The 60th Anniversary of Nothing Special

By: GE Christenson | Tue, Mar 25, 2014
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2014 is the 60th anniversary of nothing special. A quick review and comparison to 1954 seems appropriate.

In 1954 the Military-Industrial Complex was fighting a cold war with the USSR. Now they are fighting with Russia.

In 1954 the President of the United States played golf regularly. No change here.

In 1954 due to the paranoia and power-politics of Senator Joseph McCarthy and others, it seemed that "there was a communist under every bed." Now it is terrorists that captivate the national paranoia.

In 1954 there was a great deal of unrest in the Middle East. In 2014 there is a great deal of unrest in the Middle East.

In 1954 the world powers were intimidating the smaller countries to advance their agenda. No change since then.

In 1954 the United States appeared to have the "moral high ground." That "moral high ground" has slipped away.

In 1954 there were no Americans on Food Stamps. In 2014 there are almost 50,000,000 Americans who receive free food under the SNAP program. This is not progress.


Some approximate numbers

Item 1954 2014 Annual Increase
The Dow Index 300 16,000 6.9%
US National Debt $0.271 Trillion $17.5 Trillion 7.2%
Average house $17,500 $200,000 4.1%
New Car $1,700 $25,000 4.6%
Average rent $85.00 $1,300 4.7%
Movie ticket $0.60 $8.00 4.4%
Gasoline $0.21 $3.50 4.8%
Cigarettes $0.20 $6.00 5.8%
Bread $0.17 $3.50 5.2%
Cup of Coffee $0.10 $1.80 4.9%
Gold $35.00 $1,350 6.3%
Silver $0.85 $21.00 5.5%


Summary:

The value of the dollar has declined over 60 years so prices for most items have increased. Gold and Silver are still a store of value. Politics and government are ... well, the same as always.


For the Future:

  1. Politicians will borrow and spend, the national debt will increase, and more promises will be forthcoming.

  2. Deflation is a problem for the industries and governments that depend upon ever increasing prices and ever increasing debt. There are few in power that would benefit from deflation. Expect inflation.

  3. The Federal Reserve is committed to "printing dollars," increasing debt, expanding the money supply, and creating inflation. Expect the Fed to succeed.

  4. The gold and silver bears will be disappointed. Both precious metals will go much higher as all currencies weaken.

  5. A financial crash will demonstrate that debt based paper assets can plummet in value. Gold will increasingly be seen as a store of value.

  6. Even without a crash, continued inflation in the money supply will demonstrate that debt based fiat currencies are not a store of value.

  7. A hot war in the Middle East, Asia, or Eastern Europe will be expensive. Remember the Vietnam War. The consequences will include more debt, more inflation, and higher prices. Gold prices rose by over a factor of 20 between 1970 and 1980. The cost of living increased substantially during that same decade. It could happen again.

  8. Even a cold war or a currency war will be expensive, but less so than a hot war. The consequences of either a hot or cold war will be similar.

  9. From Milton Friedman: "Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless."

Zimbabwe One Hundred Trillion Dollar Bill

Delusions die hard! The delusions regarding the value of paper currency, usefulness of the Fed, government entitlements, the welfare and warfare state, and continual growth are weakening. The ultimate reckoning may be sudden or slow, but it will not be pretty for the unprepared.

Gold and silver will remain valuable and a store of value over the next 60 years. Are you prepared?

 


 

GE Christenson

Author: GE Christenson

GE Christenson aka Deviant Investor
www.deviantinvestor.com

GE Christenson

I am a retired accountant and business manager who has 30 years of experience studying markets, investing, and trading futures and stocks. I have made and lost money during my investing career, and those successes and losses have taught me about timing markets, risk management, government created inflation, and market crashes. I currently invest for the long term, and I swing trade (in a trade from one to four weeks) stocks and ETFs using both fundamental and technical analysis. I offer opinions and commentary, but not investment advice.

Years ago I did graduate work in physics (all but dissertation) so I strongly believe in analysis, objective facts, and rational decisions based on hard data. I currently live in Texas with my wife. Previously, I spent 20 years in Barrow, Alaska, the northernmost community in the United States, 330 miles north of the Arctic Circle.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/