Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Impact of US Dollar Inflation and Devaluation - ILLUSION, MYTH AND MAGIC

Currencies / US Dollar Jan 10, 2008 - 06:02 AM GMT

By: Mark_B_Rasmussen

Currencies

Best Financial Markets Analysis ArticleTHE DOLLAR HAS LOST OVER 97% OF ITS PURCHASING POWER SINCE 1913 (THE FOUNDING OF THE FEDERAL RESERVE 94 YRS. AGO).

What does it look like when we convert U.S. benchmarks of value to other THINGS over the past 8 years?


DOLLAR EURO OIL NAT GAS URANIUM GOLD SILVER
12/99 1 0.84 25 6.5 9 290 5.19
12/06 1 1.32 61 6.3 72 635 12.88
12/07 1 1.46 97 7.2 90 833 14.77
8 YR INCREASE 0.62 72 3.7 81 81 543 9.58
% DOLLAR LOSS 42% 74% 50% 50% 90% 65% 65%

 

I see a trend here, do you?

U.S. RECORD EQUITY INDEX PRICES 2000

DOW 1/2000 11722
S & P 24/03/2000 1553
NASDAQ 10/03/2000 5048

 

Following are the U.S. equity indexes converted to other measures of value from 12-1999 to 12-31-2007.

CLOSING 12/31/07 DOLLAR EURO OIL NAT GAS URANIUM GOLD SILVER
DOW 13265 7694 3449 6633 1327 4643 4643
S & P 1468 851 382 1078 147 514 514
NASDAQ 2652 1538 690 1326 265 928 928

 

So much for nominal record highs in real terms. If this is a bull market for equities, what would a bear market look like?

This is the hidden part of the “WEALTH AFFECT” equation. You get more dollars and feel ever poorer.

The headline nominal numbers look great except when compared to other measures of value (real purchasing power). Of course we could use barley, wheat, soy beans, rice, milk, eggs, butter, beef, gasoline, college tuition, health care/insurance etc., etc., etc.

The next part of this missive is interactive.

VALUE OF YOUR REAL ESTATE IN REAL TERMS: 

PRESENT VALUE OF YOUR REAL ESTATE _____________ REAL VALUE 2000

EURO X .58 = ___________­­­__

OIL X .26 = _____________

NAT GAS X .50 = _____________­

URANIUM X .10 = _____________­

GOLD X .35 = _____________

SILVER X .35 = ____________

Some little acknowledged elements of the “WEALTH AFFECT are:

•  One must go into debt to enjoy the “WEALTH AFFECT” and decimate his balance sheet with mortgage debt. This was good for lenders for awhile. It appears lender's unmitigated greed, recklessness and deceit is being duly rewarded.

•  The “WEALTH AFFECT” completely disregards the need for consistent and sustainable income to service the growing debt.

•  This usually results in greater debt service as a % of income for a very long time. This is wealth transfer by claims against future income…..a debt slave or sharecropper as Warren Buffet calls it. If the loan is adjustable it can be an incrementally increasing % of income over time.

•  Origination costs of the debt is further wealth transfer from borrower to lender.

•  The debt declines very slowly regardless of whether the asset declines in value, owing more than the value of the asset. The new legislation to “protect borrowers” from loss of their homes is designed so that homeowners can continue to pay considerably more than their home is worth and the lender does not have to foreclose and have another huge and well deserved write down/loss. “I'm from the Gov'mint and I'm here to help you”.

•  Insurance premiums increase because of the increased cost of replacement due to inflating costs.

•  AMT (Alternative Minimum Tax) is the confiscatory tax levied on short term profits.

•  The benefit, of the “WEALTH AFFECT”, is that the borrower can borrow a considerable amount against future earnings……today, bring those earnings into the present and pay for short lived prosperity/pleasure for decades into the future.

•  If/when the asset/real estate declines in value faster than the loan declines, we have the “POVERTY AFFECT”?

The net result of this illusion, is that most american's largest asset is declining in value and the dollars they are denominated/measured in, are declining in value also. How do you like the “WEALTH AFFECT“ now? Clearly the greatest fraud ever perpetrated against the American people.

One should not forget that Eduard Ponzi is the father of contemporary U.S. economics and that the 1922 Weimar Republic of Germany and current day Zimbabwe are the models of U.S. monetary policy and that of central banks around the globe.

“Inflate or die” is the battle cry/mantra of all central banks. They must increase/inflate fiat unmoney backed by nothing. The U.S. Dollar is an (IOU…… nothing) and the EURO is a (Who O'S U……..nothing)!

”By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

John Maynard Keynes……attributed to Vladimir Lenin.

NOW YOU ARE ONE IN A MILLION!

By Mark B. Rasmussen

Mark is a real estate appraiser/broker by profession

Copyright © 2008 Mark B. Rasmussen

Mark B Rasmussen Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in