Transcription of last Friday’s Market Situation Report

This email is a full transcription of Friday's "Market Situation Report". We all synthesis information differently…and for some text is best. 

I hope you enjoy Friday's transcription. If you would prefer the video format, you can find that here


Situation Report October 6, 2012

The situation in the market last week is about the underlying stability of every country in the world.

There is one thing, which if messed with, will cause an increased instability of a country.  This one thing can be disrupted by the country itself or outside forces.

Iran is going through this right now.  External forces are messing with this one thing.  

What I am talking about is a countries currency.

If you look at the chart below these five lines represent how much more currency Japan, China, Great Britain, Europe and the US printed over the last 12 years.


Notice that they are all going up to the right.  The one going up the most towards the right is the Chinese Yuan (red line). It has gone from a 1.8 Trillion dollar equivalent currency units in the world surpassing the 14 trillion dollar mark.

Even if you look at the US (the teal line) they have gone from about 4 trillion dollar currency units floating around in the world up to right around 11 or 12 trillion dollars.

The United States has almost increased their currency units by about 300%.  That is incredibly impressive.  The point of me showing you this is the whole world is printing not just the US.

China, Japan, Europe, Britain are all printing money.  The more they print money the more unstable the world gets.

But here is the thing.  Look at this second chart.

One can't really tell this is happening.  This chart shows six printable currencies over the last 2 years:  the US Dollar, the Euro, the Yen, the Australian dollar, the Canadian dollar, and the Swiss Franc.


Notice they are all kinds of twisted mumbo-jumbo of lines.  Except here in this purple line, this is the Swiss Franc.

But as you can see it quickly moved back in line when the Swiss National Bank said they were going to peg their currency to the Euro.

What I want you to notice is when printable currencies debase themselves against each other you can't really tell because they all fall together.  Not in lockstep but over time they all fall together.

It is hard to tell that in fact the purchasing power of all of them is falling.  What one needs to do is compare printable currencies against a non-printable currency, In this case we are comparing them to Gold.


Look at these six currencies.  Notice just over the last five years that it is costing them more and more currency units to buy one ounce of Gold.

The point is that if your money is saved, there is no such thing as setting your money aside.

You can't set your money aside from investing.  If you say you're going to set your money aside in cash, let's say you live in the United States, "cash" is US Dollars.

Over the last 10 years those US Dollars have fallen by a third!  A third against other printable currencies!

That means $100,000 ten years ago now has the purchasing power of $67,000.

That is why people feel poorer.  But when they look into their account statement it still says $100,000 like it did ten years ago, assuming they didn't touch it.

But it's purchasing less, and less.  That is why people feel less rich. It's because they are!

They are feeling poorer because they are losing their purchasing power.

The situation this week is to notice that you are always invested in something.

There is no such thing as not having your money invested or setting your money aside.

I am so glad you are with me for this week's Situation Report.


Together, we are growing and protecting your wealth,

RC Peck, CFP 

Fearless Wealth | Investment Independence
Helping Individuals Reach Financial Independence Sooner, Faster, Safer.