A Global Analysis by Brian

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

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11 Responses to A Global Analysis by Brian

  1. Florian says:

    You are right about what is going on. But I’m not sure precious metals are the solution. USA gov. has confiscated people’s gold in the past and it will not hesitate to do it again, due to “extreme circumstances”. Governments/politicians/bankers will not hesitate to confiscate, if it fits there purpose of maintaining the status-quo.
    I think a house with land, access to running clean water, food/water supplies, medicine supplies, knowledge, skills, strong family connections, being part of a community, guns and ammo, all this can give you a better chance. There are no easy answers. And no guarantees.
    Good luck!

  2. Brian, you make some very good points and I am glad you are speaking out. “Quantitative Easing” was the euphemism I was trying to remember in our discussions last month. I remember the U.S. Government was launching this just before we left for Europe. Our personal dilemma has been where to invest in such a wacky global climate. We are almost finished watching “The Crash Course” and I appreciate your pointing out this video. When you realize the hockey stick is our future, it makes gold a more reassuring investment. This post is a wake-up call for everyone to start paying attention. Susan is right, it’s time to get educated. Cheers!

    • briansmeenk says:

      Good to hear from you Mark. I was going through a pretty good awakening during the time you guys were here, hence my talking your ear off all the time. 😉 Glad you watched that video. Gives you a sense of why things are moving so fast lately.

  3. Yes, indeed! I have been talking about this for a while, but few listen. I saw this coming for some time and it is one of the main reasons we sold our home at peak in California in 2005 and began our family world traveling lifestyle. We are REALLY happy that we mostly got out of the dollar then and bought precious metals when they were low.

    Jim Sinclare is one of the smartest folks in this area.

    It is a crazy world today and I am afraid will get crazier. That said, i am still an optimist and know that there is also more light on the planet than ever before so good things coming too!

  4. That post sounds a bit like Glenn Beck.
    Talking of gold bugs. Which government has the largest global gold holdings?

    • briansmeenk says:

      As far as I know the USA does, but nobody really knows what they have in Ft. Knox since the accounting practices that report the government’s gold reserves are very shady. China, Russia, and India are ramping up their purchases though. They know the demise of the dollar is coming, in fact they’re helping it along the best they can.

      As for whether I sound like Glenn Beck or not, I have no idea. This is my own independent research and conclusions, and understand that what I’ve written here is perhaps just 2% of why I think what I do. There’s a ton of other things going on that align with my bias. I’ve been uneasy for 4 years now, but I’ve finally connected the dots, and this is the picture I think it makes. I might be wrong though. Do your own due diligence.

  5. Susan says:

    Brian, we feel the same way, but haven’t had the time (or made it a big enough priority) to invest in educating ourselves on the “how” of buying precious metals. But we know that soon, there will be NO time left for learning and we’re not terribly fond of drowning in the insanity of this currency war.

    It is odd that, when we talk to people back in the US about this, they don’t seem to see it. Maybe there’s something about venturing outside of what you’re used to and being able to observe your home culture that makes you realize how out of control things really are.

    If you have any resources for learning how to buy precious metals, we’d love to hear about them. For us, we’re trying to diversify our income streams, adding more ways to bring in money from different segments of people, through digital products, services, teaching English as a 2nd language in countries that are largely unaffected by the mess in the US, etc.

    • Hi Susan, I just added some link to the books I’ve been reading. They have rocked my world.

      As for people back in the States who don’t see this yet, that means there is still time to prepare, but nobody knows when or how quickly that window will close. However, when it does eventually close, it will get ugly pretty quickly I think.

      • Susan says:

        I was wondering if you’d mention Kiyosaki. We first listened to the audio version of Rich Dad, Poor Dad back in 2006. Eye opening, to say the least. Guess he’ll be our crash course teacher, too!

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