I’d like to start with a warm hello to all of our friends and family wherever you may be in the world. It sure has been a LONG time since I’ve written a blog entry here. Since we’ve been in Southern France since August 2011, I’ve just really revelled in being in one place and not moving around as we had for the previous 12 months. Adventuring around the world is great, but it sure can be exhausting. Just as a precursor to this blog entry, FYI I’m not going to talk about travelling. I’m going to talk about something else that interests me, namely the world and money. And if you have any money in your wallet or bank account, what I’m going to say is likely of great importance to you as well. Even if you think the topic is boring, I urge you to just hear me out.
Jenn and I are going to look back on this time in France with great fondness. If you don’t know yet, we are returning to Canada at the end of June 2012 and will be settling down into our nicest property. Jenn will be going back to work as a nurse and I’ll be taking back my rental portfolio from my property manager. It’s kinda funny actually, since our new home will be half the size of our big house that we sold to travel. It lacks a theatre, exercise room, and even an office for me, but that will be fine. If somebody told me 3 years ago to sell our big beautiful home and move into this smaller home, I’d have told them where to go. But now, after having travelled and having had our perspectives widened immensely, as well as having taken on a minimalistic lifestyle so we are not surrounded by stuff, we know what we truly need to live.
Jenn and I have been really concerned with the global economy for the past several years and even more so over the past several months. You see, in my line of work, while waiting for a trade setup to manifest itself, I read a BUNCH of stuff online. And so my education level on what is going on in the global economic realm has risen dramatically. I’ve downloaded and read 3 separate books on the subject in the last couple of weeks, in addition to my reading online. And here’s the summary… We are in unchartered waters in the global economy. To say that things are worrisome at this point in time is equivalent to the captain of the Costa Concordia telling everyone that it’s only an electrical fire. Things are really bad.
Ok, so to start with, I’ve got a scenario for you. Let’s say that in addition to paying your annual income tax, the government reached into your bank account every year and confiscated 2% of your money. They did it with barely a notice from you. If they did it year in and year out, you’d just chalk it up to the increasing cost of living. You don’t like it, but there’s nothing you can do about it. Now let’s change the deal a bit, and say that they actually didn’t steal 2% from you every year. Let’s use the real number. Well, as of May 2008, the Canadian government was actually stealing 13.2% from your bank account every year. Think you’d be as laissez-faire with that? I can tell you for a fact that when Jenn and I returned from our 7 months gallivanting around the Med in 2011, we very much noticed how groceries had gotten more expensive in Edmonton compared to when we had left 7 months earlier. It was rather stark. But the reality of the situation, and I didn’t know this at the time, was that it wasn’t that the food had gone up, it was that our money had gone down in purchasing power.
See, I was born in 1976, a full 5 years after the governments legalized this stealth tax, so my entire life I’ve been robbed by the government, and if you were born after 1971, this is all you’ve known too. And the mechanism that they use is called inflation. It truly is ingenious on their part and we are the frogs in the pot, not noticing that the pot is on a burner. We read about inflation, and the Bank of Canada’s mandate to keep inflation around 2%. But while the ‘official’ mandate is 2%, the real inflation is concealed and not reported. The reason being is that there would be hell to pay at the voting booth if that number got into the headlines.
And I don’t mean to sound all conspiracy-theorist and say that the government is out to ruin us. It’s just how the system was designed, plain and simple. It is a requirement of how money comes into creation, and if you don’t know how money comes into being, then you might want to go spend some time on YouTube learning how what we call money is in fact one gigantic Ponzi scheme. Here’s a good place to start: http://www.youtube.com/watch?v=AgKFLk9xffA. Bernie Madoff wasn’t the biggest Ponzi schemer in history, not by a long shot. That trophy is reserved for the central banks and the governments.
We are entering into the Third World Currency War. The first two happened in the 1900s, just like WWI and WWII. But things are different now because for the first time in human history, no currency in the world is backed up with gold. Everybody knows that WWIII, if it ever happened, would wipe out the human race, so nobody is willing to pull that trigger. But they are willing to pull the trigger of the next currency war. And this one is going to be a doozy.
Just like a war fought with guns and bombs, the civilians are going to be the casualties. The war-mongering politicians, bankers and generals are going to be holed up in their bunkers, eating caviar, while people up on the street are getting wiped out.
Central banks essentially have only 2 weapons: interest rates and printing presses. Interest rates globally are in the toilet, so they can’t realistically go any lower. That leaves the money printing press as their only effective weapon. And they are using it at a furious pace. The USA launched their first salvo against China and the world with their QE1 program. Quantitative Easing is politi-speak for printing money, plain and simple. And China responded by printing the same amount of money as the States did. See, China has their yuan pegged to the USD, and the only way to maintain that peg is to print at the same rate that the Americans do. Then the USA launched its next missile, QE2 and China responded in kind.
Meanwhile, prices for everything that people need to buy are going up, and at a pretty rapid rate. So they are seeing the value of their savings and money getting wiped out due to these reckless war-mongers. That was the basic cause of the Tunisian revolution – prices for food were getting out of hand and people couldn’t afford to feed their families anymore, because there were some lunatics on the other side of the world starting a currency war. And the scary thing is that they are not going to stop. In fact, they are just getting started, to the detriment of the entire population.
Since we have come to realize all of this, Jennifer and I have decided to do the equivalent of dodging the draft, like the Americans who fled the States and ran to Canada to avoid the Vietnam conscription. We are selling a large chunk of our rental properties, and taking all of that money and buying gold and silver. Then the crazies at the helm of the governments and central banks can do their thing, and it’s not going to negatively impact us. We’re checking out of the war.
People without precious metals or other hard assets like land or properties are going to get destroyed financially, as they see their life savings obliterated. Holding your wealth in a bank account, a GIC, the stock market, or whatever, is, in my humble opinion, financial suicide. We’re not interested in fighting anybody’s war, but the sad thing is that the majority of the population are going to, and they don’t even know it.
Here’s a great book about it called Currency Wars: The Making of the Next Global Crisis.
Here’s another one called Rich Dad’s Advisors: Guide to Investing In Gold and Silver