The greatest wealth transfer in history has already begun and the next
crisis will only accelerate the process. As the printing presses
continue cranking out more and more money, looking forward to a time
when the markets pause or another economic crisis consumes the world is
an issue we all should think about. How much wealth will escape the next
large financial reset is very
important because it will set the bar that determines the rate of
inflation or deflation in coming years. If you believe we did not solve
many of our financial problems after 2008 but merely masked them with a
huge amount of newly printed money you are likely to embrace this
concept.
The Shell Game Of Wealth Transfer |
Some items such as a tool
hold "utility value" and its value may be based on how much work it can
perform or the revenue it can produce. Replacement cost, supply and
demand, and factors such as whether something can spoil or might grow
obsolete over time also help determine its value as a place wealth can
be safely stored. The term, safely stored in this case also includes placing it out of the reach of governments' ability to tax it or make it illegal to own.
Defining wealth is one thing but
it is important to actually delve into its nature to truly understand
just how elusive it can be. Wealth is defined as the abundance of valuable resources or valuable
material possessions. An individual, community, region, or country that
possesses an abundance of such possessions or resources to the benefit
of the common good is known as wealthy. This means it might be preferable to live as a poor person in a
very rich and wealthy society versus a rich person in a poor and wretched place. This notion underlines the idea wealth is also relevant and measured by how it compares to that of others.
In the past I have written several pieces about subjects such as, writing off the rising amount of bad debt, how debt is like a mirage moving into the distance, how bad debt is resolved, and how precarious the vessels where we store our wealth can be, however, the crux of this article centers around what will or might be left after stress or war pushes the global economy to the brink or into total collapse. A great deal will depend on how such an event unfolds, this means what kind or type of value and wealth is the first to vanish.
I
will be the first to admit the answer is unknown, still in this
"exercise of the mind," I am asking you to consider and think about such
a scenario. The ugly truth is that there are many places your wealth could vanish
into and multitudes of ways it could seep away. Remember, wealth zips
across borders at the click of a button and just because you deposit it
with a local institution does not mean it stays in your community.
Don't Be Naive, They Do Not Care |
Returning to the subject of various kinds of wealth, today Bitcoin and other crypto-currencies and other "digital assets" designed
to work as a medium of exchange also fall into the category of wealth. They have joined pensions, annuities, and even investments in stocks and such as a store of wealth. Many assets fall
into the area of paper promises that are often recorded somewhere far
from sight or as a digital entry on a computer. These intangible stores of wealth based on faith have grown at a massive rate during the last several decades and were relatively minor players until recently.
Currencies, also known as fiat money, are also just IOUs or paper
promises. The idea of a currency free-society in my mind tends to break
the bonds that link us to wealth but that is for another post.
In the past I have written several pieces about subjects such as, writing off the rising amount of bad debt, how debt is like a mirage moving into the distance, how bad debt is resolved, and how precarious the vessels where we store our wealth can be, however, the crux of this article centers around what will or might be left after stress or war pushes the global economy to the brink or into total collapse. A great deal will depend on how such an event unfolds, this means what kind or type of value and wealth is the first to vanish.
Be Skeptical, Be Cautious, Get Smart! |
We
witnessed how wealth could be "transferred away" decades ago during the savings and loan crisis when
huge beautiful buildings were constructed in certain areas from wealth
transferred in from other parts of the country. Needless to say when the dust settled the big winners were the areas with the new buildings
and not those forced to pay for them when the loans used to build them
went into default.
Today some market watchers claim that the stock market is being held at lofty levels while the smart money is rushing to the exits. Today tens of trillions of dollars are sitting in offshore banking accounts in places such as the Cayman Islands. Today government and businesses are borrowing hundreds of billions of dollars each year by issuing bonds some that will not return investor's money for decades. Today homes, apartments, and buildings are being built, some poorly constructed, with loans guaranteed more or less by the American people. Today America's national debt stands at over 28 trillion dollars and is rising. Today currencies such as the euro and yen are even more fundamentally flawed than the dollar. I could do this a bit longer but I suspect I've made the point.
Today some market watchers claim that the stock market is being held at lofty levels while the smart money is rushing to the exits. Today tens of trillions of dollars are sitting in offshore banking accounts in places such as the Cayman Islands. Today government and businesses are borrowing hundreds of billions of dollars each year by issuing bonds some that will not return investor's money for decades. Today homes, apartments, and buildings are being built, some poorly constructed, with loans guaranteed more or less by the American people. Today America's national debt stands at over 28 trillion dollars and is rising. Today currencies such as the euro and yen are even more fundamentally flawed than the dollar. I could do this a bit longer but I suspect I've made the point.
We have all heard about how the Caymans have become a popular tax haven
among the American elite and large multinational corporations. This is
because there is no corporate or income tax on money earned
outside of its territory. This has made the Caymans especially popular
among hedge fund managers. I hate to blow a hole in the idea that you can safely tuck their money away in an offshore banking account, the reality is, we have no idea where all the money deposited in the Cayman Islands really
is. Banks do not just sit on deposits and keep them safe, they loan them out.
We must never forget the world is full of crooks, evil politicians, greedy bankers, and
that we have judicial systems that make true justice a rare commodity.
Returning to the focus of this article, the thing that is important is what or how much wealth survives an economic crisis and in
what form. That is because when that wealth comes out of hibernation it will soak
up all the tangible assets on the planet. This will be the
determining factor of whether we face inflation, deflation, or some
crazy mix of the two. Remember it is the nature of those in charge to
throw the masses under the bus when things go sideways.
The average person is foolish and silly if they expect to be protected when the next financial crisis hits. Those counting on a
stimulus check for survival will someday most likely find it will not
buy them diddly-squat. The shelves will be empty or the value of what
they receive will simply not be enough. The economic landscape we face following such an event
will without a doubt be shaped and depend on what wealth survives and
how much vanishes following a tsunami of defaults and /or a monetization
of debt where government debt disappears and inflation takes its place.
A word to the wise should be sufficient and cause any person prudent or
interested in protecting their wealth to consider the many ways wealth
can vanish and that it can without a doubt happen to you.
(Republishing of this article welcomed with reference to Bruce Wilds/AdvancingTime Blog)
Three (3) Economic Collapses in Two (2) Decades.
ReplyDelete2000 - Dot Com Tech Bubble Collapse
2008 - Bankster Mortgage Bubble Collapse (29 Trillion Bailout)
2020 - Everything Bubble Collapse (4+ Trillion Bailout)
Bank Fines, in Billions - Bank of America $76.1 JPMorgan Chase $43.7 Citigroup $19 Deutsche Bank $14 Wells Fargo $11.8 RBS $10.1 BNP Paribas $9.3 Credit Suisse $9.1 Morgan Stanley $8.6 Goldman Sachs $7.7 UBS $6.5. For Fraud, Corruption & Manipulation of Financial Markets.
Leaving the Same Liars & Thieves in Charge After Every Collapse Has Not Worked Out Well For Everyone.
We should not forget the rest of the world is engaged in the same game. Japan's bubble burst decades ago and that also, "has not worked out well for everyone."
DeleteThe next Reset is already underway and no matter what a person's wealth really is, it doesn't matter because the Governments will have their hand in your piggybank. Klaus Schwab from the World Economic Forum has convinced world leaders that we need "The Great Reset" because the debt can never be repaid.
ReplyDeleteSo instead they plan to checkmate the masses by outlawing "cash" and implementing a global digital currency". Thereby you have really no control over your wealth, the government along with the banks will control your wealth. I would not doubt governments will seize as much assets when The Great Reset is fully underway. Bank accounts, Money, Gold, Silver, Art, Antiques will all belong to the government because according to the World Economic Forum's manifesto, Klaus Schwab says "you will own nothing, and you will be happy".
"some catastrophic and catalyzing event" would be handy for "The Great Reset", Rod,a global i-9/11 ?
Deletehttps://www.sberbank.com/news-and-media/press-releases/article?newsID=a05b1950-213f-404e-a4c2-a39fbb41a879&blockID=7®ionID=77&lang=en&type=NEWS
https://carnegieendowment.org/2020/07/08/deepfakes-and-synthetic-media-in-financial-system-assessing-threat-scenarios-pub-82237
I'm all in physical gold, not because I love it, but by default.
ReplyDeleteEverything else just seems overvalued and garbage.
I had my pension wiped out in 2001 and then again in 2008, so that's now in gold too.
Crypto amazes me as they say they 1st one invented is the best !!!
It the only asset I can think of that won't devalue to zero.
Any suggestions on how I diversify Bruce?
If you live in a city, consider buying a "vacation" house in a rural area, but within driving distance, on an arable piece of flood-proof land large enough to support your loved ones should you be forced to go off the grid. This will give you some protection from inflation, depression, and major disasters.
DeleteIn time of national crisis, will the government/financiers confiscate gold 'for the public good' and throw you in jail if you hide gold ?
ReplyDelete