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U.S. Dollar Debasement, The 100 Year Bust

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Posted by The Burning Platform

on Friday, 10 August 2012 07:26

debasement image002

“Debasement was limited at first to one’s own territory. It was then found that one could do better by taking bad coins across the border of neighboring municipalities and exchanging them for good with ignorant common people, bringing back the good coins and debasing them again. More and more mints were established. Debasement accelerated in hyper-fashion until a halt was called after the subsidiary coins became practically worthless, and children played with them in the street, much as recounted in Leo Tolstoy’s short story, Ivan the Fool.” – Charles P. Kindleberger – Manias, Panics, and Crashes


The Holy Roman Empire debased their currency in the early 1600s the old fashioned way, by replacing good coins with bad coins. Any similarities with the U.S. issuing pennies that cost 2.4 cents to produce and nickels that cost 11 cents to produce is purely coincidental. I wonder what the ancient Greeks would think of our Olympic gold medals that contain 1.34% gold. The authorities have become much more sophisticated in the last one hundred years. Digital dollars are so much easier to debase. The hundred year central banker scientifically manufactured bust relentlessly plods towards its ultimate conclusion – the dollar reaching its intrinsic value of zero.

debasement image004

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." – Henry Ford

Henry Ford made this statement decades before the debasement of our currency entered overdrive. The facts reflected in the chart above should have provoked a revolution, but the ruling class has done a magnificent job of ensuring the mathematical ignorance of the masses through government education, mass media propaganda, and statistical manipulation of inflation data to obscure the truth. Mainstream economists have successfully convinced the average American that inflation is good for their lives and deflation is dangerous to their wellbeing. There are economists like Kindleberger, Shiller and Roubini who have brilliantly documented and predicted various bubbles, despite being scorned a ridiculed by the captured mouthpieces for the oligarchs. But even these fine men have a flaw in their thinking. They can see speculative manias spurred by irrational beliefs and delusional thinking, but are blind to the evil manipulations of bankers, politicians, and corporate titans. They believe that humans with Ivy League educations can outsmart markets and through the fine tuning of interest rates, manipulation of the money supply and provision of liquidity through a lender of last resort, can control the financial system and avoid panics.          


......read much more HERE




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Currency

How to Boost Your Income Stream by 10%-Plus... in a Single Year

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Posted by Dividend Opportunities

on Wednesday, 08 August 2012 00:00

This simple move requires no extra effort... in fact, it happens automatically when you invest in these companies.

I've told you before about the enormous number of high-yielding stocks abroad. If you remember, my research team and I found only 17 profitable U.S. companies were paying yields of more than 12%... compared to 227 overseas.

Although the numbers fluctuate daily, that means roughly 92% of the world's highest yields are found outside of U.S. markets. To me the amount of high-yield international dividend-payers out there is one of the market's biggest secrets.

But there's another big potential benefit to investing in international companies that most investors fail to consider.

This simple move could make investors extra gains of 10% or more -- even in a single year. It doesn't require any extra effort... in fact, it happens automatically when you invest in international companies.

Here's how it works...

Say six years ago you took the trip of a lifetime to Australia. Back then, $1 U.S. bought you roughly $1.30 Australian. That means a hotel room priced at $100 Australian dollars only cost about $77 U.S. dollars, thanks to a favorable exchange rate.

 

But today, even though the U.S. dollar has seen some gains of late, in relative terms it has plummeted against most currencies -- including the Australian dollar. It now trades at a 5% discount to the Aussie dollar. So that $100 room in Aussie dollars will now cost you $105 U.S. dollars -- a36% increase, even though the hotel's rate didn't change.

What does this have to do with increasing dividends? Well, what's bad news for your vacation is great news for your international income investments.

Say you bought an Australian company five years ago that paid a dividend of 10 Australian dollars each year. Back then, you would have earned $7.70 in U.S. dollars after conversion.

But today, that same 10 Aussie dollar dividend would be worth $10.05 in the U.S... or 31% more.

The bottom line is if the U.S. dollar weakens versus other major foreign currencies, then your dividends will increase over time... even if the company you invest in keeps its dividend payment the same.

The best news is that despite a recent rally, I see the downtrend in the dollar continuing over the long-term. That will help investors looking abroad.

And I'm not the only one who thinks this:

"The dollar is enjoying a safe-haven status, but long run I'm not a fan of the U.S. dollar. Our country has too many problems."
-Dr. Allen Sinai, Chief Global Economist at Decision Economics, December 27, 2011

"The dollar rally is overdone."
-Axel Merk, President of Merk Investments, Jan. 20, 2012

"While I am now short-term bullish on the dollar, there is still dollar weakness in the long-term."
-Scott Mather, Managing Director for PIMCO, March 15, 2012

But it's not just dividends that benefit from a falling dollar when you invest abroad. Every dollar you invest sees the effects as well.

Recognizing this trend years ago -- and investing alongside it -- has already given international income investors a major boost.

You can see for yourself how the falling dollar has helped score some great returns in international markets...

Picture 4

This table makes it easy to see how a falling dollar actually helps... if you're invested abroad.

Notice that the New Zealand market actually declined over the past five years when measured in New Zealand dollars, but it's showing a gain for U.S. investors when you factor in the falling U.S. dollar.

Now keep in mind, if the dollar were to rally, the opposite would happen. Your returns and dividends would lessen by the amount the dollar strengthens. And while the dollar has rallied recently -- for a variety of reasons I won't bore you with today -- I think the U.S. dollar will continue to lose value in the coming years.

That gives income investors plenty of time to take advantage of this unique opportunity.

And in my opinion, there's no easier way right now to boost your profits. Especially since you can own many of the world's highest yielders without even leaving the U.S. markets.

For more on international dividend-payers, I invite you to watch my latest presentation. I've included names and ticker symbols of the 17 American companies that yield more than 12% (some as high as 19.7%) and several high-yield international plays. Visit this link to watch now.

Good Investing!


Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist -- Top Ten Stocks, High-Yield International

P.S. -- Don't miss a single issue! Add our address, Research@DividendOpportunities.com, to your Address Book or Safe List. For instructions, go here.

Disclosure: In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any "real money" model portfolio. Members of our staff are restricted from buying or selling any securities for two weeks after being featured in our advisories or on our website, as monitored by our compliance officer.



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Currency

Even Euro Counterfeiters Are Throwing In The Towel

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Posted by Wolf Richter via The Testosterone Pit

on Friday, 27 July 2012 11:42

Jean-Claude Juncker was desperate. The Prime Minister of Luxemburg and newly re-installed President of the Eurogroup—which brings together the Eurozone’s finance ministers to exercise political control over the euro—is the ultimate Eurozone infighter and insider. “We all know what to do, but we don’t know how to get re-elected afterwards,” he’d once said, now referred to as “Juncker’s curse.” But he knows how to get reelected, being the longest serving head of state in the EU—Prime Minister since 1995. So when he is desperate, even the eight justices at the German Constitutional Court listen.
 

After a fairly steady period through 2006, euro counterfeiting jumped 70% to its peak in the second quarter of 2009. Alas, following on the heels of the financial crisis, the Eurozone debt crisis began to gnaw on periphery countries, and counterfeiters lost confidence along with the rest of the financial markets. By the first half of 2012, counterfeiting had crashed 44%. And not much but thin Alpine air appears to be underneath it.

ECB-counterfeit-euro-notes-pulled

The fact that counterfeiters are throwing in the towel—worried perhaps that they’ll get stuck with high-risk but unsalable merchandise—is bad enough for Europhiles. But now we see an increasingly clear demarcation of the Eurozone into two separate parts, though not entirely along the lines of North and South often envisioned.

On one side of the line are countries whose governments can borrow at negative yields, that is, where investors agree to lend money to them at a guaranteed loss, however absurd that might have seemed not long ago. That club includes Germany, France, the Netherlands, and Belgium (!); in the secondary markets, Finnish and Austrian government debt has seen negative yields. Eurozone neighbors Denmark and Switzerland also dipped into negative yields. Negative Interest Rate Policy (NIRP) at work.

On the other side are countries whose governments have lost access to the financial markets or are in the process of losing access. The largest two in that group are Spain and Italy.

....read more HERE


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Currency

When QU3 Will Strike + Coming: The End of Fiat Money

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Posted by Stephany Pomboy via Baaron's

on Wednesday, 25 July 2012 00:00

THE WORLD IS HURTLING TOWARD A DAY IN WHICH MONEY WILL AGAIN BE BACKED BY GOLD OR OTHER HARD ASSETS. UNTIL, THIS ANALYST SEES PLENTY OF TROUBLE.

"Hear Me Now, Believe Me Later," was the title of two separate and prescient pieces penned by Pomboy, an economist and founder of the MacroMavens research boutique. One, published in March 2006, foretold the disastrous costs of the housing bubble. The second, somewhat later, laid out the consequences of the bubble's "financial echo." Today, Pomboy predicts something more draconian: the demise of fiat money—currencies that aren't backed by anything other than government decrees that they have value.

We checked in with her last week, as central banks around the globe weighed more easing and as Fed chief Ben Bernanke described to Congress the headwinds facing the U.S. economy, including the automatic tax increases and spending cuts set for year end, called the "fiscal cliff." With the Fed being the biggest buyer of Treasuries, Pomboy thinks the 40-year-old fiat system will crack within five years.

Barron's : What don't investors anticipate today?

Pomboy: That the Fed will be a presence in the Treasury market for a long, long, long time. Some believe that, with another round of quantitative easing, we move forward, emerge from the morass, and the need for further intervention will dissipate. But the Fed is really the only natural buyer of Treasuries anymore. It will have to continue to monetize Treasury issuance at the same time all the other major developed economies—from the Bank of Japan to the Bank of England to the European Central Bank—are doing the same. Pursue that to its natural conclusion, and you see the inevitable demise of fiat money. To look at our policies and not be concerned about the risks to our currency would be dangerously naive.

One step at a time. When is the next round of QE?

....read her answer and much more HERE

BA-AZ296B qanda_G_20120721004502



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Currency

Strong US Dollar Fails to Torpedo Gold

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Posted by Richard Russell - Dow Theory Letters

on Friday, 20 July 2012 08:37

The first chart below shows the strong US dollar. The US dollar is the mirror twin of the euro. As a rule, a strong dollar works against gold. The stronger the dollar, the fewer dollars it requires to buy an ounce of gold; and the opposite is true, the weaker the euro, the more euros it takes to buy an ounce of gold. This is the reason my pen-pal, Dennis Gartman, buys his gold in euro terms.

0.30A

Below we see gold, and what is so interesting is that gold is holding above support at 1535 in the face of the strong dollar. This is obviously good action in terms of gold.

1.391E

Just for the hell of it, I'm showing a daily chart of the euro. I think it's over-priced at 1.22, and I think it's going to par against the US dollar. I saw enough of Europe during WWII, and with the euro at 1.23, I'm staying in La Jolla where I can still get a meal for less than six bucks. The euro came out at 87 cents, which is what I think it's really worth.

11.99C

Ed Note: Richard Russell of Dow Theory Letters is bearish the US Stock Market based on the Dow Theory. His advice to investors right now it that: "This is the time to cut back on needless expenses -- get rid of all the debt you can, and prepare for tough times". 

Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business. One of the favorite features of the Letter is Russell's daily Primary Trend Index (PTI), which is a proprietary index which has been included in the Letters since 1971. The PTI has been an amazingly accurate and useful guide to the trend of the market, and it often actually differs with Russell's opinions. But Russell always defers to his PTI. Says Russell, "The PTI is a lot smarter than I am. It's a great ego-deflator, as far as I'm concerned, and I've learned never to fight it."

 

 

 

 



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