A response to a subscriber; What should I do now?

Hi Chris,

I’ve been following you for about 6 months now after hearing about you on the […] blog. My question is should I start investing in RE now or just buy gold instead for now.

I am worried about the eventual downturn in the economy and people’s ability to pay rent. Rents in my area (Northeast PA?) are in the $1500.00 to $1800.00 range. I know of many people working three part time jobs with the bulk of their income going to rent. Also when the socialists return to power, I think there [may be] a change for rent controls, or worse, as mentioned in that blog recently.

As the Fed continues QE, shouldn’t the price of gold rise eventually? It seems the better option and less stressful. I am 62 years old, no debt, blue color, self employed, married, 1 child in college. Just trying to get through the reset without getting wiped out. I am worried about my family. Sorry for the long post. Thank you for all you do, for opening our eyes to the way things work.

Happy New Year and God bless.

Bill

Since 1971, the asset markets over the long-term are actually very predictable
U.S. Federal Housing Finance Agency; All-Transactions House Price Index for the United States. Compared to the other major asset classes, including gold, housing has underperformed in many areas, but housing has the potential to generate a lot of income for its owners.

So what if your worst fears were realized and the dollar collapsed? It has been collapsing in value since at least 1971, when the Nixon regime shut the international gold window.

Below, I show the performance of the Wilshire 5000, since the shutting of the gold window in 1971. In 1981, the IRS issued proposed regulations on 401(k) plans that sanctioned the use of employee salary reductions as a source of retirement plan contributions. Many employers replaced older, after-tax thrift plans with 401(k) plans and added 401(k) options to profit-sharing and stock bonus plans. Within two years, surveys showed that nearly half of all large firms  were either already offering a 401(k) plan or considering one. The Dow Jones Industrial Average closed 1981 at 875.00. The massive subsequent performance of the domestic stock market was no coincidence.

Based on the log scale, the performance of the Wilshire 5000 index since the U.S. shut the gold window has been fairly predictable and even. The Wilshire 5000 is a market-capitalization-weighted index of the market value of all US-stocks actively traded in the United States. This chart does not include dividends.

Why was the stock market crash in 1987 so short-lived? Why have all subsequent stock market corrections been short lived? There are literally trillions of dollars waiting to be deployed; either by employees, employers, governments, or central banks. Are you going to stand in front of this freight train?

There were hundreds of billions in defined contribution dollars after the 1987 crash ready to be deployed within a couple years, and this flood continues to this day. Now, that amount is in the trillions and I do not care what the alt-financial media think. As many as 80% of the population may eventually agree with many of the aspects of what the alt-media proclaim, but by then it will be too late for them to matter. Because of the powerful and sinister effects of the internet and social media, the average person on the street can no longer control his spending impulses and humans have been conditioned into spending every last cent of their money.

All that consumer debt-slave spending goes to the top 10%, and those in that top echelon are now the only ones who can affect this system. The small person is now powerless to stop this self-generating dynamo. They cannot stop spending and are the unwitting victims of a parasitic, Hindu-style, predatory monetary and economic system.

Since 1971, gold has done very well over the long term. Its total price performance is similar to the Wilshire 5000, but it generates no income and is much less liquid.

Think about the other freight train. Imagine all those overseas dollars looking for a home. In 2018, the Federal Reserve Bank estimated that 80 percent of all $100 bills were held in foreign countries. It explained that residents in other countries, particularly those with unstable financial systems, often use the notes as a safe haven. In any protracted dollar run, these dollars will have to find a home somewhere. I say they will continue to gravitate to global real estate and domestic stocks. Perhaps these dollars will also seek gold and other non-consumable commodities.

The whole system is being nationalized and given over to the elites

Think about what happened in the overnight dollar lending market during the second half 2019. The Fed is using it as a justification to effectively regulate and nationalize the entire short-term lending market. Read this article from today’s Barron’s to see what I mean.

“Various [FOMC] participants remarked on issues related to the implementation of monetary policy, highlighting topics for further discussion at future meetings,” the meeting minutes said. “Among the topics mentioned were the potential role of a standing repo facility in an ample-reserves regime, the setting of administered rates, and the composition of the Federal Reserve’s holdings of Treasury securities over the longer run.”

The Fed Plans to Consider Permanent Ways to Keep Money Markets Stable, Barron’s, January 4th

I also have been observing many economists who are conjuring up tentative ideas to combat the next downturn. A popular one; direct injections of government money to the end-user to be used for general spending purposes.

Hand out some benefits and the debt slaves will never revolt

With interest rates already so low, the Federal Reserve can’t fight a downturn by itself, and so economists are casting about for new ways that government spending can be used spur demand.

And funnily enough, one excellent way to get your local community humming would be to send everyone a $1,000 coupon to be used for dinner at restaurants of their choosing, said Gabriel Chodorow-Reich, an economics professor at Harvard University.

At a panel at the American Economic Association, economists discussed a range of ideas to use fiscal policy to counter downturns.

Former U.S. Treasury Secretary Lawrence Summers suggested that Congress develop “semi-automatic stabilizers” or targeted spending that would be triggered automatically if there was a rise in the unemployment rate.

This would help get around the sometimes slow pace of Congressional decision-making.

To fight the next recession, the government might send you money so you can go out to dinner with friends, MarketWatch, January 4th

Here is an article from today’s MarketWatch, titled, To fight the next recession, the government might send you money so you can go out to dinner with friends. If these types of programs are enacted during the next downturn, do you think the alt-media will be able to convince the average recipient that these programs are holding them back? Absolutely not. The elites will control the sheep by handing out these benefits to keep spending levels elevated, while the debt-slaves will only direct the resulting profits to the top levels of society. Since this spending will be financed with debt, inflationary growth should be minimal.

My most important advice; We need to drop the fear and change our mindset

My views are more sobering than most others in the alt-financial media, because they either believe we can turn this around or will propagandize like ZeroHedge with its self-loathing, anti-Western propaganda. I submit, we may have to wait a long time for any collapse, since most on this planet do not care what system they operate under, as long as they can have fun.

I differ, because I conclude that there are no longer any viable solutions for an ungodly global population. Our monetary and financial systems are a direct reflection of humanity’s moral compass and humanity has been corrupted to the core. The teachings of the Bible have been methodically adulterated and its philosophy has been effectively thrown into the trash heap of history.

With this in mind, I would advise all my readers to unplug from the collapse and reset talk that the alt-financial media are spreading. Imagine the tens of millions of dollars that ZeroHedge earns for its propagandist owners. Think of all the alt-media charlatans who earn tons of money off their crash-and-burn hype. It’s much easier to exploit people’s fears than to take risk and invest, as we do.

Case in point, this latest round of Iran war talk has injected a fresh round of “reset” scaremongering and I am certain that ZeroHedge’s page views skyrocketed over the past couple days. The elites running the new world order have been desensitizing us to a showdown with Iran since the Iranian hostage “crisis” in 1979. That was 41 years ago. I also recall the Iraq/Iran War of the 1980’s, which stretched on for over seven years. I remember during all that time how the Christian prophets on AM/FM radio thought Jesus’s return was imminent. What an embarrassment they turned out to be for the Christian faith and Bible. It’s not difficult to understand why real Christianity has become a running joke to most people on this planet.

During my undergraduate days, I recall my then-girlfriend’s father loading up on gold in anticipation of a big hyperinflationary downturn. Guess what, he eventually died with little money as their family struggled financially in a little house on Long Island. Why bother planning for the future when it will all come crashing down anyway? Unfortunately, things have a tendency to move in the same direction for much longer than we anticipate.

I can advise a person to do this or that, but if he or she cannot break free from their hard-wired biases, conditioning, and fear, he will always make fear-based investment and personal decisions. That is a recipe for disaster.

As for real estate or stocks, if a person has vacillated about getting involved all decade, I would suggest that he not get involved at this point. It takes a certain type of person who wishes to venture into these markets and not everyone is cut out for it. Many prefer risk aversion and there is nothing inherently wrong with this mindset, per se. My wife is extremely risk averse, while I prefer to take the risks. It works out well for us.

The internet is a killer to most people’s finances. Instead of empowering, the internet enslaves and impoverishes.

However, all is not lost. We all can still take some preventive actions to help ensure our long-term financial viability. We need to stop spending money like everyone else. We should restrict our social media usage to ZERO minutes a day. For those who are too fearful to use debt to buy income generating assets, I advise to eschew all forms of  debt. College is not worth it anymore, unless you can get a degree that can teach about money and economics. Stay liquid in cash and gold, and stop worrying.

We have no control over who gets elected and the policies they promulgate, but we can see from the above charts that it doesn’t really matter. The freight train of central bank money and deficit spending is unrelenting. If socialists get into power, we know that the massive deficit spending on benefits will be negated by higher asset prices. Tax cuts results in the same outcome. Short of outright communist-style expropriation, real estate and rents will move higher as a result as supply is effectively restricted.

I don’t have anything else to add, but if we can overcome our mental handicaps, I have to believe the opportunities will appear and be self-evident.