Employment

Peter Schiff On Direction Of Interest Rates, Housing, And Gold

Last Friday, “crash prophet” Peter Schiff added a new entry to his YouTube video blog- The Schiff Report. The CEO/Chief Global Strategist of Euro Pacific Capital warned viewers that the Federal Reserve is bluffing about raising interest rates. Schiff- who correctly-called the bursting of the housing bubble in addition to the 2008 economic crisis- also touched on the direction of the residential real estate market and gold. On interest rates and housing, he pointed out:

The risk is that the Fed doesn’t tighten at all, which is exactly what’s going to happen, because they can’t tighten. If the Fed actually tightens, the recovery is over. The recovery that is supposedly giving them the confidence to raise rates- it can’t exist if they raise rates. In fact, if the Fed could raise rates, they would have already raised them. I mean, it’s been over five years. They’re still at zero. And they’re saying rate hikes are a year way maybe. Why? If the economy is recovering, why can’t the Fed raise rates? Because if the Fed raised rates, we’d be right back in recession. Because it’s a phony recovery. That’s what people have to understand. It’s not real. It’s only here as long as the Fed can artificially sustain it, which she might. The minute they raise interest rates, that party’s over. The stock market’s going down. The real estate market’s going down.

And by the way, we had a plethora of negative numbers all week for the housing market. You could put a fork in this phony housing recovery, because it’s done. The market is going down. Housing prices are heading back down. Housing activity is slowing. I think a lot of layoffs are coming in construction because this market’s grinding to a halt…

The Fed is bluffing. This is all bark and no bite. It is impossible for the Fed to raise interest rates. If they could do it, they would have already done it. If they raise interest rates now, they destroy the very recovery that the low interest rates created. The problem is, if it isn’t a real recovery, it’s phony. If it was real, it wouldn’t need the Fed to support it. The only reason it does need the Fed’s support is because it’s imaginary. It’s phony. Because the actual economy is getting worse.

What the Fed is doing to goose the stock market, and the real estate market, to create this phony wealth effect, is undermining legitimate wealth creation. All the money we’re borrowing to spend is interfering with legitimate, genuine economic growth. And we’re just digging ourselves into a bigger and bigger hole…

The problem is, we’re going to have the next recession, and the Fed’s still going to be at zero. They’re still going to have this bloated balance sheet. And again, it’s not that the Fed is never going to raise rates. They’re just not going to do it voluntarily. They’re not going to do it as a decision. They’re not going to do it until they have to. And it’s not going to be a strong economy that’s going to force them to raise rates. Because I don’t care how strong the economic data is- they ain’t going to raise rates. And it doesn’t matter how bad the inflation data is- they’re still not going to raise rates. They’re not going to raise rates until the dollar collapses. Until foreigners no longer want to hold the dollar, because they understand the predicament that the Fed is in. They understand that it is QE forever. That it is all just talk. There is no exit strategy. There never was. Because exit is too painful. This is the end game of QE. This is the all in. This is the overdose.

On gold, Schiff predicted:

Janet Yellen is not going to wage war against inflation. She has already surrendered to inflation. It’s just that a lot of people haven’t figured that out yet. So, because people think that Janet Yellen might raise interest rates sooner rather than later because of inflation, they sold gold. If they knew the truth, that Janet Yellen isn’t going to care about the inflation, that’s she’s just going to let it get worse because she is too afraid to challenge inflation for fear of what it will do to the economy, to the stock market, to the housing market, the job market. So she is going to allow inflation to not only continue, but accelerate. And that is what’s good for gold.


“Ending QE is Bad, Not Ending it is Worse”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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CNNMoney Poll: 63 Percent Of Americans Believe Most U.S. Children Won’t Be Better Off Than Their Parents

Long-time readers of Survival And Prosperity might remember this bit about American kids possibly not turning out to be “better off” than their parents. I blogged on September 21, 2011:

Back in 2006 when I was working at a suburban fire department, a battalion chief came into my office, saw the local paper on my desk, and asked, “Did you read that piece about how kids these days might be the first generation who won’t be better off than their parents?” I replied, “Yeah, it was depressing.” The fire officer confided, “That stuff scares me. I’m worried they might be right about that.” I’d be concerned too, especially if I were the parent of a couple of young kids like this chief was.

I was reminded of that exchange when I read the following from Tami Luhby on the CNNMoney website yesterday:

The American Dream is impossible to achieve in this country.

So say nearly 6 in 10 people who responded to CNNMoney’s American Dream Poll, conducted by ORC International. They feel the dream — however they define it — is out of reach.

Young adults, age 18 to 34, are most likely to feel the dream is unattainable, with 63% saying it’s impossible. This age group has suffered in the wake of the Great Recession, finding it hard to get good jobs.

Younger Americans are a cause of great concern. Many respondents said they are worried about the next
generation’s ability to prosper.

Some 63% of all Americans said most children in the U.S. won’t be better off than their parents. This dour view comes despite most respondents, 54%, feeling they are better off than their own parents…

(Editor’s note: Bold added for emphasis)

According to Luhby, the poll came from telephone interviews with 1,003 adult Americans from May 29 to June 1, 2014.

I’m really not surprised by the findings of this survey. Besides an ugly employment picture, middle-class incomes are stagnating and the cost of living is rising (despite what the government and its shills say).

Here’s something else I mentioned in that September 2011 post. It’s from Annalyn Censky- also on the CNNMoney website:

It’s official. The first decade of the 21st century will go down in the history books as a step back for the American middle class.

Last week, the government made gloomy headlines when it released the latest census report showing the poverty rate rose to a 17-year high…

But the data also gave the first glimpse of what happened to middle-class incomes in the first decade of the millennium. While the earnings of middle-income Americans have barely budged since the mid 1970s, the new data showed that from 2000 to 2010, they actually regressed.

For American households in the middle of the pay scale, income fell to $49,445 last year, when adjusted for inflation, a level not seen since 1996.

And over the 10-year period, their income is down 7%

(Editor’s note: Bold added for emphasis)

Are middle-class wages still stuck in reverse today? From a September 17, 2013, post on the Free exchange blog (The Economist website):

THE Census released new figures on income and poverty today… They’re both grim and unsurprising. In 2012 the real median household income in America was flat relative to 2011 and down considerably from the pre-recession level

(Editor’s note: Bold added for emphasis)

So is the American Dream impossible to achieve anymore?

I don’t think so. But I predict many of the kids today and possibly future generations will find it significantly more difficult to realize the Dream due to the self-serving and ill-advised fiscal and monetary policies carried out by the adults of the last few decades to the present time.

By incurring trillions of dollars of debt during this time period, we’ve screwed a good number of our kids and future Americans.

Here’s hoping yours won’t be employed as a servant to the Chinese or whoever the next hegemon is in the coming years…


“Chinese Professor”
YouTube Video

Sources:

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Luhby, Tami. “The American Dream is out of reach.” CNNMoney. 4 Jun. 2014. (http://money.cnn.com/2014/06/04/news/economy/american-dream/index.html). 6 June 2014.

R.A. “Stagnation for everyone.” Free exchange. 17 Sep. 2013. (http://www.economist.com/blogs/freeexchange/2013/09/incomes). 6 Jun. 2014.

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Signs Of The Time, Part 75

In an era of stagnant wages and a rising cost of living, having a job doesn’t guarantee an individual can make ends meet.

In the past, many Americans would rise to the challenge, finding and working a second or third job if that’s what it took to put food on the table.

These days, it’s just easier for able-bodied, able-minded men and women to latch onto the government “tit” rather than work.

And plenty do it- no doubt about that.

Enter Scott Carroll. A minor league baseball player when he shot the following two-and-a-half years ago, this Kansas City, Missouri-native proclaimed to the world he would do whatever was required to eke out a living:


“Scott Carroll Will Endorse ANYTHING!”
YouTube Video

Okay, so Carroll was just having a good time and probably wasn’t hurting as much as many other Americans as a professional baseball player. But there’s still an important lesson to be taken away from this funny video:

Scott Carroll just recently made his big-league debut for the Chicago White Sox at age 29.

I doubt his TV pitchman skills got this right-handed pitcher to where he’s at today.

Hard work, perhaps?

Welcome to the majors- and Chicago- Mr. Carroll.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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The Illinois Diaspora Is On

“Diaspora- the movement, migration, or scattering of a people away from an established or ancestral homeland.”

-Merriam-Webster Online

On April 28, I blogged about a recent Gallup poll which revealed 1 in 4 Illinois residents (25 percent) say the state is the worst place to live.

On May 1, I talked about the same poll and the finding that 50 percent of Illinois respondents said they would leave the state if given the opportunity.

I had previously discussed how Illinoisans were departing the state in significant numbers.

And this morning, I read a commentary piece on the Chicago Tribune website that provided more evidence of a “diaspora” taking place from the “Land of Lincoln.” Diana Sroka Ricker of the Chicago-based non-partisan research organization Illinois Policy Institute wrote:

A startling pair of Gallup polls recently suggested that Illinoisans are an unhappy lot. Half of us would move elsewhere if we could. One in 4 says Illinois is the worst possible place to live in the entire U.S.

Naysayers claim it’s all talk. It isn’t.

Not long after the Gallup polls came out, the Internal Revenue Service released fresh numbers showing which states people are moving to and which states people are fleeing.

Spoiler: Illinois didn’t earn any positive marks in this report, either.

According to the IRS, Illinoisans don’t just want to move; they are moving. And they’ve been moving for a long time.

From 1995 to 2010, Illinois lost more than 850,000 people to other states. That’s after you offset the number of people who actually moved in.

The bleeding is bad; on net, 1 person leaves Illinois every 10 minutes.

(Editor’s note: Bold added for emphasis)

All those people leaving, and still traffic sucks.

Sadly enough, those who created a good deal of this mess still hold the reigns of political power throughout the state.

In conjunction with ongoing corruption and rampant voter apathy, I predict economic and employment conditions in Illinois will keep deteriorating- resulting in even more residents headed out the door.

The Illinois Diaspora is on…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Sroka Rickert, Diana. “Taxes, job market causing people to leave Illinois.” Chicago Tribune. 13 May 2014. (http://www.chicagotribune.com/news/opinion/commentary/ct-illinois-population-loss-texas-indiana-taxes-05-20140513,0,7725171,full.story). 13 May 2014.

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Forbes: Chicago ‘Bringing Up The Rear’ In Job Growth

The other day I came across an article on the Forbes website entitled “The Best Cities For Jobs 2014.”

I always hope to find Chicago high up on any of these “best” lists.

That wasn’t the case here, however.

Joel Kotkin and Michael Shires wrote on April 28:

Bringing Up The Rear

Many large cities continue to lag. Philadelphia, despite being close to New York and its considerable urban amenities, ranks 51st, with paltry 0.9% job growth since 2008. Not much better off, despite its connections to the Obama White House, is Chicago, which places 47th. Not only is the Windy City not adding many jobs (0.5% growth since 2008) but every county in the area, according to recent Census numbers, is losing migrants to other parts of the country

(Editor’s note: Bold added for emphasis)

“0.5% growth since 2008”

Perhaps I should just be happy to hear there was any growth at all.

Still, I’m curious as to what “kinds” of jobs were added.

If they mirror what took place nationally, then they weren’t the high-paying positions that were lost during the Great Recession.

And as I’ve said before on this blog- I can’t see any meaningful economic recovery being sustained on the backs of burger-flippers.

(Editor’s note: No disrespect intended to burger-flippers. I respect their hard work and savor their end product)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Kotkin, Joel and Shires, Michael. “The Best Cities For Jobs 2014.” Forbes. 28 Apr. 2014. (http://www.forbes.com/sites/joelkotkin/2014/04/28/the-best-cities-for-jobs-2014/). 1 May 2014.

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Thursday, May 1st, 2014 Employment, Income, Recession, Recovery No Comments

Chicago Police Superintendent Garry McCarthy Keeps Pushing For More Gun ‘Control’ Laws

Chicago Police Department Superintendent Garry McCarthy is not letting recent gun “control” setbacks for the City of Chicago blunt his constant push for more laws laws restricting firearms. CNN’s Tricia Escobedo reported this morning:

McCarthy is using the unwanted attention around the bloody Easter weekend to push legislators to pass gun control laws that he says will help police turn things around in Chicago.

“It’s just insanity that there’s such a proliferation of firearms that they’re so easy to get your hands on,” McCarthy told WGN Radio on Monday. “The studies show when there’s more restrictive gun laws, there’s less gun violence. It’s not brain surgery, it’s really really simple.

“It’s going to take us a while to fix poverty and the break-up of the family units and education and jobs. But we can do something about gun laws today and we’re just not doing it.”

(Editor’s note: Bold added for emphasis)

“The studies show when there’s more restrictive gun laws, there’s less gun violence.”

Like in “Chiraq?” “Murder City?” “Beirut By The Lake?”

For years, Chicago, Cook County, Illinois, was considered “ground zero” for gun “control” in the nation.

And look what good all that gun “control” amounted to?

516 murders in Chicago in 2012 (source: Washington Post). 9 dead, 36 wounded in the “Windy City” last weekend. 4 killed, 36 shot the weekend before that. A veritable and regularly-occurring shooting gallery in certain parts of the city. Need I say more?

I will.

Again- “The studies show when there’s more restrictive gun laws, there’s less gun violence.”

Not any reputable studies that I know of.

As I’ve repeated many times on this blog through the years- criminals don’t follow the law- hence that “criminal” designation. The bad guys generally don’t acquire their firearms legally. Therefore, gun “control” laws don’t really have an effect on them. So what good does implementing more of these laws do besides penalize law-abiding citizens and gun owners?

Oh yeah- pushing more gun “control” makes it look like the politicians and their ilk are actually doing something to combat firearm-related violence (being mostly committed by “illegal” guns).

It’s my belief that Chicago, Cook County, and Illinois would be better off coming down hard- real hard- on the criminal element with “truth-in-sentencing” and other measures. On this point, I actually see eye-to-eye with Superintendent McCarthy. But many of the politicians don’t, their inaction based on fiscal, political, and/or racial justifications, as well as a belief held by many that “thugs just need a hug.”

Until they and their loved ones become the victims of a violent crime, right?

A number of former gun “control” advocates came to “see the light” in the wake of such events.

As for more restrictions being placed on firearms? Reality, like the example of Chicago- and not studies- keep demonstrating their ineffectiveness.

“It’s not brain surgery, it’s really really simple.”

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Escobedo, Tricia. “Chicago’s murder rate is down, chief says.” CNN. 24 Apr. 2014. (http://www.kspr.com/news/nationworld/Chicago-s-murder-rate-is-down-chief-says/21051646_25636714). 24 Apr. 2014.

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Illinois Policy Institute: ‘Illinois Is Exporting Its Higher-Income Earners’

From time to time, I’ll talk about the Illinois Policy Institute, a Chicago-based non-partisan research organization that works “to make Illinois first in economic outlook and job creation.” The last time I blogged about the Institute, they had just released a report about Illinois having the most units of local government of any state in the country.

I happened to stop by their website the other day and something disturbing caught my eye. On March 27, Michael Lucci, the Institute’s Director of Jobs and Growth, talked about the state’s tax structure driving away businesses. He wrote:

There’s no telling how many businesses have left or expanded elsewhere over the years.

Caterpillar Inc. announced this week that it will expand in Georgia, AM manufacturing is leaving for Indiana and OfficeMax Inc. famously decided on Florida over Illinois.

That’s exactly what millions of people are doing. On net, 1.25 million more people have left Illinois than entered since 1985. Not only that: The average taxpayer who leaves Illinois earns $65,400. The average taxpayer who enters Illinois earns $56,700.

It’s clear what is happening. Illinois is exporting its higher-income earners, who are also job creators and investors…

(Editor’s note: Bold added for emphasis)

Regular readers of Survival And Prosperity shouldn’t be too surprised at these findings.

Back on January 9, I talked about a press release associated with United Van Lines’ 37th Annual Migration Study, which found Illinois was the number two outbound state for a second year in a row in 2013.

And on February 27, I discussed a February 14 Crain’s Chicago Business piece that said Cook County lost about 13,000 residents with six-figure household incomes to other places during the Great Recession.

Regrettably, the politicians and their mouthpieces will keep peddling the spin about how individuals and businesses are tripping over themselves to move into the state. Meanwhile, the exodus from the “Land of Lincoln” will likely continue for the foreseeable future.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Lucci, Michael. “Illinois’ recipe for exodus: 7 different tax structures proposed for 2015.” Illinois Policy Institute. 27 Mar. 2014. (http://www.illinoispolicy.org/illinois-recipe-for-exodus-7-different-tax-structures-proposed-for-2015/?utm_source=outbrain). 17 Apr. 2014.

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Peter Schiff Predicts Future Fed Moves

Peter Schiff of Euro Pacific Capital released a new entry Monday on The Schiff Report YouTube vlog. The “crash prophet” talked about a number of financial topics, including future activity by the U.S. central bank. Schiff predicted:

I think that with the weakening in the stock market, the softness we’re seeing now in the real estate market- with the fact that we’re going to be getting weaker jobs numbers in the spring that cannot be rationalized away based on the weather- the Fed is going to have come forward at some point and acknowledge which should have already been obvious. That they were mistaken. They were overly-optimistic on their assessment of the economy. That for whatever reason they’ll come up with an excuse to save face- they can blame it on some external factor- but the Fed is going to have to come out and they’re going to have to halt the tapering process, and ultimately reverse it.

How much time there will be between the pause and the reversal?

I don’t know. I don’t think it will be more than a couple of meetings, at best. But that’s what’s coming….

Schiff, who correctly-called the U.S. housing bubble and subsequent burst along with the 2008 global economic crisis, went on to speculate what all this might mean for gold and stocks.


“Warmer Weather’s Failure to Stoke Jobs Chills Stocks”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Where Illinois Ranks In U.S. On Key Indicators In 2014 Compared To 4 Years Ago

“A state of distress”

That’s what the Chicago Tribune had at the top of an opinion piece that was published last Sunday on their website (was also in the Sunday paper too).

And it pretty much sums up what’s going on in Illinois when a comparison of where the state ranks nationally on various indicators is made to just a short four years ago.

From the Tribune on March 30:

Is Illinois better off in 2014 than it was four years ago? In 2010 we pored over a virtual library of statistics to assess where Illinois stood relative to other states and produced a chart much like this one. Today we replicate that exercise as closely as the data permit, with comparisons to Illinois’ national stature in 2010. By economic and jobs measures, Illinois has fallen further. By some education metrics, Illinois has improved. Our kids are still chubby…

(Editor’s note: Italics added for emphasis)

Areas looked at included:

• Economy and Jobs
• Governance
• Health
• Education
• State of Mind

The word most often used by the paper to describe how they now stand in comparison to four years ago?

“Worse”

It’s an insightful- yet disturbing- read, which you can find here on the Tribune website.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Friday, April 4th, 2014 Education, Employment, Government, Health No Comments

Peter Schiff: No Recovery, Just An Illusion Of Prosperity

I first started paying attention to Euro Pacific Capital’s Peter Schiff just prior to picking up his book Crash Proof: How to Profit From the Coming Economic Collapse (now Crash Proof 2.0, second edition) shortly after its early 2007 release. While some of the calls he made in that controversial text are still playing out, others have already come to fruition.

Subsequently, Schiff has been given credit for correctly-calling the U.S. housing bubble and its burst, and the 2008 global economic crisis.

Being one of Survival And Prosperity’s “crash prophets,” his latest investment recommendations are chronicled on this blog. As are his economic analyses and forecasts as well.

Here’s a recent breakdown of what Schiff sees going on with the U.S. economy and larger financial system, courtesy of a March 21 commentary entitled “Debt and Taxes” that’s posted on his Euro Pacific Capital website:

The last few years have proven that there is no line Washington will not cross in order to keep bubbles from popping. Just 10 years ago many of the analysts now crowing about the perfect conditions would have been appalled by policies that have been implemented to create them. The Fed has held interest rates at zero for five consecutive years, it has purchased trillions of dollars of Treasury and mortgage-backed securities, and the Federal government has stimulated the economy through four consecutive trillion-dollar annual deficits. While these moves may once have been looked on as something shocking…now anything goes.

But the new monetary morality has nothing to do with virtue, and everything to do with necessity. It is no accident that the concept of “inflation” has experienced a dramatic makeover during the past few years. Traditionally, mainstream discussion treated inflation as a pestilence best vanquished by a strong economy and prudent bankers. Now it is widely seen as a pre-condition to economic health. Economists are making this bizarre argument not because it makes any sense, but because they have no other choice.

America is trying to borrow its way out of recession. We are creating debt now in order to push up prices and create the illusion of prosperity. To do this you must convince people that inflation is a good thing…even while they instinctively prefer low prices to high. But rising asset prices do little to help the underlying economy. That is why we have been stuck in what some economists are calling a “jobless recovery.” The real reason it’s jobless is because it’s not a real recovery! So while the current booms in stocks and condominiums have been gifts to financial speculators and the corporate elite, average Americans can only watch from the sidewalks as the parade passes them by. That’s why sales of Mercedes and Maseratis are setting record highs while Fords and Chevrolets sit on showroom floors. Rising prices to do not create jobs, increase savings or expand production. Instead all we get is debt, which at some point in the future must be repaid

(Editor’s note: Bold added for emphasis)

“Which at some point in the future must be repaid”

Good luck trying to get your average American in 2014 to wrap their head around that crucial concept.

Once again, I agree with Schiff’s observation of what is going on all around us.

“Illusion of prosperity” is a fine choice of words here, and makes sense that I find a fine economic blog by the same name good reading.

As certain as the “Big One” will eventually hit California, so must our nation’s “financial reckoning day” arrive for all this debt we’ve accrued for some short-term “prosperity.”

You can read Schiff’s entire commentary on the Euro Pacific Capital website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Milestone: Survival And Prosperity Reaches 2,000 Posts

Yesterday was a milestone for Survival And Prosperity:

2,000 posts have now been published on the blog

Not bad considering the weblog was started a little less than three-and-a-half years ago.

My previous flagship blog, Boom2Bust.com, “The Most Hated Blog On Wall Street,” only reached around 1,500 posts.

I think a little celebration is called for, don’t you?


“Clerks Dance”
YouTube Video

There’s lots more blogging to be done. Washington and the Fed has managed to “kick the can down the road” this far, and while the economic picture might look rosy to many for a bit longer, I’m still not deviating from that prediction I made back on Memorial Day Weekend 2007 about a U.S. financial crash.

In fact, I believe we’ve already started into the descent. And gradually, the U.S. economy and larger financial system that is weighed down by tremendous debt and steered by greed, arrogance, and incompetence will eventually crash hard.

That being said, America has been here before (Great Depression). And I do see the country getting back on firm economic ground again. But only after the excesses off a multi-decade debt binge are effectively purged.

No “doomsday,” but definitely a “financial reckoning day.”

In the meantime, it’s probably wise to take advantage of the present situation to prepare for what I see is in store for the country down the road. Whether that means finding a line of work that’s more stable or acquiring more income to preserve one’s standard of living in hard times, it’s something one may want to look into and take action on while it’s still possible to do so. Of course, individual circumstances vary. Still, improving one’s self-sufficiency- even incrementally- can make a big difference in an emergency or major crisis. It’s something our predecessors in this great nation of ours understood and practiced, but unfortunately has fallen by the wayside in modern times.

Survival and prosperity. That’s what this blog continues to be all about.

Christopher E. Hill
Editor

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Record Net Worth Result Of Fed Blowing Bubbles In Housing, Stocks?

I was surfing the Internet last night when I read something about Americans’ net worth making a comeback. Neil Shah reported on The Wall Street Journal website Thursday:

Americans’ wealth hit the highest level ever last year, according to data released Thursday, reflecting a surge in the value of stocks and homes that has boosted the most affluent U.S. households.

The net worth of U.S. households and nonprofit organizations rose 14% last year, or almost $10 trillion, to $80.7 trillion, the highest on record, according to a Federal Reserve report released Thursday. Even adjusted for inflation using the Fed’s preferred gauge of prices, U.S. household net worth—the value of homes, stocks and other assets minus debts and other liabilities—hit a fresh record…

(Editor’s note: Italics added for emphasis)

I can’t say I’m surprised to hear of this rebound in net worth. After all, Euro Pacific Capital’s Peter Schiff has been warning for a couple of years now that the Federal Reserve is inflating new asset bubbles via tremendous amounts of stimulus (quantitative easing) to spark some sort of economic recovery in the wake of the bursting of the housing bubble and global financial crisis that reared its head in the fall of 2008. I blogged back on September 18, 2012:

In his September 14 entry on the The Schiff Report YouTube video blog, Schiff, who correctly-predicted the bursting of the U.S. housing bubble and 2008 global economic crisis, explained to viewers what QE3 was really about:

This is the plan that Ben Bernanke has. Ben Bernanke’s plan to revive the U.S. economy, and create jobs, is to inflate another housing bubble. That’s it. That’s what the Fed’s got. That’s what it came up with. As if the last housing bubble worked out so well for the economy, that the Fed wants an encore…

How is another housing bubble going to solve anything. Now one thing that Ben Bernanke hasn’t figured out yet- it ain’t gonna work. No matter how much he tries, no matter how much air he blows in to that housing market, he’s not going to reflate that bubble. There are simply too many holes in it, and there is no precedent for relating a busted bubble. More likely, all that cheap money is going to go someplace else…

Schiff asserted the Federal Reserve was trying to inflate another housing bubble.

Instead, there’s suggestions both housing and the stock market look “frothy” these days.

Suppose the Fed did in fact want to inflate new asset bubbles. If the central bank aimed to spread the wealth around in an attempt to jump-start the economy, it doesn’t seem to be happening. Shah noted in that WSJ article:

But the rebound, while powerful, has been tilted in a way that limits the upside for the broader U.S. economy and is increasingly leaving behind many middle- and lower-income Americans…

That means that even as wealth increases, it’s increasingly going to the affluent.

In addition to the affluent, much of the wealth surge is going to older Americans. Both groups are less likely to spend their gains and more likely to save, Mr. Emmons said. Meanwhile, sheer demographics—the retirement of the baby boomers and America’s aging population—are increasing the ranks of the nation’s savers.

The upshot: While American households overall are getting wealthier, the benefits for the economy may prove limited until such improvements reach more people.

(Editor’s note: Italics added for emphasis)

“The benefits for the economy may prove limited until such improvements reach more people.”

I fear another financial crisis will have paid us a visit before such prosperity is achieved.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Shah, Neil “U.S. Household Net Worth Hits Record High.” The Wall Street Journal. 6 Mar. 2014. (link). 7 Mar. 2014.

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Illinois To Lag All States In Job Creation In 2014, According To Pew Research, Moody’s Analytics

“We’ve had seven straight months of job creation and more to come.”

-Illinois Governor Pat Quinn, speaking with Charles Thomas of ABC7 News Chicago on December 20, 2013

On January 7, The Pew Charitable Trusts, an independent, non-partisan, non-governmental organization that carries out global research and public policy organization, displayed an interactive data visualization on its website entitled “Top States for Job Creation in 2014.” The source for the interactive graphic was Moody’s Analytics, a subsidiary of Moody’s Corporation and provider of financial analysis services and software.

According to the visualization, the top states for job creation this year will be:

1. North Dakota
2. Arizona
3. Texas
4. Colorado
5. Florida

Bringing up the rear in 2014?:

46. Alaska
47. New York
48. Vermont
49. Maine
50. Illinois

(Editor’s note: Italics added for emphasis)

Here’s what the Pew people had to say about the “Land of Lincoln”:

Illinois
State rank for job growth: 50
Growth rate: 0.98
Jobs added: 56,996

The other day I mentioned Illinois was the number 2 outbound state for the second year in a row in 2013 (New Jersey took the top spot), according to the latest United Van Lines Annual Migration study.

A new year, and more worrisome news for Illinoisans.

Stay tuned for more “blue skies ahead” spin from Illinois politicians shortly. In the meantime, you can view that interactive graphic over on the Pew website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Chicago At The Tipping Point

“There should be no doubt that I predict tough times ahead for the city. But it’s not just me who harbors such suspicion. Even the Chicago FOX affiliate, Channel 32 News, is running a series called ‘Chicago at the Tipping Point’ these days.”

-Survival And Prosperity, July 24, 2013

FOX 32 News in Chicago has been pretty busy with their “Chicago at the Tipping Point” project since I wrote the above. What is it? Political Editor Mike Flannery wrote on their website back on May 30:

FOX 32 News is starting a new series: “Chicago at the Tipping Point.”

We know — as you do — that Chicago is at a critical point, where things can either get better, or much worse. We want to know what you think about which way things will go.

Joblessness and violent drug gangs? Lousy schools and families fleeing? We’ll be looking at those connections in our city…

Recently, I happened to catch a series special entitled “Special Report: Jobs And The Economy.” Released at the end of November and hosted by Flannery and former FOX 32 News anchorwoman Robin Robinson, this production further confirmed for me that Chicago faces some major economic headwinds going forward, potentially making the city’s financial position even more precarious than it already is:

Chicago News and Weather | FOX 32 News
“Special Report: Jobs And The Economy”
FOX 32 Video

The special is worth checking out when you can spare 33 minutes and change.

In the meantime, for more information about the “Chicago at the Tipping Point” project, visit the FOX 32 News site here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Flannery, Mike. “Chicago at the Tipping Point: New FOX 32 News Series.” FOX 32 News. 30 May 2013. (http://www.myfoxchicago.com/story/22463117/2013/05/30/chicago-at-the-tipping-point-flannery-violence-drugs-schools-economy-jobs). 24 Dec. 2013.

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Tuesday, December 24th, 2013 Employment, Mainstream Media No Comments

Peter Schiff Bashes QE, Taper Lite, Gold Bears

“Gold Set for Worst Annual Tumble Since ‘81”

-FOX Business website headline, December 23, 2013

“Gold’s safe-haven role is over: strategist”

-MarketWatch.com headline, December 23, 2013

“I wouldn’t buy gold with my worst enemy’s cash: Strategist”

-CNBC.com headline, December 22, 2013

Not only have I been waiting to hear Euro Pacific Capital CEO Peter Schiff’s take on last week’s “taper” of the Federal Reserve’s quantitative easing program, but also his opinion on the latest bout of gold selling.

Schiff, who correctly called the recent housing crash and 2008 global economic crisis, just uploaded a new entry to The Schiff Report, his YouTube video blog. Schiff told viewers on December 20:

We have never had more stimulus- both monetary and fiscal- than we have right now. This is record-breaking, Keynesian stimulus. And it’s barely working. Yes, it’s inflating a stock market bubble. It’s inflating a real estate bubble. But it’s not creating genuine economic growth. And it never will. It is not raising living standards for the vast majority of Americans. And it isn’t creating productive, high-paying jobs. And it never will. And Ben Bernanke doesn’t understand that.

Like fellow “crash prophet” Marc Faber, Schiff believes the Federal Reserve will eventually pursue more, not less, bond-buying in the future. He explained:

Why did gold sell off? “Because everything is great.” “Because the Fed has done the impossible.” “It’s tapered and it hasn’t hurt anything.” This is what everybody believes. That the Fed has accomplished its goal. It hasn’t done anything. It’s talked about doing a tiny bit. But again, as far as I’m concerned, monetary policy is even easier now than it was before they announced this trivial taper lite. And the rest of the taper is probably never going to happen because the Fed is going to have to buy more bonds, not fewer bonds, to keep this whole house of cards from imploding.

Now, is gold going to continue to fall? I don’t know. My gut is that it’s probably still finding a bottom around 1,200. There is plenty of legitimate support for gold all around the world. Yes, all the speculators who are convinced that everything is great. The same people that thought it was great in 2007. Or it was great in 1999. That crowd, completely clueless about actual economics, is convinced that there is no reason to own gold. And so, they’re going to sell it, they’re going to short it. But there is a larger community around the world, particularly I think a lot of the emerging markets, central banks, China in particular, that see it differently. And they’re using this opportunity to buy as much gold as they can so that when the speculators and the investors figure out how wrong they’ve got it, and they realize that they need to be buying gold not selling it, there won’t be any gold left to buy because they would have already sold it. And the people who bought it from them aren’t going to sell it back. The gold that China bought- they’re never going to sell it. I don’t care how high the price of gold goes. They want that gold as reserves for their currency because they know the dollars that they have in reserve are eventually going to be Monopoly money. It’s going to be confetti. So they need something real to back up their own currency, and they want gold.

And so, I think that we need to be taking advantage of this opportunity. And don’t be worried about all the negativity that’s out there and all the professionals who are writing gold’s obituary. They’ve written it before, they’ll write it again. But I still think that the bull market has a long way to go. Ultimately, we are still heading for a currency crisis.


“Taper Lite: Bernanke Tightens Monetary Policy by Easing it!”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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