current limit of $14.3 trillion (£8.7tn) dollars, the federal government could find itself struggling to make payments, and risks the loss of its AAA credit rating.
The United States is currently spending around $200bn (£122bn) more than it collects in revenue every month.
This is the crux of the economic problem… in more countries than just the USA… there is spending more than it collects every month.
History suggests that in a democracy… once this pattern sets in… once citizens become hooked on passing personal responsibility to their government, a recovery is very hard. Take Greece for example… on its knees financially… yet the public riots when the government tries to cut back. This the problem in the US right now. This is human nature. When austerity is called for… after a period of extreme abundance via borrowing no one wants the party to end. Everyone wants others to be austere.
What to do about tip #1. Watch for a dollar rally. If the dollar strengthens… due to relief created by increased US debt… the strength will be temporary. Sell the US dollar. Buy gold and currencies in strong countries as they drop versus the dollar.
* Tip #2: Trade Currencies. Thomas Fischer explains why in his latest Money & More missive entitled “Ugly Betty!”
Ugly Betty! by Thomas Fischer
I have been involved in the currency markets since 1978, when I was first appointed as a foreign-exchange trader in the Danish bank I had joined as a student in 1975. Since then I have served as a trader, broker and now as an investment manager. Here are some of the most important lessons I have learned.
When President Nixon took the U.S. dollar off the gold standard in 1971, he ended the existing foreign-exchange system (the Bretton Woods Accord) and thus set the stage for freely floating currencies. Back in 1978 when I began trading, almost all currency trades were between financial institutions – the so-called Interbank Market. Retail investors were not part of the equation. Currency trading as we know it today did not exist until the late nineties, when internet-based platforms made trading currencies possible for practically anyone.
In 1999 when the electronic euro was introduced (coins and notes followed in 2002) some 1.5 trillion dollars worth of currencies changed hands every day. Many people expected this number to drop, as the 12 countries of the European Union locked their exchange rate to the euro. However, the opposite occurred. Foreign-exchange transactions have soared to 4 trillion dollars a day. This is substantially more than all the wealth that is exchanged on all of the world’s stock markets.
Initially, Greece was not seated at this table. They became a participant in 2002 thanks to faking their deficit figures and a little sub rosa assistance from Goldman Sachs. Today the euro is the sole currency of 17 EU member-states. Although my country, Denmark, is a member of the EU, we still use the Danish kroner, not the euro. Danish voters rejected the euro in a referendum in 2000.
When trading in the euro was first possible, on January 1, 1999, the euro traded at 1.19 to the U.S. dollar. In October 2000, it hit its all-time low against the USD (at least for now) at 0.8230. The high was set in August 2007 at 1.6038. The following chart shows how much volatility there has been in the euro-dollar ratio:
Source: Jyske Markets
Today, with some periphery euro zone members in debt turmoil, and the United States fighting widening trade and current account deficits, selecting the “best” currency to buy has become a reverse beauty contest. The goal is to choose the least ugly one.
Currencies are about relative fundamentals (that is, comparing each one to another) and not absolute values. This is actually fortunate for those of us whose job it is to trade them. Otherwise, it would be almost impossible to find an attractive currency to purchase today. Of course, with so many ugly currencies out there, it is no wonder that gold has been rising against all of them.
Thanks to new austerity measures in Greece, followed by yet another IMF/EU bailout, it appears that the Greece day of reckoning has been delayed yet again. Thus, in the contest to find the least-ugly currency, it seems as if the euro may once again be the winner.
The U.S. dollar is still the most widely held reserve currency in the world. About 60% of all reserves globally are in dollars. However, this is changing rapidly. A few years ago that number was over 70%. The euro has gone from 15% of such reserves, when it was introduced in 1999, to about 25% today. This is quite a big shift and we expect the trend to continue.
U.S. politicians want the Chinese to revalue their currency and make it freely floating. I would caution them to be careful what they wish for; a freely floating reminbi, together with an open Chinese securities market, would make the reminbi an obvious alternative as a reserve currency. It will probably take another five to ten years for that to happen, but it will happen.
When that day comes, the dollar will still be important (and probably still a reserve currency), but not to the extent it is today.
Currency trading is a zero sum game. For every winner there must be a loser. For me to make money on a trade, someone else must lose money. As it happens, the vast majority of participants in the currency markets are not seeking a profit; rather, they are seeking liquidity. These “losers” are central banks, companies hedging currency exposure, international bond and equity investors, and tourists.
Believe me, there are plenty of “chips” left on the table to tempt active, currency traders to try to win some of them for their clients. The bond and equity markets hate volatility and uncertainty, whereas the currency market enjoys greater profit potential when volatility rises. Currencies thus offer an excellent diversification for investors in times of uncertainty.
Here at Jyske Global Asset Management, we trade currencies in all of our managed portfolios. Last year we took this one step further, by introducing a pure managed currency portfolio. We trade in currency pairs, buying one and selling another as we look for “Ugly Betties” to add to our clients’ profits.
There is no question that currency trading can be an attractive choice from a diversification point of view. But in my opinion it is best left to the professionals, as it has to be watched 24/7. As the old commercial for Greyhound used to say, “Leave the driving to us”.
We have been travelling extensively in the US in 2011 and still have several trips pending. You can follow all our future trips on our webpage www.jgam.com/events and of course always book us for a meeting should we be in your vicinity. Thomas Fischer
Three things you can do about Tip #2:
1) Visit JGAMs web page at http://jgam.com
2) Learn about multi currency investing with our Multi Currency Portfolios Report.
3) Invest in either a commodity currency or emerging currency ETF. You can learn more about ETFs from Morgan Hatfield at Ruggie Wealth Management at firstname.lastname@example.org
Tip #3: Have a portion of your total assets allocated in precious metal, both offshore and readily available.
Learn more about this from Rich Checkan and Asset Strategies International.
One the subject of forex trading and gold we have interviewed Thomas Fischer JGAM Senior Vice President about multi currency diversification and Rich Checkan of the precious metals dealers Asset Strategies International.
You can hear both recent interviews on where to invest globally now. Order here $9.99.
Global economic tension has been building for 40 years as US and Western European economies have increased debt. The fiscal rebalancing taking place now will cause economic pain to those who are not prepared. Precious metals, forex trading and commodity and emerging market ETFs can bring profits as the purchasing power of many other investments fall.
Join Merri and me as we look at ways to fight international economic turmoil in the year ahead.
Since the best way to maintain purchasing power is a refined ability to serve, we have started a program to help our readers create their own micro business working with these businesses as introducers, dealers and distributors.
What a match… tens of thousands of readers, many wanting to earn globally… meeting some great… really unique global businesses tied together with our communication system that can bring all this: training…. communicating and networking.
We are starting with these five businesses first.
#1: Jyske Global Asset Management (JGAM)
#2: Bio Wash
#3: Candace Newman Essential Oils
#5: Ecuador Imbabura Export Products
After attending our International Business and investing seminar on October 7-8-9, you will be qualified to enroll for the introducer, distributor and dealer programs above and any others we develop.
Enrolling in any of our online business development courses and attending one seminar provides full qualification to apply for all programs we provide for a year.
Plus three or four times a year we conduct our International Investing and Business seminar that updates all the data in these courses.
Enrollment for our October 7-9 North Carolina Course click here for details.
We have now connected our many contacts with unique global businesses, with our online training and seminars so you can:
#1: Connect via our our online courses to here and now specific business opportunities.
#2: Keep in touch with other readers in the program, share business tips, ideas contacts and even website support in some instances.
Our first turnkey earning program is Jyske global Asset Management because our activities as publishers has a synchronicity with Jyske and JGAM. We have been able to combine our training, communications and lead generation abilities with their financial organization.
Business is always a little more complicated when it entails financial products so we have created a beta program to develop this system.
A JGAM Introducer does not have to be a registered as an investment adviser but JGAM does have a due diligence requirement. JGAM will also expect a certain amount of introdcutions per year though this amount has not been determined… hence this beta offer.
JGAM pays a percentage of their fee to the Introducer up to a maximum 25% of their fee. This not only offers an excellent income generating opportunity but creates a potential long term income stream because JGAM keeps paying the fee as long as the client remains a client. Fees are paid on a quarterly basis.
There is also potential for growing long term income because JGAM pays the Introducer based on the total assets under management. If a referred client makes additional payments, the referrer will be paid on the total amount.
For example if an Introducer refers a client who invests a minimum $100,000 and the annual fee is 2%, the referrer earns $500 per annum basic fee (as long as the customer remains with JGAM)… plus if the assets grow either through portfolio growth or added deposits… so too does the referrer’s fee.
We have set our first training JGAM training session for October 10, 2012.
This program will allow subscribers to any of our online courses who have attended an International Business Made EZ seminar to become Introducer for JGAM.
We have been working with Jyske Bank for over 20 years and Jyske Global Asset Management, a Jyske Bank wholly owned subsidiary. We started talking to Thomas Fischer Senior VP about an referral program for some time. Finally,we introduced this opportunity for the first time at our June 2011 seminar. The response was overwhelming.
Jyske Bank employs a staff of about 4,000 and operates 116 Danish branches, which makes it the second largest independent Danish bank. They offer a full range of financial solutions to retail as well as small and medium-sized corporate clients.
We have always liked Jyske because they are one of Europe’s largest currency traders and offer very simple but sophisticated multi currency investing services. They are one of Europe’s largest currency traders and dealers.
We have especially enjoyed our business relation with Jyske because being open and honest is one of the core values of the bank group. Traditionally, Jyske formulates and communicates its values – and the way they understand and live by them – to the surrounding world. They work hard offering shareholders, customers and employees balanced opportunity.
We especially like the fact that Jyske employees are not paid bonuses. No multi million pay outs are in the system that might temp staff to distort earnings or take undue risks.
Here is how you can apply for this program.
To start as a Introducer, there is first the compliance process with Jyske Bank.
Once that process is complete, our IBEZ system helps educate and assist Introducers.
First… once a Introducer has been approved by JGAM, and the Introducer has completed one of the online courses above and attended one of our international investing and business seminars they can attend an exclusive training seminar at our farm.
We have a…
seminar hall where…
unless the group grows too large, we’ll meet. We’ll have lunch on the deck looking over Little Horse Creek.
JGAM and our company conduct this one day intensive training for agents the day after each International Investing and Business seminar.
The first such seminar will be conducted Monday, October 10, 2011 immediately after our October 7-8-9 International Investing and Business Seminar in West Jefferson, North Carolina.
Part of the JGAM program is designed so we can assist Introducer by referring readers in their locale to them. So for example if a referrer is in Miami, we will send special emails to our readers in that area, help organize mini seminars… etc.
We can zero in as close as 20 miles to a location so for example we can send a separate email to every reader within 20 miles of the address of an Introducer. And although we won’t release the names in that area, we can send them a note of the opportunity.
We will also provide a Introducer communication forum and update training as well as portfolio and investing ideas. We have general plans at this stage but find the best way to develop systems is to refine through action. We expect our beta program this year to clarify how we can best help our readers become referrers and how we can help them succeed.
Step one is to start the compliance process with JGAM. Thomas Fischer can send you the Introducer Questionnaire and Terms of Business.
Thomas Fischer’s email is email@example.com
This will begin the process of establishing a relationship with JGAM. Once this relation is approved and verified, then you will be able to enroll in the referrer training.
You must complete one of the online business development courses above and attend an International Business and Investing Seminar to be eligible for the October training.
All of our readers are invited to enroll in an Online Course and our International Business and Investing Seminar at any time.
Satisfaction Guaranteed. Three Guarantees.
There is no guarantee that JGAM will approve your application as a Introducer just because you enroll in the seminar or take the online course so we make two special guarantees.
First Guarantee. Regarding the online business course. Enroll in this course. Take it and if you are not satisfied for any reason within 30 days… let us know and we’ll give you a full refund.
Second Guarantee. Enroll in our October 7-8-9 International Business & Investing Seminar. I’ll send you a recording of the June seminar now so you better understand what these seminars are and how they help you. If you are not happy with what you hear, let us know within 30 days and we’ll give you a full refund. You keep the recorded seminar as our thanks.
Third Guarantee. Your earnings potential has this guarantee. First, any time between now and October… before you attend the International Business and Investing seminar if you fail to qualify as a JGAM Introducer or change your mind before attending the International Business and Investing seminar you can ask for a full refund.
Enrollment for our October 7-9 North Carolina Course click here for details.