Chart of the week
The U.S. now has a breadline of 45.8 million people. Not only is this a new record, but the most recent month report added 1.1 million people, the largest single monthly jump since 2009.
Predictions Coming True
Last year FutureMoneyTrends.com predicted that currencies, like the Hong Kong Dollar, would eventually come under pressure to end their U.S. dollar peg. Though there has been no official word from Hong Kong, yesterday a story out of Sydney stated that there is mounting pressure from financial strategist who believe the current pairing is outdated and decoupling is only a matter of time. HSBC's Chief Executive Stuart Gulliver said that Hong Kong should consider moving the peg to a basket of currencies instead of the U.S. dollar. Right now Hong Kong is experiencing high price inflation due to their dollar peg, something that we believe will eventually force them to de-peg their currency.
FutureMoneyTrends.com is following these types of trends closely as they will help us assess how much longer the dollar will be the world's reserve currency. Already we are seeing nations get their ducks in line for a post dollar world, with many Asian nations shifting their foreign-reserve currencies out of the dollar and into physical gold. South Korea recently reported that they purchased gold for the first time in 13 years, joining other central banks in buying gold in 2011. China, India, Russia, Thailand, and Kazakhstan are among others who have been loading up on the yellow metal that the western media has been calling a bubble for the past 10 years.
China, the largest foreign creditor, criticized the U.S. for failing to ensure borrowing is reined in during the recent debt ceiling increase. China currently holds over 1 trillion in U.S. IOU's and is probably getting a little concerned about the U.S. borrowing over 40 cents for every dollar we spend. China's central bank said that they would be "closely observing" the implementation of the new deal. Well, considering that the D.C. gimmicked math is projecting 4% GDP growth in order to have the size of revenues and cuts they headlined, FutureMoneyTrends.com has ZERO expectations that 99% of the headline cuts will ever happen.
Harvard economist calls for more inflation to cure the economy
Ken Rogoff, another economist that didn't see the most obvious contraction since the last depression, is now calling for inflation to fix the economy. He thinks that inflation is an economic cure and that the reason previous stimulus hasn't worked so far is because it simply wasn't big enough. He is actually quoted saying, "inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery." Rogoff clearly shows that he does understand how inflation hurts people, what he doesn't understand is that in order to have a real sustainable recovery, the U.S. and its citizens will have to stop borrowing from future generations in order to live rich today.
What's the end game? How do you ever stop constant inflation if you make the economy completely dependent on it like it is now? More inflation, theft, and fraud is not the answer to America's economy.
Is the new Super Congress Constitutional?
Watch Judge Napolitano explain just how outrageous this new super congress is that was included in the debt ceiling bill. Our way of government has literally been changed without a peep from the main stream media, absolutely disgraceful in our opinion.
Gold
FutureMoneyTrends.com believes that in the short term, over the next 1 to 12 months, a lot of wealth is going to be flooding into gold. Those that were looking to other fiat currencies for a safe haven have the potential to get burned as central banks around the world are coordinating a massive devaluation of all currencies.
Though we doubt it will go through, right now the Swiss National Bank is debating on whether or not to place a currency peg against the Euro. The Swiss National Bank has clearly injected this idea into the main stream as every Swiss news agency is covering it as their #1 story. In our opinion, this is currency suicide for the Swiss, yet this is now a real possibility. Just two weeks ago the Swiss cut interest rates in order to weaken their currency, so already investors have seen that running to the Swiss may not be the right answer.
FutureMoneyTrends.com believes that the rush to gold will soon start once gold breaks $2,000 per ounce. It is very possible that gold mania in Europe and Asia will breakout quickly pushing gold up another $500 in a very short time period. IF the Swiss were to peg themselves to the Euro, we believe this could be a major catalyst for a HUGE move up in gold. Imagine all of the investors who jumped the Euro ship looking for safety only to find themselves tied to the Euro again, these people will almost certainly go to gold. The fact that they are in the Swiss Franc already tells us what they think about the dollar, so it is highly likely that big money that was in the Swiss Franc for the long term will move into gold sending the price over $2,000 per ounce. You also have to consider what would happen if another major news event happened, safe haven fiat currencies would pretty much be nonexistent and investors would have no choice but to go into gold accelerating all bullish gold price predictions even by hard core gold bugs.
Other catalyst to push gold higher in 2011
- Super Congress Success in Cuts or Failure (we're betting on the latter)
- PIIGS
- Quantitative Easing 3(QE3)
- Market Collapse Prior to QE3 Being Announced
- Bank of America (BAC) Filing Bankruptcy, Being Broken Up, or Bailed Out
- The Acceptance that the U.S. is Still in Recession and that Bernanke is out of Conventional Ammo
- Black Swan Event
What the Hell is going on with the Stock Market?
Look, pure and simple without quantitative easing, the stock market is screwed. We are literally one story away from a full blown meltdown. The fundamentals for the economy post quantitative easing are a disaster. Protecting yourself from a market downturn and keeping some opportunity cash to the side should be everyone's top priority.
Think about how a second wave could look if we have some type of Lehman Brothers moment. In 2008, we had 27 million people on food stamps, today we have 46 million. Unemployment is higher, the duration for the unemployed is at a record, and in order just to pretend we have a functioning recovery, the government is borrowing over 40 cents for every dollar we spend.
We are NOT investment advisers, but we do want to disclose that our chief strategist currently owns the following options, Citi Bank (C) Jan12 $30 Puts, Bank of America (BAC) Jan12 $6 Puts, S&P 500 (SPY) Jan12 $119 Puts, GLD Jan12 $170 Calls, and SLV Jan12 $39 Calls. Options are NOT for anyone who can't accept HIGH RISK, options are a BET that something could go up or down in a specific time period. Most options expire worthless and are for professionals only, please do NOT invest in options without educating yourself and speaking with a licensed professional. Our chief strategist has been in and out of these trades for the past 4 weeks and will continue to trade them as the market moves.
The reason we are disclosing these current positions is because we are very concerned about the risk of another market crash. We believe that to a certain extent the FED wants/needs a crash prior to unleashing another major dose of QE. Only this time, the fiat currency system itself will be on the line.
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