The first step is to stop wasting time and energy worrying about Democrats and Republicans. We need to focus on what we can do for ourselves, our families and humanity. The politicians, left or right, are not going to take care of us or even help us. In fact you can see below why our best interests are probably not perceived as theirs.
Government is a necessary evil, but the necessity does not eliminate the corrosive aspects of the democratic process that can afflict your health an wealth.
Based on this fact, since the 1970s, Merri and have focused on ways to help individuals protect themselves from the destructive aspects of government. There are over seven thousand pages at this posted over the past twenty plus years and the theme of most of them is is take care of yourself!
Our first efforts in the 1970s and 1980s were on how to invest globally for tax benefits, privacy and asset protection.
Later we specialized in multi currency (borrow low – deposit high) investing.
Then we focused on how to invest in real estate or have a second (or first non US) residence in other countries. Our main focus was initially on Switzerland, England and the Isle of Man. Later we took thousands to Belize, Mexico, the Dominican Republic and Ecuador. Plus we helped readers relieve some of the government intrusion in their lives by sharing ideas about living and investing in Smalltown USA.
Finally we focused on how to reduce dependence on the US health care system. Almost nothing can ruin one’s wealth faster than poor health.
The biggest step in fighting inflation, for most Americans, is to become and remain healthy so you are not drained by the very sick health care system.
This is why the only book I continue to market is Shamanic Health Secrets
Investing for inflation.
The next step to fight inflation is to position your assets so they are not all in US dollars.
No government, left or right, will look after your interests. We have to look after our investments and protect against the greenback’s loss of purchasing power. Here’s why the need to recognize the fallibility of the dollar is supported by a most fundamental part of nature.
Cooperation is the key. Humans have worked their way to the top of the food chain due to our ability to communicate in complex ways, even with strangers, at a distance. No other sentient species does this. This requires that we create hierarchies that are fabrications of our agreed imagination. For example the idea that we are Americans or British of Chinese etc. These are agreed fabrications.
These social economic fabrications require hierarchies to reinforce the fiction. The best type of short term, political-economic hierarchy humanity has created, so far, is the capitalistic democracy. The idea that each person within the hierarchy has a say in the construction and bolstering of the illusion seems to be most in tune with human nature.
But in democracies an essence of nature unravels the cooperation-competition balance.
See below one reason why I still hold onto this Ecuador property.
Cooperation is mankind’s big asset, but competition is a vital part of this mix of progress, because the cement of the hierarchy is the idea that the illusion we all agree upon can benefit everyone, if they participate by working within the rules of the hierarchy. The more they work, the more they benefit.
Life has a driving force, energy that passes through a chain from the sun to plants to herbivores, to predatory carnivores and omnivores to scavengers and back to the plants. This energy has two simple goals as it passes through every phase of the chain, to survive so it can procreate.
Yann Arthus-Bertrand in his documentary “Legacy” (available at Amazon Prime-I recommend it) describes this flow of energy nicely, “Ceaselessly circulating from one species to another through the networks of our ecosystems.”
The power in this energy has the specific goal to “hoard, eat, dominate and reproduce” and nature’s way of encouraging the survival of the fittest in this process is competition.
This competitive power in each of us means that nature only supports hierarchies as personal tools for personal survival and expansion. This power flows through every person, at every level of the system. This means that those who create and rule social systems, have a built in desire to dominate, which in a democracy means to remain in office.
This also means that the more competitive individuals within a society are the ones who tend to run the hierarchy.
Here’s the rub. The best way to remain in office is to give voters something for nothing. The way for a politician to accomplish this is to spend borrowed money on the most important voters behalf that someone else will pay off… later.
This rule applies to almost all politicians, left or right, and leads to the phenomenon that all political-social-economic systems come and go. The leaders from this November and the 2024 election will not suddenly make America great again. Quit worrying about who will be President next and be concerned about the fact that whoever is in power will try to create more debt which encumbers you and me and all Americans.
Later is here.
A huge part of the hierarchy problem is that money is the biggest social economic fabrication of all. Money is the grease that lubricates today’s hierarchies. All the debt created by the politicians erodes the power of this myth. The borrowing destroys the value of money. We call the destruction inflation.
See why I continue to hold gold coins. See more about how to hold precious metals at Asset Strategy International
Eric Roseman, CEO of ENR Asset Management, points out what this means in terms of investing in the September ENR Advisory Extra, a publication ENR sends to its larger clients.
The Inflation Swindle: Until Dollar Declines, Inflation-Hedging will Remain a Challenge
The bad news: Investors will continue to struggle in their quest to hedge out inflation risk until the American dollar goes down. The biggest inflation episodes in history have been accompanied by a falling currency, not a rising one. The dollars’ ongoing bull market is therefore an anomaly in an inflationary context.
The good news: The number of speculators and investors long the dollar remains near historic highs. Everyone and their dog, loves the dollar. This is already an old story with the dollar trading at its highest levels in 20 years.
With stocks and bonds suffering their worst year since at least 1970, investors are struggling this year as inflation and declining asset prices eat away at portfolios. The S&P 500 Index is down 17.6% and the Bloomberg Aggregate Bond Index is off almost 11%; this is the worst year for the traditional 60/40 stock-bond mix on record.
Even alternative assets like crypto, gold and silver, foreign currencies, and most residential housing (in real terms) have failed miserably to protect investors in the worst inflation since the early 1980s. U.S. inflation hit 7.6% year-over-year in July, down from 9% in June.
Though early, I have been arguing for a dollar bear market for the last few years. Since Nixon broke the gold link to the dollar in 1971, the USD has averaged a 5.5-year bull market cycle; this one is already twice that in duration terms from 2011 to 2022 (see chart above). Yes, other countries have mountains of debt and are plagued by their own set of financial problems. The markets know this. The EUR trades at par, the yen has collapsed to its lowest level since 1998, and the British pound — in the midst of a currency crash — fetches just 1.16 to the dollar. Yet the USD continues to get a strong bid because of the economic malaise everywhere else, including China and the perception that America is doing better.
The United States, according to Ruchir Sharma of Rockefeller International, currently owes the world a net $18 trillion, or 73% of U.S. GDP, far beyond the 50% threshold that has often foretold past currency crises. The misconception today is that investors are chasing dollars to shield against a bear market across most assets; this is true, but they are not net buyers of U.S. assets, otherwise markets would not be down in the double-digits in 2022. Instead, they are reducing risk everywhere and piling in cash, in USDs.
I suspect the next USD bear market will be the worst on record — far worse than the 1970s, late 1980s and after the dot.com bust in the early 2000s. And once the USD finally declines, inflation-hedging will be like throwing darts at the wall. A U.S. dollar bear market will lift foreign currency assets, boost commodities prices, digital assets, and gold and silver. That day of reckoning is coming for the dollar.
After years of being in the doldrums, much cheaper foreign assets will shine, including still cheap raw materials.
Got enough U.S. dollars? This is the time to reduce your exposure before the storm. For most individuals, the dollar represents the bulk of their net worth – and that is a bad idea. When the USD finally forms a secular peak in this cycle and declines again, investors will scramble to other currencies. Most of us cannot fathom a period of long-term dollar weakness, but the dollar has indeed been in a long-term downtrend for more
ENR Asset Management is one of the few SEC registered investment advisors that specializes in holding assets outside the US.
For details on ENR’s anti inflation investment strategy, contact Thomas Fischer at thomas@enrasset.com
Here’s what I am doing to fight inflation. I am adjusting my assets so they provide just the income I need, plus 10% extra to deal with the inflation that will still come.
Many of my assets are in tax deferred positions so until I draw income on them I have no tax consequences.
Mostly I want appreciating assets, real estate, top value non US dollar equities, precious metals. These assets and their compounding returns over the next decade can fight inflation as they offer double appreciation potential, from the equity itself and as a hedge against the US dollar.
I am selling some real estate I hold in all time high markets and investing the proceeds in good value non dollar equity market ETFs, taking a ten year view.
I am using iShare ETFs that invest in most of the top value developed and emerging markets below.
You can see more about the Top Value non US dollar markets here
We can see how these forces work if we examine the last three reserve currency nations that rose to become the leading global power and then saw their dominance fall.
From the 1500s to the mid 1750s, the Netherlands was the leading power. In the mid 1700s the British Empire took the lead and was not passed as the supreme power until around 1900 when the USA surged ahead until about 1950.
In the Dutch era, Amsterdam was the world’s financial center and the Dutch guilder became the world’s reserve currency. London and the British pound took over these roles as Britain rose. Then the US dollar became the world’s reserve currency in 1944 and was as good as gold (or silver) until Richard Nixon reneged on the American currency promise.
Each nation rose and has fallen because nature runs in a bell shaped curve and within every success lies the seeds of decline.
Growing wealth and power have generally come from a (or many) new innovation that helps one or two countries become a leading power in the world. Then the hubris of success takes over, the power declines and some new technology creates a new leading power.
The Bottom Line? Inflation is part of the system and we should focus our energy on dealing with the erosion of currencies rather than electing and expecting any government to solve it.
This does not spell disaster. There can be declines, but affluence can remain. The Roman Empire fell thousand of years ago but Italy is still a great place to live, for some.
Days of Dutch glory are long gone, but I have spent a lot of time in the Netherlands (I maintained an office and worked from there for years). I promise you, Holland is still a really great place to live.
The UK’s dominance has been in decline for over a century. I lived there for more than a decade and am there often. English life can be absolutely superb!
The trick is to live in a pocket of affluence and do something that makes you happy.
One final point, the system I use is dead simple. I buy iShare country ETFs that invest in the major indices of top value markets. I
Then I leave the investments alone! I don’t even look at their performance except once a month.
I continue to play at subsistence farming because its healthy, in tune with the times and I enjoy the process,
If you are my age or anywhere near, these are our golden years. There’s better things to do than rummage through the mountains of data, rumors, conjectures and such that are in the news to try and figure out what really is genuinely unpredictable.
That well know phrase for success grows increasingly meaningful with every year, “Keep It Simple”!
Go do something useful that you really love. That’s the ultimate step to success.
Good health and wealth to you. Gary
