If Printing Creates Wealth, Why Isn’t Zimbabwe The Richest Country on Earth?

If printing creates wealth, why isn’t Zimbabwe
the richest country on Earth?

You may want to sit down for this one.

The past doesn’t exactly predict the future but it often rhymes.

It’s time we take a moment to look back over the past three and a half years so we as US dollar holders can really grasp what is happening to our world…and if you live on planet earth than regardless of where you live, from Shanghai to Cairo, your central banks owns tons of US dollars in their central bank.

So we are all dollar holders!

From September 2007 to December 2008 the US Fed cut rates from 5.25% to zero (English speak: banks can borrow as much as they want at 0%). The result of this historic measure was that the US stock market fell 40%.

“Hmmm, not good”, thought Federal Chairman Bernanke.

Then from December 2008 to March 2009 with rates at zero percent the stock market fell another 30%!

“Hmmm, really not good…zero percent interest rates aren’t doing what they use to do”, thought Bernanke.

Then from March 2009 to April 2010 the US Fed started “Printing 1.0”, known to most as QE I or quantitative easing. And the result was that the market rallied 75%!

“Yippee, I’m brilliant”, thought Bernanke.

Then from April 2010 to August 2010, the Fed did not print or announce any further money printing.  The result was that the US stock market fell 15%.

“Hmmm, not good…market must go up”, thought Bernanke.

Then at the end of August 2010 Bernanke introduced Printing 2.0. The result is that the US stock market went up 29% to the market close on February 18th.

“Bingo, I’m brilliant again. Keep rates at zero forever AND print money forever”, thought Bernanke.

With Bernanke’s Printing 2.0 ending in 100 days will the US stock market support itself without Printing 3.0, 4.0, 5.0…and rates at zero?

Will “Printing 3.0” even be politically allowed?

And what about “Stimulus 1.0 and 2.0” by Obama?

Here are the cold hard facts (this is where you really might want to sit down).

The United States GDP is expanding at about $40 billion a month and all its costing the US tax payer is $220 billion plus a month in money printing.  


Did you just say the US government is printing [at least] $220 billion a month to produce $40 billion in growth?


The $220 billion is the combination of the federal government’s deficit spending of $120 billion a month and Bernanke’s printing of $100 billion a month.

So the US prints $220 billion A MONTH to create $40 billion A MONTH!

Isn’t that almost like spending $6 to make $1 of growth?

Am I alone in thinking that this can only end badly?

Oh yeah, during the same time period…

The municipal bond market has crashed.
The sovereign debt market is crashing.
Housing is continuing to crash.
Wages are continuing to fall for the bottom 95% of workers.

 …and the entire planet is paying higher prices for food, energy, metals, healthcare, education, cotton, beef, gold, silver and even a dollar of earnings.

AND then there’s the Middle East.

It is erupting into the biggest world event since the Iron Curtain fell on November 9th 1989.

The bottom line is that the US tax payer (just like the Egyptian/Bahrainian/Libyan/Tunisian/Jordanian taxpayer) cannot afford their own government and banking system.

The facts are black and white. No gray area here.

The US stock market has quickly moved into an even more unstable and dangerous period. Yes, I think it will probably go up until June…but then what.

What’s the next financial tremor?

AND how do we protect ourselves against it?

Bernanke and the US government are guaranteeing an incredible financial earthquake. They have already created many dangerous financial tremors.

I hope investors have their [financial] survival kits ready, because come June they are going to need them…not that they haven’t needed them for the past ten years…it’s just that things are going to get much worse.

My favorite financial survival tool is being part of an investment peer group that has consistently been on the correct side of every major macro trend for the past 14 years.

This investment peer group has literally saved and produced $100s of millions of dollars for its members.

Is it time to upgrade your investment peer group?

Until then ride the wave of money printing and deficit spending but be prepared to bail when the tremors turn into something bigger.

Together, we are growing and protecting your wealth,