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It is THE story of the day.
It is THE event that will impact every investment decision you make.
If you ignore it, it will cost you. If you harness it, it can make you substantially richer.
I’m talking about the end of austerity programs and so-called “fiscal pacts” all over the world.
Last year, for example, Congress debated endlessly about budget cutting but never actually DID anything of substance. Nor are they likely to do a darn thing during this election season.
Also last year, after months of agonizing debate, the Europeans finally managed to cobble together an agreement to cut their deficits. But just in the last couple of weeks, the entire agreement has started to collapse.
Sarkozi in France, who was a major linchpin of the pact, has fallen from grace. The government of the Netherlands, another major supporter of the pact, has collapsed. The upcoming elections in Greece could be another game changer.
And now, May Day in Europe will launch new street protests against austerity all across the continent.
Suddenly and without warning, the pressure is building for MORE spending, BIGGER deficits, and a bigger pile-up of DEBT.
Plus, I’m talking about an enormous amount of money that’s already being created by the world’s central banks right now.
From Tokyo to Brussels and from London to Washington, the world’s governments are printing money like there’s no tomorrow. (See what I wrote about this last week in The Deadliest Vicious Cycle We’ve Ever Seen.)
Everybody knows about it. Everybody’s talking about it. But almost nobody has any idea what to DO about it!
This vast, massive, GLOBAL orgy of money printing — and the explosion in the world’s money supply that it’s creating — IS THE 800-pound gorilla in the room.
Already, that money has helped push U.S. stocks up to unsustainable levels as investors from all over the world pour new money into Wall Street.
Just since the first of this year, the Dow is up nearly 7% — and many household name stocks have fared much better …
Tractor Supply is up 42% … Polaris Industries is up 43% … Red Hat is up 47% … VeriFone Systems is up 50% … and Netflix is up 53%.
Plus Fossil is up 62% … LinkedIn is up 67% … Sears is up 67% … Cobalt Energy is up 73% … and Regeneron Pharmaceuticals is up 128%.
And this may surprise you given the global debt problems, but Bank of America has surged a mind-boggling 50% since January 1.
Now, you have to wonder: Is the company — Bank of America — 50% more valuable than it was just 16 weeks ago?
Of course not!
It’s still choking on toxic assets. It still has a Weiss Financial Strength Rating of just D+ (‘Weak’). Worst of all, the European crisis is erupting again, exposing the bank to major new dangers.
But the trillions of newly created dollars, euros, pounds and yen sloshing around in the U.S. economy have to go somewhere — and for reasons known only to themselves, many investors have decided that BofA stock is where they want to be.
Across America, Asset Inflation Is Beginning
to Pop Up in Some of the Most Unlikely Places
Stocks aren’t the only assets getting inflated by central bank money pumping.
Prices for some collectibles are surging, too. Art and antique auctions that just a few months ago were sparsely attended are suddenly packed to the rafters.
A vinyl banner posing as a work of pop art recently sold at a Woodbury, Connecticut auction for an astounding $15,990!
A friend of mine just finished planning his summer vacation. He says HALF of the places he wanted to stay were already booked solid. Instead of staying at posh resorts and spas, he’s settling for Hampton Inns and Motel 6.
Another friend is looking for a low-priced duplex or condo here in Florida. There are plenty in her price range, but on several occasions, as soon as she found one she liked, it was snapped up by another buyer.
The rental market is also strong in Florida. With a $100,000 property, you can get up to $1,500 per month in rent. That’s $18,000 per year, or an 18% gross return on your money before expenses — nearly six times more than 30-year treasuries are paying.
Everywhere you look, you see prices rising — especially if it’s related to an asset that’s the target of speculation. You see higher prices on clothing, e-books, grapes, fertilizer and health care products.
Why? Fed money printing is creating a temporary “wealth effect.” It’s also making millions worry about how much their money will be worth tomorrow.
Good luck and God bless!
Martin
Dr. Weiss founded Weiss Research in 1971 and has dedicated his entire career to helping millions of average investors find truly safe havens and investments. He is Chairman of the Weiss Group, which includes Weiss Research and Weiss Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. His last three books have all been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.
{ 8 comments }
Doom and gloomers abound Mr. Weiss, with every problem there’s a gift, where’s the gift?
Where and what is the transformation that’s taking place?
Won’t do a dam thing, huh? Like cutting funding for building more dams?
How does printing money get to investors hands? Are not they just buying bonds?
Seriously?
the “printed” money is deficit spent into the economy…where some of it undoubtedly ends up invested in equities, commodities, etc. or supporting the financing of leveraged assets like homes or rental properties.
and US Treasuries make pretty high quality collateral don’t ya think
…so borrow money from the fed at zero; buy treasuries at a yield; pledge the treasuries as collateral at the fed and borrow more money to buy more treasuries (do that 5-10 times)…so now you have a s**t ton of treasuries paying a modest yield…well pledge those as collateral too and borrow, borrow, borrow all the digital money you can get your hands on and buy EVERYTHING!
BUY GOLD & SILVER ITS TRUE MONEY THE DOLLAR IS DIEING A SLOW DEATH CASH IS NOT KING AND SAVING ACCOUNTS ARE BIG WASTE. GET REAL MONEY ….
Hi Martin
As this game of chess plays out the profligate economies will find they can’t protect their people in a currency union. Germany needs the union for their export markets and the grossly indebted economies need to default and the bond holders will take a bath because the unregulated markets won’t be able to hold this together. National interest will decide this at some stage when the blood of the technocrats is on the floor.
OK OK does anyone else see whats going on here …….. LAST FALL all anyone heard about was the debt from the PIIGS nations …… no one knew what to do….. so finally GREECE agreed to deep austerity programs but their nation has a problem when 70% of their population is employed by their own government so……….to the outside world they agreed to these cuts saying YES YES WE WILL DO WHATEVER YOU WANT … so more monies were given to keep GREECE alive for a few more months from the IMF ….and everything sounded great and its amazing how everyone justs forgets about it……..like it was never a problem……….so lets face it GREECE has technically defaulted SPAIN is headed for default this summer and lets not forget about ITALY, PORTUGAL, IRELAND………but the problem here is this… all of the EURO nations have been buying each others debt and buying time with the main goal of keeping the EURO currency afloat and so I know you all see this too …..so when SPAIN defaults with its economy so will the rest of the PIIGS nations which in turn will make FRANCE default and possibly GERMANY. But their are deeper problems afloat ……..first I have to ask everyone this what country is the largest producer of gold year after year MOST PEOPLE WILL THINK AFRICA MAYBE BRAZIL possiby AUSTRALIA………….BUT the real truth is its CHINA and although they are the worlds largest producer of gold ……..this gold never makes it to the worlds markets it goes back to CHINESE government where it is kept in CHINA …………there was a huge purchase of gold secretly puchased by a foreign government …. who was that government….. speculation is its CHINA …WHY WOULD CHINA WANT TO HOARD ALL THE WORLDS GOLD…….remember those old days when the U.S. was a creditor nation ……not anymore we are now a debtor nation,,,WE NOW OWE EVERYONE we now owe CHINA trillions $$$$$ of dollars and they know we cant pay it back and they know very well the U.S. is trying to devalue their way out of that debt obligation as are other countrys that owe CHINA . So what is CHINA to do with their trillions of U.S DOLLARS they are sitting on ……….its obvious dump them slowly and as this unfolds the dollar will lose its value AND THE U.S. WILL LOSE ITS WORLDS RESERVE CURRENCY STATUS WILL THE EURO TAKE OVER THAT STATUS nope MAYBE THE YEN not a chance. CHINA wants to take the YUAN to the worlds reserve currency status and how are they going to do that……. by putting the YUAN on the gold standard ………..do most people even know here that the UNITED STATES GOVERNMENT has done everything in its power to supress the price of GOLD, SILVER and OIL if the true value of these commodities were to unfold then americans would see just how worthless the american dollar is AND THIS COULD HAPPEN SUDDENLY on a weekend on a holiday or overnite. Recently i was chating with some friends of mine from SPAIN they say its getting just worse and worse there. The crowds are getting larger… more violence… more rioting… to the outside world SPAIN agrees to deep cuts …. but on the inside the population that has the most to lose from austerity measures SAYS NO were not going to take it ……so they take to the street and its getting more and more violent there no longer are they demonstrating instead its turned to rioting and the rioting is getting worse . And what do we hear about these countrys when we watch the news in our country hardly anything. But if you know someone who lives in GREECE, SPAIN ITALY OR PORTUGAL then the real truth is revealed.
In Italy there are business owners that commit suicide every day…now they are numbered by the hundreds…desperation to the ultimate extreme.