Mish didn't write this article I received but could have.
Deflation Survival Briefing
>
> with Martin D. Weiss and Jack Crooks
>
> Martin Weiss: Jack, in this discussion, I will focus on the dangers and
> protective strategies; you can focus on the profit opportunities.
>
> Jack Crooks: That makes sense, but I think it's pretty obvious what the
> dangers are.
>
> Martin:
> Specifically, you're referring to .
>
> Jack: Losing money. Losing a lot of money. Deflation means most asset prices
> go down. When asset prices go down, anyone who owns those assets loses
> money. It's that simple.
>
> Martin:
> What most people don't seem to grasp is how much money - the sheer magnitude
> of the losses. But the Fed just released the numbers, and I want to show
> them to you. I want you to see for yourself the amazing drama that literally
> bursts from these pages.
>
> On the Web, just go to Flow of Funds, pdf page 113. From this table, I've
> pulled out the main numbers to walk you through this step by step, because
> it's probably the most important set of facts you've seen - or will see -
> for a long time:
>
> The Fed tracks five key sectors that go into household wealth: real estate,
& gt; corporate equities, mutual fund shares, life insurance and pension fund
> reserves, plus equity in noncorporate businesses. Now let me show you how
> the wealth destruction is spreading throughout the U.S. economy.
>
> First quarter 2007: Every single wealth sector is still growing, except one
> - real estate. This $53 billion loss in real estate is a time and place that
> will go down in history as the great turning point of our era.
>
> Second quarter 2007: Another $190 billion in real estate wealth destroyed.
>
> Third quarter 2007: Households suffer a whopping $496 billion in losses -
> nearly 10 times as much as in the first quarter.
>
> Fourth quarter 2007: The wealth destruction spreads to nearly all other
> sectors. Households lose $708 billion in real estate, the most in history.
> Plus, they lose $377 billion in stocks, $145 billion in mutual funds, $265
> b illion in their life insurance and pension reserves.
>
> First quarter 2008: The carnage deepens. Households lose $911 billion in
> stocks, $297 billion in mutual funds and $832 billion in insurance and
> pension fund reserves. Plus, the losses spread to the last major sector,
> equity in noncorporate businesses.
>
> Second quarter 2008: The Bush economic stimulus package kicks in, and it
> slows down the pace a bit. But the hemorrhaging continues. Not one single
> sector recovers.
>
> Third quarter 2008: Earth-shattering losses across the board, with
> households losing .
>
>
> ANOTHER $647 billion in real estate
> $922 billion in corporate equities
> $523 billion in mutual funds
> $653 billion in insurance and pension fund reserves
> $128 billion in noncorporate businesses
>
> Grand total: Nearly $2.9 trillion in losses - the worst in recorded history.
>
>
> Grand total lost over the past year: $7.7 trillion.
>
> Jack: And this is not just a bunch of numbers. It's a hard-nosed reality
> that almost everyone is up against.
>
> Martin:
> Absolutely! At the peak of the housing boom, one of our associates had his
> home appraised at $1.4 million. Three weeks ago, he had it appraised again
> and it was down around $700,000. That's a 50% decline. And it's not just the
> high end of the market. In May 2005, another home in our area sold for
> $175,000; now it's listed at Realtor.com for only $64,000.
>
> Jack: People think that since home values have already fallen so far, they
> must be near a bottom.
>
> Martin:
> I don't agree with that view. Most of the price declines we've seen so far
> merely represent a recognition that the peak prices of the mid-2000s were a
> fantas y built upon "Frankenstein Financing" - wildly speculative credit
> terms such as option ARMs and liar loans. The hard-core declines in housing,
> driven by basic things like recession and unemployment, are just now getting
> under way.
>
> Jack: How much further do you see home prices falling?
>
> Martin:
> My personal opinion is that that over half of the declines are still ahead.
> That applies not only to housing, but also to commercial properties; not
> only to real estate, but also to stocks and other assets. Consumer prices
> just began to fall in October. Outright contractions in the economy are just
> now getting under way. Deflation is still in its early stages. The wealth
> destruction has a long way to go.
>
> Jack: You call this wealth destruction and I don't deny the validity of that
> term. But another way to describe it is rampant deflation. Deflation in t he
> value of real estate and other investments, deflation in energy, deflation
> at the car dealer and deflation at every mall. In each and every sector that
> you've described, the U.S. dollar buys more.
>
> Martin:
> That's the positive side of the story. But whatever you call it, these
> numbers don't lie. You can see with your own eyes that it's massive and that
> it's spreading throughout the entire economy.
>
> Jack: Martin, all this raises some urgent questions in my mind and probably
> in the minds of our readers as well. First, can the government offset this
> massive destruction of wealth with more bailouts, more Fed actions and
> gigantic economic stimulus packages?
>
> Martin:
> They can buy some time or they can slow down the process temporarily, as
> they did in the second quarter of 2008, for example. But still, my answer is
> a flat NO! Not even Washington can print enough money fast enough to halt
> this deflationary spiral; it's just too huge. And all the printing press
> money in the world won't do much if it's not lent or spent.
>
> Bottom line: No matter which companies Washington bails out, this is a house
> of cards. It's coming down. And you must get out if its way.
>
> Jack: Still, a lot of people have big expectations for President-elect
> Obama's stimulus package starting next year.
>
> Martin:
> The highest estimates for the Obama stimulus package are $1 trillion. But
> even if it's that big, it's still small in contrast to the wealth
> destruction we're already seeing. And it's going to take a couple of years
> before all of that money reaches Americans. By that time, trillions more in
> wealth could be lost.
>
> Jack: Every economist I read likes to leave some wiggle room for future
> butt-covering, just in case they turn out to be wrong. But you're not
> pulling any punches, are you? Why is that?
>
> Martin:
> It's not needed in this situation - because of the sheer enormity and speed
> of the wealth destruction: $7.7 trillion just through over the past year. In
> contrast, the Trouble Asset Relief Program (TARP) is $700 billion. So these
> losses are already 11 times more than the entire bailout program.
>
> Let's compare how much is being lost vs. what the government is doing to
> offset it. Here's the progression we just saw:
>
> $1.5 trillion lost in the fourth quarter of 2007
> $2.7 trillion lost in the first quarter of 2008
> $630 billion lost in the second quarter of 2008
> $2.9 trillion in the third quarter
>
> Now, let me demonstrate why the government's efforts are unable to offset
> this wealth destruction. Congress has a uthorized $700 billion for TARP. But
> the Treasury Department reports that in the fourth quarter, only $330
> billion has been committed so far.
>
> Jack: Committed or actually disbursed?
>
> Martin:
> Committed.
>
> Jack: The ol' check-in-the-mail routine, eh?
>
> Martin:
> Yes. But let's assume the $330 billion is already at the banks. And let's
> say that in the first quarter of 2009, they are able to disburse all of the
> rest. That's still minuscule in comparison to the wealth destruction.
>
> Jack: Meanwhile, the wealth destruction continues.
>
> Martin:
> Right. We don't know how much. But let's assume the wealth destruction does
> not decelerate or accelerate. Let's just assume it continues at the same
> pace.
>
> Here's what it would look like. Moreover, most of the money being funneled
> to the banks is no t reaching consumers and businesses. Instead, it's sitting
> idle at the banks, to rebuild their capital, to try to offset all the losses
> they've sustained.
>
> Jack: How much of the TARP money are the banks actually lending out?
>
> Martin:
> We don't know.
>
> Jack: Isn't this why Congress is so ticked off, trying to find a way to
> force the banks to lend out the TARP money?
>
> Martin:
> Yes. But it's a tough sell. The banks are going broke. They're being asked
> to lend it to borrowers, who they fear will also go broke. So the resistance
> is great. But even if you assume that Congress can force the Treasury
> Department to, in turn, force the banks to loan out some fraction of the
> TARP money, it would still be only a fraction of the total TARP funds.
>
> Jack: A drop in the bucket.
>
> Martin:
> Absolutely! The huge red areas in this chart represent the tremendous power
> of deflation. The small black areas represent the impotence of government to
> offset the deflation.
>
> The power of deflation is hundreds of times larger than the government's
> ability to counteract it. This is why the U.S. government was not able to
> prevent deflation in the 1930s. And it's also why the Japanese government
> was unable to prevent its deflation in the 1990s.
>
> Jack: Still, most people think the government can just print more money at
> will. They're now talking about a total bill of $8.5 trillion. Your numbers
> don't seem to account for that.
>
> Martin:
> Because those bigger numbers are almost entirely guarantees and swaps - not
> net new money added to the economy. Plus, please bear in mind one more
> thing: The wealth destruction we've been discussing today does not include
> the losse s by financial institutions, corporations and governments.
>
> Jack: Good point. But let me go to the second major question I get from
> readers: What's causing this and when will it end?
>
> Martin:
> What's perpetuating the deflation is excess debts. Look. Debts were usually
> bearable. As long as people had the income to make their payments - or as
> long as they could borrow from Peter to pay Paul - they could keep piling up
> more debt, and life went on. Deflation alone is also not so bad. It makes
> homes more affordable, college education more accessible, and basic
> necessities of life cheaper.
>
> Jack: But when you put debts and deflation together .
>
> Martin:
> That's when things fall apart! That's when you get not only wealth
> destruction but DEBT destruction.
>
> Jack: And we have evidence of that as well, I presume.
>
> M artin:
> Yes, undeniable, smoking-gun evidence. For decades, we've almost always seen
> more debt piled up quarter after quarter, year after year. But then,
> beginning in the third quarter of 2007, all that changed. For the first
> time, we saw massive debt liquidation - debt destruction.
>
> It started in the commercial paper market, where corporations issue
> short-term corporate IOUs to borrow in massive amounts: In the third quarter
> of 2007, instead of growing as it almost always has, commercial paper was
> being liquidated at a rapid pace. That was the canary in the coal mine.
>
> Jack: And now?
>
> Martin:
> Now the debt liquidation has spread: In addition to the liquidation of
> commercial paper, we're seeing massive debt liquidation in mortgages and
> corporate bonds.
>
> Jack: How big?
>
> Martin:
> The biggest ever in record ed history. Look at mortgages! The Fed reports how
> much in new mortgages are created each quarter at an annual rate. Ever since
> you and I were born, all we've even seen is net new growth in mortgages.
> That's how it was when we were growing up, that's how it was in recent
> years, and that's what we saw in the third quarter of 2007. See?
>
> Jack: $1,005 billion.
>
> Martin:
> Yes. Net net, after all mortgage paydowns, new mortgages were added at the
> rate of $1,005 billion per year. Almost the same in the fourth quarter of
> 2007.
>
> But then look: First quarter 2008 - $539 billion. Second quarter 2008 - new
> mortgages begin to vanish from the market. Yet, up until this point, we're
> just talking about a credit crunch.
>
> Jack: In other words, less new credit.
>
> Martin:
> Yes, and that's already a powerful deflationary force: Most people can't get
> mortgages. So they can't buy. Since there are few buyers, prices fall.
> That's when people think: "This is terrible. It couldn't possibly get any
> worse."
>
> Jack: But it does, doesn't it?
>
> Martin:
> Dramatically worse: In third quarter of 2008, the volume of mortgages going
> bad is so big and the volume of new mortgages being created is so small, we
> have a net decline in mortgages outstanding. For the first time in recorded
> history, we have a net destruction of debts in this sector. This is far
> worse than a credit crunch. It is a DEBT COLLAPSE, an unprecedented,
> unstoppable deflationary force.
>
> The same kind of debt collapse also hits corporate bonds. Third quarter of
> 2007 - no problem. New bonds are issued at the annual rate of nearly $1,481
> billion per year.
>
> Fourth quarter of 2007 - big decline, to $821 billion.
>
> Jack: Credit crunch begins to hit.
>
> Martin:
> Exactly. First and second quarters of 2008 - credit crunch hits even harder.
> Third quarter of 2008 - debt collapse strikes! It's the biggest net
> reduction of corporate bonds in recorded history, running at the annual rate
> of $755 billion (red bar in chart). Again, one of the most powerful
> deflationary forces of all time!
>
> Jack: So what's the next stage?
>
> Martin:
> A chain reaction of corporate bankruptcies.
>
> Jack: But it looks like they're going to save companies like General Motors
> and Chrysler.
>
> Martin:
> Even if they do, they cannot save hundreds of thousands of smaller and
> medium-sized companies that are going bankrupt all over the country . tens
> of thousands of municipalities and states running out of money . tens of
> millions of A mericans who have gotten smacked with the trillions in losses
> I've just showed you in the household sector.
>
> This wealth destruction and debt liquidation is classic; and despite all the
> government intervention, it is fundamentally very similar to the collapse we
> saw in 1929 and the early 1930s.
>
> Jack: But many people believe the 1930s Depression was caused by the failure
> of the federal government to fight the decline. This time, they say, the
> government is doing precisely the opposite.
>
> Martin:
> In reality, America's First Great Depression wasn't caused by what the
> government failed to do to stop it. Rather, it was largely caused by all the
> wild things the government did do to create the superboom in the Roaring
> '20s that preceded it. They dished out money to banks like candy. They let
> banks loan money to brokers without restraint. And they enc ouraged brokers
> to hand it off to stock market speculators with 10% margin.
>
> But if you want to see what happens when a government intervenes
> aggressively after a bust, just look at Japan since 1990. Japan lowered
> interest rates to zero, just like the Fed is doing today. Japan bailed out
> banks, brokerage firms and insurance companies, much like the Fed is doing
> here. Japan embarked on massive public works projects, much like
> President-elect Obama is proposing now.
>
> But it did not end the deflation. And it did not prevent their stock market
> from making brand-new lows this year.
>
> All it did was prolong the agony - now 18 years and counting.
>
> Jack: So precisely how much longer do you think the deflation will continue
> in the U.S.?
>
> Martin:
> Nobody knows. But it's clear that this is not a short-term situation that
> w ill be resolved in the foreseeable future. It could take years to flush out
> the bad debts and restore confidence.
>
> The key is the debt liquidation. That's the main engine behind the deflation
> and a major element in vicious cycles that are just beginning to gain
> momentum. Consider the housing market, for example. The more debts are
> liquidated, the more prices fall . and the more prices fall, the more people
> abandon their homes and mortgages, leading to more debt liquidation.
>
> This is what's happening all around the country right now - not only in
> housing, but also in every asset imaginable. These vicious cycles are like
> hurricanes striking every city and state in the country. Until they exhaust
> themselves, the deflation will continue.
>
> Like you said at the outset, deflation is falling asset prices across the
> board. Not just falling home prices, but fall ing prices on land and
> commercial properties. Not just stocks and bonds, and commodities, but also
> collectibles - art, antiques, stamps and, soon, rare coins as well. There
> may be some exceptions. But overall, unless you have some very convincing
> evidence to the contrary, you must assume the value of your assets are going
> down and going down hard.
>
> Jack: So what's a person to do?
>
> Martin:
> If you don't need something, seriously consider selling it. Real estate.
> Stocks. Corporate bonds. Even collectibles if you consider them an
> investment.
>
> Jack: Even if it has already gone down a lot?
>
> Martin:
> Don't look back at what the price was. Just look ahead to what the price
> will be after a massive deflation. You don't have to sell everything all at
> once at any price. Every time the government inspires a rally in the stock
& gt; market, use that as a selling opportunity. Every time the government
> stimulates some activity in real estate or in the economy, grab that chance
> as well.
>
> Jack: Suppose market conditions are so severe, there are no buyers. Then
> what?
>
> Martin:
> Then, you can afford to wait for a temporary stabilization or recovery.
> Markets never go straight down. And even in some of the worst markets, there
> are ways to sell most assets.
>
> Jack: What about antiques and art?
>
> Martin:
> For the first time in many years, you're seeing a contraction in major
> auctions sales. For example, annual sales of contemporary art at Sotheby's
> and Christie's auctions in New York and London are down 17% in 2008. In the
> two years before that, they doubled in sales. So that's not a huge decline
> yet. But it's a sign.
>
> You won't get peak pr ices. However, if you act swiftly, you can still sell.
> If you wait, you'll get caught. Ditto for stamps and rare coins.
>
> Jack: Gold is holding its value the best compared to the much larger
> percentages you cited earlier for other commodities. But I believe it's only
> a matter of time before gold succumbs to the deflation as well. What do you
> think?
>
> Martin:
> This is hard for a lot of people to accept, but it's also hard to envision a
> situation in which gold defies gravity for much longer. It's still a good
> insurance policy against governments that could run amuck. But I suggest you
> reduce your holdings to a bare minimum.
>
> No matter what, the key is to pile up as much cash as you possibly can. Then
> put that cash into the safest place you possibly can - short-term Treasury
> securities. You can buy them from the Treasury Department directly, through
> their Treasury Direct Program. Or for even better liquidity, I recommend a
> Treasury-only money market fund. Our favorites are Capital Preservation Fund
> and the Weiss Treasury Only Money Market Fund. There are many more to choose
> from and they all provide the same safety.
>
> Jack: Last week, there were some Treasury bills auctioned off at zero yield.
> Doesn't that discourage you?
>
> Martin:
> Not in the slightest. As long as your cash is in a safe place, the deeper
> the deflation, the more your money is worth. My last word: Just make sure
> you keep it safe!
>
> Jack: Martin, I'm going to assume that's my cue to jump in and take us
> beyond just safety and protection, so we can talk about turning this
> deflation into a profit opportunity.
>
> Martin:
> Yes, please do.
>
> Jack: There is just one thing that always goes up wit h deflation: The U.S.
> dollar! By DEFINITION, when the price of investments or goods and services
> goes down, the value of each dollar goes UP. That's the essence of
> deflation. And here's the key: When the value of the dollar goes up in the
> United States, it inevitably goes up abroad as well.
>
> Martin:
> Please explain that connection more specifically.
>
> Jack: Virtually everything that matters in the global economy - trade,
> commodities, GDP, debts - is measured in U.S. dollars. The dollar is the
> world's reserve currency. So just as we see domestically, when your dollar
> buys more, its value also rises internationally.
>
> Martin:
> There was a lot of talk about other currencies replacing the dollar as a
> reserve currency.
>
> Jack: Talk, yes; action, no. It never happened. And now, it's going the
> other way: Your dollars now buy more than two gallons of gas for every one
> gallon they bought just a few months ago. The dollar now buys three times
> more oil and copper than just a few months ago. Not just 20% more or 50%
> more, but three times more!
>
> We're seeing the same thing happen against currencies. The dollar is in a
> massive, long-term uptrend against the euro, the British pound and virtually
> every currency in the world. Yes, we've witnessed a temporary dollar setback
> in recent days, but it does nothing to change the big trend.
>
> Martin:
> It certainly does not change the deflation. But please give us specific
> reasons why the dollar is rising against currencies in particular.
>
> Jack: There are three big reasons. The main one is that, as I said, the
> dollar is the global measure of virtually everything. So when there's global
> deflation, the dollar is the prime beneficiary.
& gt;
> Look. We've had decade after decade of inflation and global expansion.
> During most of that period, the worldwide supply of dollars and dollar-based
> credit expanded dramatically. And those dollars became the key funding
> source of bubbles in nearly every major asset class - real estate, stocks,
> commodities, energy and metals. As the supply of dollars expanded, the
> dollar lost value.
>
> Now we have deflation and global contraction. So now everything is turning
> the other way. Despite the Fed's efforts to lower interest rates, credit -
> dollar credit - is drying up all over the world. The overall supply of
> dollars is contracting. So U.S. dollars are suddenly scarce and their value
> is going up.
>
> Martin:
> Still many people in the U.S. don't see that. They think: "If the U.S.
> economy is in so much trouble, isn't that bad for the dollar?"
>
> Jack: No, that's simply not how it works. A country's currency is never
> valued based on how well or how poorly that particular economy is doing in
> isolation. It's always measured against another country's currency. So it is
> always valued based on how a particular economy is doing relative to another
> economy.
>
> It's not the U.S. dollar vs. some other measure. It's the U.S. dollar versus
> the euro, the British pound, the Aussie dollar, etc. So the relevant
> question is never, "How well is the U.S. economy doing?"
>
> The question is, "How is the U.S. economy doing compared to the European
> economy, the U.K. or Australia?" In this environment, it's not a beauty
> contest. It's a contest of which economy is the least ugly . which leads me
> to the second reason the dollar is rising: The U.S. is winning the least
> ugly contest hands down.
>
> Martin:
&g t; Please elaborate.
>
> Jack: Europe's banks have lent more than $2.7 trillion to the high-risk
> emerging markets, and those emerging markets are being crushed by deflation.
> Europe's banks have big exposure to Hungary, and Hungary is collapsing. They
> have big exposure to the Ukraine and to Russia, which are also collapsing.
>
> Europe's economy is in much worse shape than ours. In Germany, export demand
> has vanished. So it's just now starting to accelerate downward.
>
> Worst of all, the Eurozone's governing bodies are a mess. You've got each
> member nation making its own monetary policy and each going off on a
> different course with its economic stimulus plans. For example, the European
> Central Bank wants to retain some semblance of moderation in its monetary
> policy. But the leaders in countries like Italy, Greece, Spain, Portugal and
> Ireland are scared. So they 're going to whatever it takes to try to prop up
> demand, no matter what the central banks says.
>
> Martin:
> It's adding political chaos to financial chaos.
>
> Jack: Precisely. These are the reasons the euro has been falling and,
> despite a sharp rally, will likely continue to fall - probably down to
> parity with the dollar, or lower.
>
> Martin:
> That's a huge drop - over 30% from these levels. What about the U.K.?
>
> Jack: Worse. Their housing bust is more extreme than ours. Their reliance on
> revenues from a sinking financial center - London - is far worse than ours.
> Their consumers have more debt than almost any other developed country.
>
> Martin:
> And the Australian dollar?
>
> Jack: Solid as long as commodities were going up . but a disaster with
> commodities going down! In just the last five months, the Australian do llar
> has lost 31% of its peak value. Other currencies tied to commodities are
> also getting killed: The New Zealand dollar is down 39% from its peak; the
> Brazilian real, 35%; the Canadian dollar, 23%.
>
> Martin:
> And going forward?
>
> Jack: Deflation means more declines in commodities. And the more commodities
> fall, the more these commodity currencies plunge. It's that simple.
>
> Martin:
> You said you had three reasons for the dollar's surge.
>
> Jack: The third reason is the flight to the center. Think of the world
> currency market as a solar system. The dollar is the sun; the other
> currencies, the planets. As the system expands, investors migrate from the
> core currency, the U.S. dollar, to the inner planets - currencies like the
> euro, the Swiss franc or the pound.
>
> And as the system expands even more, they migrate to the next tier of
> currencies, like the Australian dollar or the Canadian dollar . and then,
> still further, to the system's periphery - outer planets like the Brazilian
> real, the Mexican peso or the South African rand. At each step of the way,
> they take more risk with less stable economies, use more leverage, go for
> bigger returns - all fueled by abundant dollar credit.
>
> Martin:
> OK. What happens when the global economy contracts?
>
> Jack: Precisely the reverse. As the global economy begins to come unglued,
> they rush back to the center, creating a massive flight back to the U.S.
> dollar. They have no love affair with the dollar. They just see the
> peripheral economies going down and they dump those currencies. These are
> the first risky investments they sell, almost invariably switching back to
> U.S. dollars.
>
> The U.S. economy, despite all its tr oubles, is still the dominant world
> economy. Militarily, it's the only remaining superpower. Financially, it's
> still the world's capital. So it's natural that when investors are running
> from risk, they rush back to the dollar, bidding up its value.
>
> Martin:
> Is this true across the board, regardless of the currency?
>
> Jack: No. There's one notable exception: The Japanese yen. Japan is the
> world's second largest economy and also one of the world's largest sources
> of capital. So when the other currencies go down, a lot of that money goes
> back to Japan, boosting the yen.
>
> But the main point is this: The single most consistent consequence of global
> deflation is a rising dollar.
>
> Martin:
> So in the midst of all these bear markets, if you're looking for a big bull
> market .
>
> Jack: You've found it! It's the U.S. dollar. I think the U.S. dollar is in
> the early stages of a powerful bull market that could last for years. It's
> the single cleanest way to make windfall profits from the deflation.
>
> Martin:
> A year or two ago, you were betting against the dollar, and you were right.
> Now you're betting on a rising dollar. That's a big change.
>
> Jack: You're darn right it is! It goes hand-in-hand with the big sea change
> you've so clearly illustrated today.
>
> Martin:
> Can you explain to our readers how to go about betting on a rising dollar?
>
> Jack: There are several ways. You can place your bets in favor of the
> dollar, using instruments that are tied to the dollar index. So as the
> dollar index rises against other currencies, you profit directly.
>
> Or you can bet against foreign currencies. Remember, the flip side of a
> rising dollar is falling currenc ies. The more those currencies fall against
> the dollar, the more you make. I prefer betting against the currencies
> because that lets me choose the weakest of them all.
>
> Martin:
> What instruments do you use?
>
> Jack: I use revolutionary investment vehicles like currency ETFs [UUP] and
> World Currency Options.
>
> Martin:
> Before we get into this any further, can you give us full disclosure on the
> risks?
>
> Jack: All investments have risk. If the currency goes the wrong way, you
> lose money. But the advantage of the currency market is that it's divorced
> from the stock market. The stock market could be crashing, and it would not
> interfere with your ability to make large steady profits in the currency
> market. The U.S. economy could be sinking into a depression, and it would
> still not interfere with your ability to make nice large st eady profits in
> the currency market. No matter what happens in the global economy or the
> world's financial markets, there is always at least some major currency
> that's going up in value.
>
> Martin:
> Please explain that.
>
> Jack: Currencies are measured against each other. When one is going up, the
> other is going down, like a seesaw. Therefore, there's always at least one
> currency going up. There's always a bull market in currencies. I don't
> recommend them for all of your money. But at a time when nearly all other
> investments are going down, it's a great place to get away from the
> disasters and find a whole separate world of investment opportunity.
>
> Martin:
> A world that's far removed from those disasters.
>
> Jack: Exactly. I also think that it's THE ideal vehicle for average
> investors to profit from deflation and a rising dol lar.
>
> Martin:
> Thank you, Jack. And thank YOU, our readers, for joining us today. Let's
> talk again soon.
>
> Good luck and God bless!
>
> Martin
>
>
>
> |
