Central Bankers Turn to Uncle Pennybags for Guidance

The board game Monopoly debuted in 1935. Not too long after the Federal Reserve system was created in 1913.

But what many people don’t know is that it was the game’s top-hatted icon, Rich Uncle Pennybags, who originated the scheme that the world’s most-influential central bankers are following today.

Indeed, it’s a scheme that real-life bankers — Janet Yellen, the U.S. Federal Reserve chair; Mario Draghi, the European Central Bank president; and Haruhiko Kuroda, the Bank of Japan governor — use to keep the currently over-indebted global financial system afloat for as far as the eye can see.

And consider this: You could switch out a photo of any of these bankers for Uncle Pennybags, and the revised image would be right on the mark!

That’s why, as the Captain of the Safe Money ship, it’s important that I share with you what the central bankers are doing and, above all, what their Monopoly-money-like policies mean for you and your nest egg.

It’s not surprising that you can even find “Monopoly money” defined in the Oxford English Dictionary as “money regarded as having no real existence or value.”

Legend has it that it was Uncle Pennybags who inserted the following clause into Monopoly’s rules to ensure that there would always be a game winner:

“Some players think the bank is bankrupt if it runs out of money. The Bank never goes bankrupt. To continue playing, use slips of paper to keep track of each player’s banking transactions — until the Bank has enough paper money to operate again. The banker may also issue ‘new’ money on slips of ordinary paper.”

Right now, you are probably asking yourself, “How does this have anything to do with the central banks and their current policies?”

Well, in this article, I’m going to pull back the curtain and reveal how the world’s central bankers and their bands of merry money men have latched onto Uncle Pennybags’ scheme to create an unstoppable wave of liquidity …

And how these very same bankers have modified the rules of the world’s most popular board game — to further turbocharge their low-interest-rate money machine to crank even more liquidity into the world’s financial system.

As a result, a certain select group of stocks — such as those in the Safe Money portfolio — will soar higher … probably much higher.

And that’s where Uncle Pennybags comes in.

You see, Ms. Yellen, Mr. Draghi and Mr. Kuroda were around for the Great Recession of 2009 that came about as the result of the subprime-lending blow-up.

And they vowed to never let it happen again. At least, not on their watch!

So, they turned to rules of Monopoly about how to backstop the global banking system.

And by doing so, they have created more debt relative to GDP than at the beginning of the subprime disaster …

In the U.S., the total estimated debt of $65 trillion is roughly 350% of annual GDP and the ratio continues to rise!

In China, the ratio of debt-to-GDP has more than doubled in the past decade to nearly 300%.

Consider this: Since 2007, the U.S. and Europe have each added about $12 trillion in debt.

But that’s small potatoes compared with China. Over the same period, China has added an astronomical $24 trillion of debt to its collective public and private balance sheets. Wow!

These numbers are indeed staggering.

That’s why there’s no exit for Ms. Yellen, Mr. Draghi and Mr. Kurodo. They have to stay in the game to keep it going. Thank you, Uncle Pennybags!

That’s why in this overleveraged, low interest-rate world, I continue to emphasize GROWTH, GROWTH and more GROWTH.

It’s the magic elixir to propel your portfolio forward in a world where the real economy continues to sputter along under an ever-increasing mountain of debt.

And if you’re looking for growth in a slow-growth world, you should consider the iShares Morningstar Large-Cap Growth ETF (JKE).

Click image for larger view

It’s up about 27% year-to-date which is about 60% — yes, 60% — more than the market so far this year as measured by the S&P 500.

And it’s a prime holding in the Profit Accelerator component of the Safe Money Portfolio.

Come back next week and I’ll tell you about how the Ms. Yellen, Mr. Draghi and Mr. Kuroda are using a well-known gambling technique to keep their magic money machine humming along. I’ll also provide a peek at even more growth-oriented moneymaking ideas.

Best wishes,

Bill Hall

Bill Hall is the editor of the Safe Money Report. He is a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). Besides his editorial duties with Weiss Research, Bill is the managing director of Plimsoll Mark Capital, a firm that provides financial, tax and investment advice to wealthy families all over the world.