Hello. My name is Porter Stansberry.
I'm the founder and the managing director of Stansberry & Associates, a Baltimore–based financial research firm.
Over the past decade, we have become one of the largest and most recognized research companies in the world, serving hundreds of thousands of subscribers in more than 120 countries.
About 6 months ago, I produced the first version of this presentation. It was an effort to warn people about what I believe is a very serious, impending currency and debt crisis in America, that will radically change our way of life and upset the balance of power around the world.
My warning is based on publicly available figures that anyone can look up for themselves. These are things that should be obvious to anyone with a background in finance or accounting. But, even if you don't have those skills, the financial problems I'm revealing in this presentation are so large that every American will recognize the seriousness of this situation. And every American ought to know what's about to happen...Since first airing, my presentation has been watched my more than 14 million people across the nation. It has been written about in newspapers, and talked about on the radio and online. It has taken on a life of its own, and as a result, I felt an obligation to update many of the facts and figures and to address a few of the questions I've received since we first began to broadcast our warning.
If you saw the original version of this presentation, then you know as early as last November I was predicting that, as a result of this emerging crisis, there would be riots in the streets, protests, and martial law, enforced by the military.
Well, I have to admit that in recent months, these events have moved more quickly than even I anticipated.
Just look around at what's happening today.
Angry protests in Wisconsin made front-page news for weeks. Similar fights and protests are brewing in Indiana, Ohio, and Kansas, just to name a few. In fact, one political organization organized a rally in EVERY state on a single day in late February.
Around the globe, there have been massive protests, hundreds of deaths, and even the overthrow of several governments.
And here's the thing.
Although few Americans recognize it... As I see it, THIS IS ALL RELATED TO THE VERY SAME CRISIS THAT WILL SOON ERUPT IN FULL FORCE HERE ON U.S. SHORES.
Now, when I first started giving this warning last November, many people ridiculed my work... even my friends and family thought I was crazy.
In fact, my wife was stopped on numerous occasions by some of her closest friends, who said, "I didn't know your husband was such a radical."
Please understand this... I am not a radical. Our research firm doesn't proclaim a crisis every other month.
I am a conservative businessman with a growing business and a young family. Normally I prefer to stay behind the scenes as much as possible. I had never made a presentation like this before. I've never agreed to appear on TV. The truth is, until a few months ago I wouldn't even let anyone publish my picture.
I never thought I would ever be willing to sacrifice my privacy for anything in business, much less a warning like this...
But I cannot sit idly by and watch as my customers, friends, family, and colleagues are destroyed by what's going on, especially when there are some very simple steps everyone could take to protect themselves. That's why I have spent several million dollars issuing this warning in print, online, on television, and on the radio.
You see, I am not afraid to risk embarrassment or to be ostracized in an effort to do what I believe is the right thing. I want to protect as many people as I can.
So let me state this as firmly and as plainly as I can...
The current problems with our currency and our runaway deficit in the United States cannot be fixed without radical changes to our standard of living.
And most people have NO IDEA what's happening to the world around them.
We are seeing radical changes take place right before our very eyes, as the prices of food, oil, and other commodities like cotton, copper, sugar, corn, aluminum, steel, and wheat absolutely skyrocket.
None of this was a surprise. You see, I started issuing my warnings about a coming crisis in late 2008, just after the financial crisis erupted on Wall Street. I saw what was happening... how the government was transferring all of Wall Street's bad debts into the U.S. Treasury. Then... a few months later, in March of 2009, when the Federal Reserve began printing trillions of dollars to paper over these debts I knew would face a serious currency crisis and massive inflation. Finally when the Fed turned on the printing press again in the fall of 2010, I decided to take my warnings to the public, in the form of these presentations. Since then the crisis has begun to erupt, all around the world.
People across the globe and even here in America are now realizing that the promises made to them in the form of pensions, healthcare, and contracts... are essentially worthless when your government is broke, when it has to print trillions of new dollars merely to finance its existing obligations.
That's why I created the first version of this presentation in November of last year. To warn about what is going on, and to show you what steps you can take to protect yourself and your family.
I've updated all of the critical information here. I can quickly bring you up to speed with what is going on. I will show you how events are now moving very quickly. And I will show you how you could still protect yourself and your family.
It is NOT(yet) too late.
Believe me, I have no interest in trying to scare you. But this is all happening very fast. And I strongly encourage you to get the facts, so you can make a decision for yourself.
This is your second warning. It is highly unlikely that you will receive a third.
You know, my guess is that even with everything we've witnessed in the past few months, as you watch this presentation, you'll say: "There's no way this could really happen... not here."
But just remember:
No one believed me three years ago when I said the world's largest mortgage bankers Fannie Mae and Freddie Mac would soon go bankrupt.
And no one believed me when I said GM would soon be bankrupt as well... or that the same would happen to General Growth Properties (the biggest owner of mall property in America).
But that's exactly what happened.
And that brings us to today...
America is Facing Right Now
In short, the same financial problems I've been tracking from bank to bank, from company to company for the last five years have now found their way into the U.S. Treasury.
From our Treasury, this massive crisis was spread around the globe via the Federal Reserve, because the U.S. dollar is the foundation of the world's banking system.
Our inflation is being spread, from country to country, upsetting food and energy prices... and sparking revolts. These troubles will find their way back to America too, as people who are dependent on the Gov't, pensions, fixed incomes, and Gov't contracts find themselves impoverished by skyrocketing prices and broken promises.
I'll explain how I believe this will all play out. It is critically important for you and every American to understand the facts and the enormous risks we face.
As I see it, the next phase in this crisis–which is already well underway–will threaten our very way of life.
The savings of millions will be wiped out. This disaster will change your business and your work. It will dramatically affect your savings accounts, investments, and retirement.
It will change everything about your normal way of life: where you vacation... where you send you kids or grandkids to school... how and where you shop... the way you protect your family and home.
I'll explain how these events are playing out now, and how I believe they will continue. You can decide for yourself if I'm full of hot air. As for me, I'm more certain about this looming crisis than I've been about anything else in my life.
I know that debts don't just disappear. I know that bailouts have big consequences. And, unlike most of the pundits on TV, I know a lot about finance and accounting.
Of course, the most important part of this situation is not what is happening... but rather what you can do about it.
In other words: Will you be prepared?
Don't worry, I'm not organizing a rally or demonstration. And I've turned down every request to run for political office.
Instead, I want to show you exactly what I'm doing personally, to protect and even grow my own money, and how you can prepare as well.
You see, I can tell you with near 100% certainty that most Americans will not know what to do as commodity prices – things like milk, bread and gasoline – continue to soar. They won't know what to do when banks close... and their credit cards stop working. Or when they're not allowed to buy gold or foreign currencies. Or when food stamps fail...
In short, our way of life in America is about to change – in fact, for many it is already changing. I promise you... this is far from over. It is only just beginning.
In this presentation I'll show you exactly what is happening.
You can challenge every single one of my facts and you'll find that I'm right about each allegation I make.
And then you can decide for yourself.
Will you act now to protect yourself and your family from the catastrophe that has already begun around the world and will soon threaten our way of life?
I hope so. And that's why I've updated this presentation and spent millions to broadcast it all around the world.
I'm going to walk you through exactly what strategies I'm using personally, and what you can do as well. I can't promise you'll emerge from this crisis completely unharmed – but I can just about guarantee you'll be a lot better off than people who don't follow these simple steps.
You know, when I first began writing about the looming collapse of the bond market and the risks to the U.S. dollar, a lot of people called me a "right-wing nutjob" or a "gold bug."
But the truth is, I had very little interest in this subject until recently. I started my research firm (in 1999) on the idea the Internet would change our lives in a profound way. That was my primary focus for many years.
I write about the biggest financial trends I can understand – whatever they happen to be. I have always strived to understand the facts and allow the facts to dictate my view. Now, three years after we first predicted the imminent collapse of the U.S. dollar, more and more people have discovered these facts. They can look around and see with their own eyes what's happening. Our ideas have gone from fringe to mainstream.
In fact, if you think I'm being "alarmist," look at this...
On the day I was preparing to record this presentation, Sam Zell (the 60th richest man in America according to Forbes Magazine, and one of the world's best investors), did a rare interview with CNBC.
Here's what he said:
"My single biggest financial concern is the loss of the dollar as the reserve currency. I can't imagine anything more disastrous to our country. I'm hoping against hope that ain't gonna happen, but you're already seeing things in the markets that are suggesting that confidence in the dollar is waning. I think you could see a 25% reduction in the standard of living in this country if the US dollar was no longer the world's reserve currency. That's how valuable it is."Believe me, this is very scary stuff, which not 1 in 1,000 Americans fully understands.
But before I get to the solutions, and the best way to protect yourself, let me back up a bit, and show you in the simplest terms possible what is going on, why I am so concerned, and what I believe will happen in the next 12 months...
America Has Ever Faced?
I believe our country is in the midst of a major collapse in our national monetary system, and our normal way of life.
Basically, for many years now, our government has been borrowing so much money (very often using short-term loans), that very soon, we will no longer be able to afford even the interest on these loans.
Again... I say these things as an expert in accounting and financial research.
Just look at the simple math, which we've updated here using the Congressional Budget Office's January 2011 report. These are not "pie in the sky" numbers. These are not "future obligations." I'm talking about the debts our government owes today, right now.
Income tax receipts are roughly $900 billion a year. Corporate taxes are roughly $200 billion annually.
Our current annual deficits are nearly $1.3 trillion. So, even if you doubled tax revenue, we would still be running a deficit of more than $100 billion.
"Wait a minute," you say. "How can that be? Doesn't the mainstream media report that our deficit is only around $1 trillion per year right now?"
Yes, that's what they report.
But that's because the government counts all $865 billion of payroll taxes (Medicare and Social Security) as current income. It's not. Those taxes are supposed to be funding the future liabilities of those programs, but we're spending all that money now. (And, in fact, Social Security will post nearly $600 billion in deficits in the next 10 years. ) If a private corporation did the same thing, its executives would all go to jail.
Consider this simple fact from the National Inflation Association:
Even if all U.S. citizens were taxed 100% of their income... it would still not be enough to balance the Federal budget! We'd still have to borrow money, just to maintain the status quo.
That's absolutely incredible, isn't it?
Yet I've never seen this fact reported anywhere else.
So, folks who believe higher taxes on the rich will solve this problem are simply delusional. Tax increases will not even make the smallest dent on the true size of our debt. Nor do I believe we can ever pay our annual deficits by raising taxes. That's why there's not a single credible plan, by any political party, to merely end our annual deficits, nevermind actually paying back our debts.
And here is the part that really matters... the costs of maintaining our debts are about to skyrocket.
Right now the Federal Reserve is manipulating interest rates down to almost zero. As a result, the interest rate at which the government can borrow money is at a record low level – less than 1.5%. Obviously, this won't last forever.
But, the question is, how much will we have to spend in interest to actually afford the money we have already borrowed?
Right now we're only paying about $200 billion a year in interest. That's around 18% of federal tax receipts. But if you assume a real, market-based rate of interest, the Federal government might have to spend 6% to cover its debt. In that case, we would be spending $850 billion a year on interest – or 77% of tax receipts.
And that's just the interest on the debt we owe right now, today.
I'm not including any of the future debts we will surely incur. It should be obvious to you that we're facing a deadly serious crisis. Obviously we can't afford to spend 77% of tax receipts on interest payments. Just as obviously, we can't continually print trillions and trillions of new dollars to fund our debts.
We are trapped.
The mainstream media doesn't want you to know these figures. In fact, one major TV network refused to run an ad for this presentation. Nobody in Washington – not Republicans, not Democracts and not even Tea Partiers, want you to realize how precarious our government's finances really are. They can't afford for you to understand this dilemma... or what it means...
Normally I study these kinds of numbers when I'm looking at a business to invest in or to recommend to my readers. But lately I've spent most of my time looking into our national balance sheet, because as the banking system collapsed in 2008, all of the bad debts were absorbed by the world's governments.
For example, when Fannie Mae and Freddie Mac collapsed in the summer of 2008, the U.S. government responded by simply guaranteeing all of their outstanding debt.
Since then these companies have recorded hundreds of billions of losses – all of which were passed along to the government. Yes, you can still get mortgages today. And yes, Freddie and Fannie are still in business. But costs associated with these programs are piling up at the U.S. Treasury – and they are enormously expensive.
These losses and trillions in other private obligations are now the responsibility of the U.S. government.
The problem is, even before this crisis, our government was deeply in debt. With each additional commitment we sink further and further into debt... closing in upon the moment that we can simply no longer afford even the interest payments on our obligations.
According to even my most conservative calculations (again, using numbers provided by the Congressional Budget Office) a debt default by the U.S. government would be inevitable – were it not for one simple anomaly... the one thing that has saved the United States so far.
I'm talking about our country's unique ability to simply print more money.
You see, the U.S. government has one very important weapon to use in this crisis: It is the only debtor in the world who can legally print U.S. dollars. And the U.S. dollar is what's known as "the world's reserve currency."
The dollar forms the basis of the world's financial system. It is what banks around the world hold in reserve against their loans.
That's a secret that most politicians don't understand:
As things stand now, the U.S. government can't go broke in any ordinary sense of the word because it can simply print dollars to pay for its bad debts. (It's been doing so since March of 2009).
That might sound pretty good at first. Since we can always just print more money, what is there to worry about...?
Well, let me show you...
is About to Disappear
You see, as things stand today, America is the only country in the world that doesn't have to pay for its imports or its debts in a foreign currency.
Let's say you're a German and you want to buy oil from Saudi Arabia. You can't just pay for your oil in German marks (or the new euro currency), because the oil is priced in dollars.
So you have to buy dollars first, then buy your oil.
And that means the value of the German currency is of great importance to the German government. To maintain the value of its currency Germans must produce at least as much as they consume from around the world, otherwise the value of its currency will begin to fall, causing prices to rise and its standard of living to decline.
But in America...?
We've been able to consume as much as we want without worrying about acquiring the money to pay for it, because our dollars are accepted everywhere around the word.
In short, for decades now, we haven't had to produce anything or export anything to get all the dollars we needed to buy all the oil (and other goods) our country required.
All we had to do was borrow and print more money.
And boy did we. Take a look at this chart...
Even as late as the 1970s, America was the world's largest creditor. But by the mid-1980s we'd become a debtor to the world. And since the late 1990s we've been the world's LARGEST debtor.
Today, our government owes more money to more people than anyone else in the world.
And that was before the financial crisis!
With all of these bad debts piling up, we've had to begin repaying our debts by printing trillions of new dollars. And now, finally, the impact of this is being felt in a big way.
As our creditors continue to figure out what's happening, we're going to have very, very big problems.
I believe our creditors (which includes foreign countries and other investors here and abroad) will either completely stop accepting dollars in repayment... or greatly discount the value of these new dollars. I'm sure you think that sounds crazy, but as I'll show you, it is already happening.
This will make our consumption-led way of life impossible to afford.
And I'm confident it will lead to an end of the U.S. dollar standard.
Keep in mind, the U.S. dollar has been the world's reserve currency for decades now... so most Americans don't have a clue about what the repercussions are of losing this status.
And maybe you think it could never happen... but the truth is, this is exactly what happens when countries get too far in debt or when they consume too much or produce too little.
In fact, the exact same thing happened to Great Britain in the 1970s.
Most people don't know this, but British Sterling was the reserve currency for most of the world for nearly 200 years... for most of the 18th and 19th centuries.
It continued to play this role until after World War II, when America was forced to prop up Britain's economy with foreign aid – remember the famous Marshall Plan, when we gave billions to help European countries rebuild?
Unfortunately though, Britain pursued a socialist national agenda. The government took over all of the major industries. Like Barack Obama, Britain's leaders wanted to "spread the wealth around." Pretty soon the country was flat broke.
The final straw for Britain came in 1967, when things got so bad the Labour Party (the socialists) decided to "devalue" the British currency by 14%, overnight. They believed this would make it easier for people to afford their debts.
In reality, what it did was make anyone holding British sterling 14% poorer, overnight, and it made everything in Britain, much, much more expensive in the coming years.
And for the country as a whole, it ushered in one of the worst decades in modern British history.
Most Americans don't know about Britain's "Winter of Discontent" in the late 1970s, when the government put a freeze on wages. There were continuous strikes in nearly every sector... grave diggers, trash collectors... even hospital workers. Things got so bad at one point that many hospitals were reduced to accepting emergency patients only.
In 1975, inflation in Britain skyrocketed 26.9%... in a single year!
The government also imposed what was known as the "Three Day Week" in 1974. In short, businesses were limited to using electricity for only three specified consecutive days' each week and they were prohibited from working longer hours on those days. Television companies were required to cease broadcasting at 10:30pm... to save electricity.
The extreme problems in the economy led to Britain being nicknamed, "the sick man of Europe."
Just how bad were things, exactly?
Well, here's a photo of the garbage that piled up because they didn't have enough money to pay trash collectors a fair wage...
And here's what John Blackburn, from Wetherby, recently told the BBC television channel about his experience during this period...
John Blackburn, from Wetherby said:
"I was a control engineer at Huddersfield Power Station at the time and part of my duty was to switch off the supply to various substations around the town, according to an official rota. On many an evening shift I would have to switch off the power to my own home before going back for a candle-lit supper!"
Imagine... Britain was a global superpower for 150 years. But when they started intentionally devaluing their currency, things went straight down hill.
Maybe you don't think something similar can happen here... but I'm telling you... it's already underway!
In fact, the exchange value of the U.S. dollar has fallen about 13% since June 2010. And its rate of decline is accelerating.
What happened to the British currency is now happening to the U.S. dollar.
As Barron's recently reported:
"When the monetary history...is written decades from now...2010 could be a watershed marking the beginning of the end of the dollar-based, Western-centric monetary system."As the U.S. dollar continues to lose its position as the world's currency, gas, oil, and other commodities will continue to skyrocket. Almost EVERYTHING we consume will immediately get more expensive. All the clothing, furniture, and household goods we import from China.
All the food we get from Central and South America... all the electronics, televisions, computers, and cars we get from Asia and Europe. In fact, it's happening, right now before our eyes.
Everything is getting more expensive...
In fact, each week, The Wall Street Journal has a section called �Cash Prices.' It lists dozens of commodities, everything from wool, zinc, tin and pork... to gold, silver, platinum, and lead.
I recently checked these listings in the paper's March 1st, 2011 edition. And the numbers were mind-boggling...
In short, of the 88 prices quoted ... 85 items are more expensive today than they were just a year ago... many significantly so.
Oil is up more than 50% from a year ago. Silver is up more than 100%–so is cotton, and coffee. Tin is up 90%. Oats are up more than 70%. So is wheat. Butter is up more than 40%. So is sugar.
Again, of the 88 prices quoted, the only three physical commodities that are cheaper today than they were a year ago... natural gas, eggs, and chickens.
Everything is more expensive! In some cases... MUCH more expensive.
And yet the government says there is no inflation? How is that possible?
It's unbelievable to me that they think the American public is going to fall for this.
U.S. businesses have certainly caught on...
As Wesley Card, the head of a clothing company that includes brands like Dockers and Anne Klein, recently said: "It's really a no-choice situation. Prices have to come up."
And when you look back further than a year, the numbers are even more startling...
The chart below shows how much a few key commodities have skyrocketed in price, just since the beginning of 2009...
And the point here is simple: As we print more money, the price of the world's most essential commodities have soared. This is NOT a coincidence.
Around the world, as we print, prices soar... citizens protest... governments get overthrown. And it's only going to get worse...
Because we can NOT stop printing because we can't actually afford our existing debts. No one wants you to know this. No one.
That's why, despite the obvious inflation going on all around the world, the Fed continues to say there's no inflation at all.
And that's the scary part, to me. Just like in a Banana Republic, the government is radically devaluing the dollar and totally lying to everyone about what is really happening.
Whether you realize it or not, there is already a "run" on the dollar. Many of our creditors, like the Chinese, are getting out of the dollar as fast as they can via strategic commodities, like copper. That's partly why commodity prices are soaring.
Unfortunately, skyrocketing commodity prices are just the beginning.
There are other disastrous consequences to the U.S. dollar losing status as the world's currency...
For example, there would be much less demand for U.S. dollars around the globe, so interest rates will skyrocket. Already, just look how quickly rates have moved up in recent months...
Instead of getting a mortgage at today's low rates of 5%, it may soon cost you 8% or even 10% or 15%.
Imagine what that would do to housing prices!
Stock prices will likely plummet by at least 40% in a matter of weeks as a result of this event in the currency markets.
It will cost every American business A LOT more money for supplies and materials. No one will be able to get a loan... and no bank will want to make loans.
In short, when the U.S. dollar loses its spot as the world's 'reserve currency,' it will cause a brutal downturn in the economy, which I expect will be about 10-times worse than the mortgage crisis of 2008.
As Barron's recently reported:
"The demand for dollars from the rest of the world has been of inestimable benefit to the U.S. economy. It quite simply allows Americans to consume more than they produce and save less than they invest; in other words, to live beyond our means."
You see, what will also happen as a result of this currency crisis, and the end of the U.S. dollar as the world's reserve currency, will be massive inflation, the likes of which we have never seen before.
When everyone is trying to get rid of their dollars, the government is printing more and more to pay debts, and no one wants to own them, the crisis will reach epic proportions.
Just look, for example, at what happened to one European country that faced this type of crisis in the 1990s...
This is what happens during a major hyperinflation in the real world.
Expensive Loaf of Bread
In the early 1990s, the national government of one European nation had spent nearly all its savings. So what did they do next? Simple... they began to steal the savings of private citizens by limiting people's access to their money in government-controlled banks.
And of course, to finance the daily operations of maintaining their basic infrastructure, they started printing money, big time. Even so, the country's basic infrastructure began to fall apart. There were potholes in the street, broken water pipes... elevators that never got repaired... and entire construction projects that simply shut down, before being completed.
The unemployment rate was more than 30%... and the government just kept printing money.
As San Jose State University Economics Professor Dr. Thayer Watkins, an expert on countries that try to inflate their way out of big debts, wrote on this particular disaster:
"The government tried to counter the inflation by imposing price controls. But when inflation continued, the government price controls made the price producers were getting so ridiculously low that they simply stopped producing. bakers stopped making bread... slaughterhouses refused to sell meat to the stores... other stores closed down"
So what did the government do next to try to curb inflation?
Well, one bright idea they had was to force stores to fill out government documents every time they increased prices. They thought that this would slow down price increases, because the paperwork would take so much time!
But like many government plans, this one had terrible, unintended consequences.
Since stores had to dedicate an employee to do nothing but register this paperwork, and since the process took so long, stores began to raise prices on basic goods at even higher rates, so that they didn't have to come back and file more paperwork!
Incredible, isn't it?
So next the government created a new currency... which basically removed six zeroes from the old one. So 100,000,000 old units were soon worth 100 new units. Of course, this didn't work either... it never does.
Between October of 1993 and January 1995, prices increase by, get this: 5 quadrillion percent. That's...
In other words, a loaf of bread that cost $1 in 1993, suddenly cost
Yes, that's $50 TRILLION.
I know, it's laughable... but I can guarantee that the people of this once proud European country weren't laughing one bit, especially those living on a fixed income.
Of course, at this point, the country completely fell apart. As Dr. Thayer Watkins wrote:
"The social structure began to collapse. Thieves robbed hospitals and clinics of scarce pharmaceuticals and then sold them in front of the same places they robbed. The railway workers went on strike and closed down the country's rail system."
At this point, businesses and citizens across the country basically refused to take the local currency.
Instead, everyone started dealing in German Marks. Keep in mind, the daily rate of inflation was nearly 100%.
Can you imagine the panic in a society when the price of just about everything doubles... every single day? It was absolute pandemonium, and the economy basically came to a grinding halt. It was like living in a war zone. Truckers stopped delivering goods. Stores, restaurants, and gas stations all shut down.
In another ridiculous government move, the government actually made it illegal to NOT accept a personal check.
Imagine... you could write a check... and in the several days that it typically takes for a check to clear, inflation would wipe out almost all of the cost of covering your check.
Of course, as is typical, the government took none of the blame. As Dr. Thayer Watkins reported, the government's official position was that the hyperinflation occurred "because of the unjustly implemented sanctions against the people and state."
Again... I know what you are thinking... "just because it happened in Europe doesn't it mean it can happen here, right"?
Well guess what...
The same thing that happened in this European country – Yugoslavia – also just happened in Iceland and Greece, but on a less dramatic scale. Of course, the only reason the situations in Greece and Iceland weren't worse is because of giant foreign bailouts. Yes... that's right... more debt to solve the problem of already existing, insurmountable debts.
Remember too that in roughly the past 100 years this type of debt crisis has reared its ugly head in Germany, Russia, Austria, Poland, Argentina, Brazil, Chile, Poland, the Ukraine, Japan, and China.
And now it is well underway in the United States.
As George Melloan of the Wall Street Journal reported in late February of this year:
"Indeed, it is unlikely that Americans themselves will escape the inflationary consequences of current Fed policy.... The Fed is financing a vast and rising federal deficit, following a practice that has been a surefire prescription for domestic inflation from time immemorial." –
If you don't believe these problems are already happening in America... just take a look... When I put together my first presentation about this idea, in November of last year, I talked about how, according to the Center on Budget and Policy Priorities, a Washington, D.C.-based think-tank, at least 46 states face huge budget shortfalls for 2011.
And I mentioned some of the crazy things some states are doing to close their budget gap...
Arizona, for example, has sold many of their government-owned buildings, including the state capital. California is releasing more than 6,000 prisoners from jail. And nearly every state in the union is talking about legalizing some form of gambling, to boost tax revenues.
Of course, none of these ridiculous steps will work in the long run.
And since I put together my original presentation, the situation has actually gotten much, much worse...
* THE 60 MINUTES REPORT: Meredith Whitney is one of the most respected analysts on Wall Street.
Soon after I published my presentation last fall, Whitney went on the CBS news program 60 Minutes, and predicted that:
"You could see 50 sizeable [local government bond] defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults."And if this happens, it will instantly become much more expensive, if not impossible, for state and local governments to borrow money. Which means thousands of people could lose their jobs, and hundreds of programs could be shut down, overnight.
"The most alarming thing about the state issue is the level of complacency. It has tentacles as wide as anything I've seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy,".
New Jersey Governor Chris Christie, confirmed that this problem is going on all over the country...
He told 60 Minutes...
"It's not like you can avoid it forever, 'cause it's here now. And we all know it's here. And the federal government doesn't have the money to paper over it anymore, either, for the states. The day of reckoning has arrived. That's it. And it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's comin'.The New York Times reported this weekend that New Jersey's total "unfunded liability" over the next 30 years has now passed $100 billion.
That's why Christie and other governors around the country are now introducing bills to slash pension benefits to government employees.
This would have been completely unthinkable just a few years ago, but now it's happening all over the country...
There are huge state pension problems in Wisconsin, Indiana, Illinois, Connecticut, Hawaii, Alaska, West Virginia, Massachusetts, Delaware... the list goes on and on.
And the truly amazing thing is that the U.S. Federal government is in even worse shape than the local governments!
The only reason we haven't seen the full brunt of this crisis yet on the federal level is because we've just continued to pile on more and more debt.
The states can't print money... but the Federal government can (at least for now). And for the moment, this is all that is preventing a currency collapse of unprecedented proportions.
And this is the important point: What most people don't realize is that the U.S. government can only continue printing dollars... as long as the U.S. dollar remains the world's reserve currency.In other words, this is all going to fall apart much sooner than people think. In fact, it's already happening...
The first steps are already well underway. It is happening right now... before our very eyes.
I can't stress this enough: You need to act now in order to protect your assets, and grow your savings in the next few years. In the next few minutes, I'm going to show you exactly how I'm protecting my own money, and what I recommend doing with your own.
But first, let me show you what exactly is going on right now...
Like I said, most Americans don't believe the U.S. dollar could ever lose its spot as the world's reserve currency.
But I am here to tell you... this process is already well underway.
For example, although it went almost completely unreported in the U.S. press, last fall, a group of the world's most powerful countries, including China, Japan, Russia, and France, got together for a secret meeting – WITHOUT the United States being present or even knowing about the meeting.
Veteran Middle East report Robert Fisk reported on this even in the Britain's Independent newspaper:
"In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese Yen, Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar."Fisk also interviewed a Chinese banker who said:
"These plans will change the face of international financial transactions. America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."And sure enough, after Fisk published the details of this secret meeting, U.S. officials and central bankers from around the globe denied these plans.
But as the old central banking adage goes... how do you know exactly when a currency will be devalued?
The answer: Right AFTER the head of the central bank goes on television to adamantly deny that any such transaction will occur. (And guess who just went public in recent weeks with a statement about how the U.S. will "not devalue its currency"? Yes, you guessed it... U.S. Treasury Secretary Tim Geithner.)
You see, the last thing a central banker wants to do in the midst of a devaluation is to give people a warning BEFORE he can devalue. So they have to deny, deny, deny. After the announcement is made, it's too late for citizens and investors to get out.
I reported on this secret meeting last fall.
And then, just a few weeks ago, a major international organization announced a big push for the end of the U.S. dollar as the world's reserve currency...
On Thursday February 10th, The International Monetary Fund issued a report on a possible replacement for the dollar as the world's reserve currency. CNN reported the story.
I'm sure you recognize the significance of this event. The IMF, which is headquartered in Washington, DC, is the intergovernmental organization that oversees the global financial system. They are THE most influential financial organization in the world economy.
The IMF has proposed replacing the U.S. dollar with something called "Special Drawing Rights," or SDRs. SDRs represent potential claims on the currencies of IMF members. SDRs were created by the IMF in 1969 and can be converted into any currency, based on a weighted basket of international currencies. When the IMF lends money, it typically does so via SDRs.
The IMF also proposed creating SDR-denominated bonds, which could reduce central banks' dependence on U.S. Treasuries. The Fund also suggested that certain assets, such as oil and gold, which are traded in U.S. dollars, could be priced using SDRs.
This is a HUGE and important step to replace the U.S. dollar as the world's reserve currency.
It's just another sign of the growing trend...
Any government or investor with any sense is looking to get out of the U.S. dollar as quickly and safely as possible...
China is Secretly Getting Out
China holds more U.S. dollars than anyone else on the planet. And publicly, at least, China is still buying our debt.
But behind the scenes, China is secretly getting out.
Here's what I mean...
Let's say you are China, our biggest creditor, and you hold $900 billion worth of U.S. treasury bonds, with more coming in daily.
If you are worried about the U.S. dollar, what can you do?
Well, you certainly can't just start dumping dollars, because prices would collapse, and you'd lose billions of dollars overnight.
So instead, the Chinese are doing something very clever.
They have essentially gone on a spending spree with U.S. dollars, paying basically any price to get the money into hard assets, around the globe.
In other words, China is getting rid of U.S. dollars, without seeming to get rid of them, and thus, without destroying their value.
In December, for example, the China Petroleum & Chemical bought all of the oil and gas assets in Argentina belonging to Occidental Petroleum for $2.5 billion. A few weeks before that they announced plans to buy 40% of the Brazilian operations of Spain's Repsol for $7.1 billion. That puts China's oil and gas deals in Latin America at $13.3 billion for 2010.
Before that, the Aluminum Corp. of China (Chinalco) began negotiating a $19.5 billion deal with the world's largest primary aluminum company, Rio Tinto. And China Minmetals paid $1.39 billion for the world's No. 2 zinc miner, Oz Minerals.
And this is just the tip of the iceburg.
In fact, China is buying so much, so fast, that The Economist ran a story in November 2010 called: China Buys Up The World. The magazine reported:
"Chinese buyers–mostly opaque, often run by the Communist Party and sometimes driven by politics as well as profit–have accounted for a tenth of cross-border deals by value this year, bidding for everything from American gas and Brazilian electricity grids to a Swedish car company, Volvo."Sure, it might look like China is overpaying now, but when the dollar collapses, China will have protected its wealth, and should even make a very nice profit.
Wealthy Russian oligarchs have been using this trick for years.
Instead of keeping millions of dollars in bank accounts in Russia, many pay outrageous fees for houses, sports teams, yachts, etc... anything to get the money out of Russia, so it can't be taken from them by the government.
And when you look at the numbers on a percentage basis, it's clear that China is looking to hold a smaller percent of its reserves in U.S. dollars. The number has gone form 74% in 2005 to 65% in 2010.
These moves by China, of course, are just one sign of the end of the U.S. dollar standard.
There are many more...
No need for U.S. dollars anymore
Russia and China have announced an interesting agreement recently...
To settle their ordinary trading of about $50 billion per year, they will no longer convert to U.S. dollars.
You see, it used to be that China had to obtain dollars to buy gas supplies from Russia. But not anymore. And Russia no longer needs U.S. dollars to buy stuff from the Chinese.
And this brings us to one of the biggest and most important facts regarding the U.S. dollar.
As the dollar loses its place as the world's reserve currency, foreign countries will no longer need to maintain large holdings of dollars. This means we will no longer be able to print as much money as we want.
This move would have been unthinkable 10 years ago, but today it is the new reality.
As I am sure you are aware, for years the U.S. dollar has been accepted almost universally around the globe.
Heck, many times when I've traveled, I never even bothered to convert to the local currency, because I knew everyone would take my dollars.
Well, that's simply not the case anymore...
Reuters reports that the same thing has happened in 2008 in one of Europe's most popular tourist spots...
Currency exchange outlets in Amsterdam have been reportedly turning away customers who want to exchange their U.S. dollars for Euros.
As one traveling American told the Reuters news agency: "Our dollar is worth maybe zero over here," said Mary Kelly, an American tourist from Indianapolis, Indiana, in front of the Anne Frank house. "It's hard to find a place to exchange. We have to go downtown, to the central station or post office."
In India, the country's tourism minister said in 2008 that U.S. dollars will no longer be accepted at the country's heritage tourist sites, like the Taj Mahal. And the U.S. dollar is no longer good anywhere in Cuba.
The New York Times reports that: "now, many shops in China no longer accept dollar-based credit cards issued by foreign banks... and foreigners cannot convert American dollars into renminbi beyond a given quota."
Iran, of course, has already moved all of its reserves out of U.S. dollars, and Kuwait de-pegged it's currency from the dollar a few years ago:
Bloomberg News recently reported that China and Russia plan to start trading in each other's currencies to diminish the dollar's role in global trade. "Given the risk to the dollar and U.S. assets from their fiscal position, they want to reduce their dependence on the dollar as an invoicing currency," said Bhanu Baweja, of UBS bank.
It's even happening here in the USA
Most Americans don't know that some states in the Mid-West are already using "alternative currencies"...
An NBC News affiliate in Michigan reports that
"new types of money are popping up across Mid-Michigan and supporters say, it's not counterfeit, but rather a competing currency. Right now, for example, you can buy a meal or visit a chiropractor without using actual U.S. legal tender."
What most Americans don't realize is that this is all totally legal.
The U.S. Treasury Dept web site says that, according to Coinage Act of 1965: "There is... no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services."
I saw one report that says there are now 150 of these alternative local U.S. currencies being accepted around the country!
USA Today reports that the largest of these local currencies is a currency called "Berkshares," which are being used in the Berkshires region of western Massachusetts.
According to the paper:
"Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares." And even in places that do not yet have local currencies, store owners may now actually prefer foreign currencies rather than U.S. dollars...
In Washington, DC, just 25 miles from my office, some stores have begun accepting euros. Of course, the euro isn't much more stable than the dollar right now. But my point is that most people don't understand there is NO FEDERAL REQUIREMENT in the United States for a private store to accept dollars for non-debt transactions.
You see, no matter what the government decides, stores and businesses will accept whatever they believe is a strong currency.
As Texas Representative Ron Paul wrote recently:
"If you walk into a 7-11 to buy a soda, the clerk doesn't have to accept your dollars, he could demand euros, silver, or copper. But because legal tender laws backing the dollar have caused the dollar to drive other currencies out of circulation, [right now] it is easier for stores to accept dollars."Well, all that is quickly changing...
Many places in Texas now accept Mexican pesos for payment. "Euros Accepted" signs are popping up in of all places: Manhattan. And not only Manhattan, but in New York's favorite summer playground... the Hamptons.
There, an art gallery assistant was quoted by The Real Deal: "I wouldn't want to discourage a sale in any way because of a currency issue."
And it's not just small stores that are accepting other methods of payment besides U.S. dollars.
The Chicago mercantile exchange the world's largest futures and commodities exchange board), now accepts gold to settle futures contracts. Until recently, the exchange typically accepted only U.S. treasuries and bonds as payment.
These guys obviously see the writing on the wall.
This would have all been completely unthinkable 10 years ago, but today it's a reality. And this trend is going to keep moving incredibly fast.
That is why...
The smartest investors are taking action...
Bill Gross, who probably knows as much about currencies and debt as anyone in the world, runs the world's biggest bond fund. He was quoted by Bloomberg:
"We've told all of our clients that if you only had one idea, one investment, it would be to buy an investment in a non-dollar currency. That should be on top of the list."Jim Rogers, one of the world's most successful multi-millionaire investors writes:
"The dollar is not just in decline; it's a mess. If something isn't done soon, I believe the dollar could lose its status as the world's reserve currency and medium of exchange, something that would lead to a huge decline in the standard of living for U.S. citizens like nothing we've seen in nearly a century."I know... you probably still don't believe it can happen here in the United States. But think about it...
Are we as Americans really immune to the laws of economics and finance?
I don't think so.
And every circumstance I know of, in which a government has tried to inflate its debts away, has ended in disaster. It will happen here too.
As Jim Rogers says:
"History teaches us that such imprudent monetary and fiscal behavior has always led to economic disaster."This is why World Bank president, Robert B. Zoellick, in a speech at the School for Advanced International Studies at Johns Hopkins University, recently said: "The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency. Looking forward, there will increasingly be other options to the dollar."
And this is why the International Monetary Fund (IMF) recently called for a new global currency.
This is why big U.S. companies like McDonald's and Caterpillar have begun introducing what are called "dim-sum bonds." These are securities denominated in the Chinese currency (the renminbi) by non-Chinese borrowers.
In other words, two of the biggest and most successful corporations in America realized they would have an easier time raising money by offering their bonds in a currency other than the U.S. dollar!
Do you see where this is all heading?
As Brazilian economist and strategist Ricardo C. Amaral wrote recently:
"The US dollar served its purpose since the end of WW II and became the major foreign exchange reserve currency... [but] the days of the US dollar playing that special role... has reached the end of the line, since today that system is very sick and it is dying a slow death... Mr. Amaral added that we will soon see: "the major collapse of the US dollar creating the biggest international monetary crisis the world has ever seen..."This is why gold and silver prices are soaring:
The point is, it's not a matter of "if" the U.S. dollar will lose its status as the world's reserve currency... it's a process that is already underway.
Investors, foreign governments, and large corporations know there are serious, serious problems with the U.S. dollar, so they are fleeing to precious metals, which have historically been very reliable when a country has major currency problems.
In short: It's not hard to see why people are no longer accepting U.S. dollars... and why many foreign countries are pushing for a new world reserve currency.
The good news is, no matter what happens, I've found several ways for you to protect your savings – and you could even make 3- to 5-times your money over the next few years.
I'll show you exactly what to do in a moment. But first let me explain why the collapse of the dollar as the world's reserve currency could happen much sooner than most people expect...
of the U.S. Economy
I know many of my friends, colleagues, and family members are still in serious denial.
In the world of psychology, they call this the "normalcy bias."
You see, the normalcy bias actually refers to our natural reactions when facing a crisis.
The normalcy bias causes smart people to underestimate the possibility of a disaster and its effects. In short: People believe that since something has never happened before... it never will. We are all guilty of it... it's just human nature.
The normalcy bias also makes people unable to deal with a disaster, once it has occurred. Basically... people have a really hard time preparing for and dealing with something they have never experienced.
The normalcy bias often results in unnecessary deaths in disaster situations. For example, think about the Jewish populations of World War II...
As Barton Biggs reports in his book, Wealth, War, and Wisdom:
"By the end of 1935, 100,000 Jews had left Germany, but 450,000 still [remained]. Wealthy Jewish families... kept thinking and hoping that the worst was over...Just think about what was going on at the time. Jews were arrested, beaten, taxed, robbed, and jailed for no reason other than the fact that they practiced a particular religion. As a result, they were shipped off to concentration camps. Their houses and businesses were seized.
Yet most Jews STILL didn't leave Nazi Germany, because they simply couldn't believe that things would get as bad as they did. That's the normalcy bias... with devastating results.
We saw the same thing happen during Hurricane Katrina...
Even as it became clear that the levee system was not going to work, tens of thousands of people stayed in their homes, directly in the line of the oncoming waves of water.
People had never seen things get this bad before... so they simply didn't believe it could happen. As a result, nearly 2,000 residents died.
Again... it's the "normalcy bias."
We simply refuse to see the evidence that's right in front of our face, because it is unlike anything we have experienced before.
The normalcy bias kicks in... and we continue to go about our lives as if nothing is unusual or out of the ordinary.
Well, we're seeing the same thing happen in the United States right now.
We have been the world's most powerful country for nearly 100 years. The U.S. dollar has reigned supreme as the world's reserve currency for more than 50 years.
Most of us in America simply cannot fathom these things changing. But I promise you this: Things are changing... and faster than most people realize.
For a moment, just look at a tiny fraction of the evidence around us....
** 14% OF POPULATION ON FOODSTAMPS
Did you know that there are now nearly 44 million Americans on food stamps? That's nearly 14% of the entire population. Those numbers are up 16% from 2009... and that translates to roughly 1 in 7 Americans!
Can a country really be in good shape when 14% of the population can't even afford to buy food?
Or how about this...
** 43% OF AMERICAN FAMILIES ARE ESSENTIALLY BROKE
According to a recent article on MSN Money, about 43% of the American families spend more than they earn each year.
Look at this chart... it's unbelievable..
The average household carries $8,000 in credit card debt... and personal bankruptcies have doubled in the past decade.
How in the world can we possibly spend our way out of the current crisis?
We certainly can't do it with savings... the only answer is to print more money, which will hasten the fall of the U.S. dollar as the world's reserve currency.
** SOARING FOOD PRICES AROUND THE GLOBE
World food prices soaring offers still more evidence that something unusual is happening. Food prices and the market for U.S. Treasurys are negatively correlated (as you can see in the chart below).
That is, as food prices rise, U.S. Treasurys fall. We know there's a fundamental reason for this: food, around the world, is priced in U.S. dollars. As people begin to fear inflation, they buy food and sell U.S. Treasurys. Judging by food prices, the market for U.S. Treasurys is likely to collapse.
What's amazing to me is that so few people make these simple connections. I think it's going to be exactly like the mortgage mess we saw a few years ago. In hindsight, people will look back and be shocked that they didn't see this coming. But for now, they just go on blissfully ignorant about what is happening.
And that brings me to...
** THE MYSTERY OF DISAPPEARING JOBS
There's simply no one better at bending statistics than the U.S. government. Take the unemployment rate, for example. Back in the 1930s, anyone without a job but not retired was considered "unemployed."
Today, however, the government calculates unemployment mainly by counting the number of people receiving unemployment benefits. So when people's benefits expire, they are no longer counted... and the unemployment rate actually falls! Ridiculous... I know.
But the reality is, the true unemployment rate is much, much higher than what the government is reporting.
If you don't believe me, look at two job postings I read about recently..
In Long Island City, an estimated 2,000 people waited in line at the local employment office – some for as long as four days! – to apply for 100 elevator mechanic apprenticeship positions.
We even found a photo of this incredible scene...
And in Massillon, Ohio, 700 people recently applied for a single janitorial job... paying $16 an hour, plus benefits!
The point is, our country is not growing jobs, because the government makes it harder and harder for businesses. With current regulations in place, our country will never experience the type of growth necessary to dig our government out of the hole they've put themselves in.
I'm sure you think I'm exaggerating, but just look at what the CEO of one of America's most important companies said just a few weeks ago..
Intel CEO Paul Otellini said in a recent speech: "I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States"
He said that 90% of the additional costs are not from higher labor rates... but from higher taxes and regulatory charges, which other nations simply don't impose.
Cypress Semiconductor CEO T.J. Rodgers agreed that the problem is not higher U.S. wages, but anti-business laws. He was quoted in an interview with CNET News: "The killer factor in California for a manufacturer to create, say, a thousand blue-collar jobs is a hostile government that doesn't want you there and demonstrates it in thousands of ways."
Few Americans today realize that we have the second highest corporate tax rate in the world. And since Japan's prime minister announced that his country's corporate tax rate will by cut by 5% at the start of the next fiscal year... the U.S. will soon have THE highest corporate tax rate in the world.
Why would anyone want to start a business here, when they can do it for less money...and keep more of the money they make... by locating elsewhere?
It's just another good reason to avoid the U.S. dollar...
So is this:
** DEBT-RIDDEN U.S. COMPANIES
Did you know that in 1979, there were 61 American companies that earned a top-level AAA credit rating from Moody's?
Today, there are only four: Automatic Data Processing, Exxon, Johnson & Johnson, and Microsoft
Does this sound like an economic recovery to you... when only four companies in the entire country are stable enough to earn a triple-A credit rating?
Me neither. But it's nothing compared to what's going on in the housing sector...
** A CRAZY LAS VEGAS ECONOMICS STORY
You want to know how crazy things are in the U.S. right now...
Consider the bizarre state of the Las Vegas housing market, where The New York Times reports that building is booming again in a city where nearly 10,000 new houses are empty, thousands are in foreclosure, thousands of regular people have simply stopped paying their mortgages and around November 2010, average prices were down more than 60% since 2006.
What could possibly be driving this building mania?
Well, it turns are that buyers don't want homes that were built during the boom, because they sit in neighborhoods that look like ghost towns, and because many of these never-occupied houses are filled with cockroaches and other critters.
So local builders are doing the worst possible thing they could be doing in Las Vegas right now... building more homes! Similar scenarios are taking shape in Phoenix and other U.S. cities.
Of course, this might look good for economic numbers, but all it does is make the situation much, much worse in the long run.
Here's something else that should give most Americans pause... but is rarely mentioned in the mainstream press...
** IN THE STOCK MARKET, IT'S 1937 ALL OVER AGAIN
One of the most worrisome problems in the stock market right now is that we are basically repeating the exact same situation that occurred from 1937 to 1942.
Most Americans think we've had this amazing stock market recovery since the financial crisis of 2008... and we have to a certain extent.
But we are by no means out of the woods.
In fact, during America's last real economic collapse, in the 1930s and 1940s, we saw a similar drop and recovery... before the markets crashed all over again.
In fact, the situation is eerily similar.
Look at this chart... it's one of the scariest I've seen in a long time. It shows an overlay of what happened in the stock market in 1937 compared to 2008.
In both situations, we saw big crashes, of about the exact same magnitude... then a big recovery, again of about the same size.
But what will happen next?
Well, if history is any guide, we could well have another big leg down in the stock market. That's exactly what happened 70 years ago.
And with all of the problems left unresolved in our economy today, it could certainly happen again, especially if the U.S. dollar loses its reserve status.
The Wall Street Journal did report on this situation recently, and said:
"Over the last year the stock market has followed a path eerily similar to 1937. First, a strong, rapid run to a recovery high – same pace, same magnitude. Then a correction – again, the same. Will we continue on the path that led the correction of 1937 into a collapse in 1938?The point is, the cards are seriously stacked against us.
This looming currency crisis is inevitable.
Almost every state in the country is on the verge of bankruptcy. We have borrowed an impossible amount of money, which we'll never be able to pay back.
Our economy is an absolute mess. Taxes are sky high already... and will certainly go much higher over the next few years. And nearly all of the world's major financial players are preparing for an alternative to the U.S. dollar as the world's reserve currency.
To me, it is so obvious that we are about to experience a serious currency crisis, that I can't believe people can deny this reality with a straight face.
Again, if you don't believe a currency crisis is coming, just take another look at the price of gold and silver compared to the U.S. dollar over the past decade.
Think about this...
Silver is up more than 500% since the year 2000.
I mean... how high do precious metals prices have to go before the average American realizes how serious this problem is? To me, it's clear that investors would rather hold gold and silver, rather than U.S. dollars.
Anyone with any sense or basic understanding of economics can tell that the U.S. dollar is doomed. And it's going to have major repercussions, which the average American has not yet even considered.
So, what can you do?
Well, I've done a lot of research on this, and have found that there are a surprising number of simple things you can do to not only protect what you've currently got, but to also potentially make quite a bit of money as this currency crisis unfolds.
Here's what I recommend...
Yourself and Actually Make Money
So what should you do... to protect and possibly even grow your wealth in the next few years?
Well, there's a series of pretty simple financial moves I believe you should begin making, immediately.
And here's something I want you to keep in mind: I'm really only going to talk about your finances here.
As far as protecting your family... well... it depends on your circumstances. If you live in an urban area, I recommend making sure you've got somewhere you can go in case there are riots or food and water shortages. I think there's a very good chance we'll see that in the next two years.
Wherever you're going to wait out the chaos, I recommend you have basic food, water, and medical supplies to last you for at least six months.
Remember, you won't be able to count on the government during this crisis. Think about it... if the government couldn't even save the city of New Orleans during hurricane Katrina, how in the world will it save an entire country when all hell breaks loose?
And as I said earlier, the truth is, the government won't even try to save individual American citizens... the government will be much more concerned with saving itself.
As far as taking care of your money – to make sure you don't lose money and even use this situation to come out quite a bit ahead – well, that's where I can help you.
All of the moves I recommend are simple and fairly straightforward to implement – at least right now. If you wait to do these things, however, they will almost certainly get very expensive, difficult, and even impossible to do.
If you do these things now, not only will you be better prepared to weather the coming storm, I believe you could also make quite a bit of money over the next few years.
And if I'm wrong... well... that's the best part... I think you'll still make very good gains.
Even if all we get out of this crisis is a mild inflation, you will still be set up to do very, very well.
So here are the specific steps you should take...
STEP #1. GET SOME OF YOUR MONEY BEYOND THE REACH OF THE U.S. GOVERNMENT (it's perfectly legal, and a lot easier than you think)
I know you probably don't believe me when I tell you that the U.S. government is going to implement policies to save itself, which are unimaginable right now.
But remember, desperate governments will do very desperate things. That's why they outlawed the ownership of gold 80 years ago.
That's why they are already talking about "nationalizing" automatic 401(k) and retirement plans... and it's why it might soon be against the law to open a foreign bank account, or to move your money overseas without paying outrageous taxes.
The good news is, I met recently with a man who is considered one of the top "asset protection" attorneys in America.
In short, I learned that there are four simple investments you can make right now, which you DO NOT have to report to the U.S. government.
Don't get me wrong...
When and if you ever sell these things, years down the road, you are still required to pay taxes on your gains. But the great thing is, while you are holding these investments, so long as you play by the rules, neither you nor anyone else is required to report them to the government.
And this benefit should be obvious...
The less the government knows about where you have your money, the better. They simply will have a very hard time taking what they don't know you have.
I am personally putting a fairly significant portion of my portfolio into one of these assets. And I plan to hold it for a long time. No matter what happens, I know I'll have a significant amount of money that is beyond the government's grasp.
I'm not going to tell you exactly what I'm doing here in this letter, but I will explain everything in full detail in my new report, called: The 4 Investment Assets You Do NOT Have to Report to the U.S. Government. And I will gladly give you access to a copy, free of charge.
In addition to explaining how I'm protecting my own money, I'll show you three other places you can put your money, which you legally do not have to report to the U.S. government.
Of course, normally it would cost you thousands of dollars to meet with my asset protection attorney, and to take advantage of his best strategies. But I'll reveal everything you need to know to get started in this report.
Plus, I'd like to send you the information on...
STEP #2: HOW TO ACQUIRE THE WORLD'S SAFEST ASSETS, WHICH ARE LIKELY TO PERFORM BEST DURING THIS PERIOD.
What I'm talking about here is buying as much gold and silver as you can reasonably afford. I know... gold has had a huge run, jumping more than 300% in the past decade.
But believe me, when the U.S. dollar loses its status as the world's reserve currency, this early run is going to be a mere afterthought.
I will be surprised if gold does not reach $5,000 or $6,000 an ounce in the next few years.
The smartest money managers in the world, people like George Soros, David Einhorn, and John Paulson, have all recently taken huge positions in gold. And I think you are crazy to not do the same.
How should you do it?
There are many options. And my research firm has recently published a great book, called The Gold Investors Bible, which details in full all of the best ways to own and hold gold bullion.
In this volume, we reveal dozens of secrets about the gold industry... specifically the best ways to buy, sell, and store your gold. It explains why some gold coins are better than others. How to buy gold with ZERO dealer markup. How to easily and safely store some of your gold overseas, very cheaply... where to hide it... and so much more.
Not regularly available for sale, this book is valued at $24. I'd like to give you instant access to a copy, totally free of charge.
And what about silver?
Well, I believe silver will serve a unique role during this currency crisis.
Let me explain...
For most of recorded history, the price of gold has been around 16 times the price of silver. This ratio – the so-called "silver ratio" – has fluctuated from time to time based on silver discoveries and attempts by governments to regulate the silver-to-gold ratio. But... in a free market, where demand for silver as money exists, I'd expect the natural supply and demand balance to lead to a silver price around 1/16 times the price of gold.
Based on the historical ratio, with the price of gold around $1,500, the price of silver should be around $94. It's not, of course. Today, silver is trading around $38. Today then, gold is selling for more than 40-times the price of silver.
What explains the difference between hundreds of years of history and today? Why is silver still so cheap relative to gold?
When silver is "demonetized," as it is now (meaning it's not being used for money, but just for industrial purposes), supplies soar as people sell silver for gold and other currencies.
On the other hand, during periods of monetary crisis, demand for silver as money pushes the silver ratio heavily in silver's favor.
For example, the ratio returned to its historic range (16) during World War I. It happened again in the early 1970s, when Nixon abandoned the gold standard. It also happened most famously in 1979-1980, when it seemed as if America was really entering a serious money crisis
Most people don't know this, but silver is actually the best-performing asset of this century... not gold.
Gold has risen from $256 to $1,500 since 2000. That is a rise of 485%. Silver has risen from $4.02 to $38. That is a rise of 845%.
In short, silver is the best hedge against a money crisis.
As the dollar fails, silver will once again be in demand as money.
And as this demand materializes, the free market price of silver will likely return to around 1/16 the price of gold. When gold hits $2,000 an ounce, and assuming the price of gold is 16 times the price of silver, silver should be worth about $125. My multimillionaire friend and currency expert, Chris Weber, believes silver will likely hit $187 an ounce.
If that happens, you could make gains of around 400% if you invest at today's prices.
So what are the best ways to buy silver?
Well, my firm has done a ton of research on this precious metal. We have found great ways to hold the metal personally... to have it stored in a secure location in the United States or overseas... and more. We've put everything we know into a valuable guide called: Secrets of the Silver Market.
I'd like to give you this valuable resource, also free of charge. I'll show you how to get it in a second.
But first let me get to the 3rd financial step I recommend you take right now:
STEP #3: LEARN THE 100% SECRET
If you want the opportunity to make a lot of money during the coming crisis, one sure way to do it is to learn the intricacies of an unusual investment strategy that is now making some investors an absolute fortune.
At my research firm, we have been teaching readers this method for several years.
And get this: You don't have to buy a single stock to begin using this strategy... and it has nothing to do with "shorting."
In a nutshell, this is an approach that could enable you to safely extract gains of exactly 100% from the market... without ever owning or touching a stock.
Keep in mind: this strategy can play out in two very different ways. Though you'll always be able to keep the initial cash you extract from the market, there is a chance you will be required to purchase the underlying stock, at a price less favorable that its current market value. So please understand, there is risk involved with this strategy, and it probably won't be right for everyone.
But this can be such a sound market strategy, especially in times of financial uncertainty, that once you learn how it works, you might decide to never invest the old-fashioned way again.
That's why I call this the 100% Secret.
For example, look at how it has worked for a few of the folks I taught this secret to in recent years...
Last March, for example, Peter Kos of Boise, ID began using this strategy. He says he now makes an average of $10,000 per month. And Randy Bowman of Annapolis, MD told me he's made over $87,500 with this technique. Bernard Henderson of Carmel, IN, now collects an average of $100 a day. Another, Harold Welchik of New Brunswick, NJ, has made over $20,000.
Tim Hewitt from Sacramento probably put it best when he wrote me and said: "This has saved my portfolio."
That's why financial author Lee Lowell writes: "I've been a professional trader for 17 years... but many people have never heard of a [this investment], let alone used this strategy. This is a great way to get your hands on instant cash."
Pulitzer Prize winning author James Stewart learned this technique recently and said: "[These payouts] are so rich I consulted a colleague to make sure they were real."
This seldom-understood strategy is how we've helped dozens of people make incredible gains, even in a terrible stock market. And in all likelihood, when the stock market gets really bad, as I expect it soon will, this will be incredibly lucrative and safe strategy.
Everything you need to know is in my new report called: The 100% Secret: The Easiest Way to Make Money When Stocks are Risky.
I'll explain exactly how this investment strategy works so you can decide if its something that might be right for you. And I'll show you how you could begin to take advantage of it, starting immediately..
Believe me, this is something you want to learn about now. Because as the stock market begins to unravel, this incredible technique will likely get more and more lucrative.
And that brings me to:
STEP #4: MAKE SURE YOU OWN THE ONE ASSET THAT CAN HELP SAVE YOU AND YOUR FAMILY, NO MATTER HOW BAD THINGS GET
There's no telling exactly how bad things are going to get as this crisis unfolds.
I firmly believe there could be riots, marches in the streets, bank runs, massive arrests, and periods of uncontrollable mayhem... at least for several months as things begin to unravel.
But the good news is that there is one asset you can own (now widely available in America), which should help protect you and your family from this chaos... and could also likely make you a fortune in the years to come.
I'm not talking about guns or bonds or gold or other precious metals... or anything like that. And of course this has absolutely nothing to do with the stock market.
What I'm talking about is a very powerful asset that wealthy families have used for centuries to protect themselves... and preserve and build their fortunes.
An index tracking this asset has absolutely crushed the stock market between 1991 and 2009, by returning more than 13,000% during that period.
Best of all, it provided these gains with almost no volatility. Just look at the chart below.
See how that blue line goes straight up, without any hiccups?
Multimillionaire investor Barton Biggs wrote that this type of asset, throughout history, "protected both your wealth and your life."
During World War II, for example, when millions of families lost their entire life savings through inflation or government seizure, this was the one asset that enabled some families to protect, preserve, and grow their money.
What the average American doesn't realize is that many of the richest people in the United States have a significant ownership stake in this asset: The Walton family (of Wal-Mart fame), Bill Gates, Ted Turner, the Hilton family, Charles Schwab, Microsoft billionaire Paul Allen, the Hunt family (of Texas oil fame), the Hearst family, the Ford family, and more
As I mentioned, you can easily make this investment today, here in America. Probably less than 1% of the population owns it today... but it is readily available, and fairly inexpensive.
I've written up all of the details on everything you need to know. My full report is called: The World's Most Valuable Asset in a Time of Crises.
There are several ways to make this investment. I'll show you what they are.
Like I said, this has nothing to do with stocks, bonds, precious metals, guns, medicine, or anything like that. Yet it could save your family... and make you very wealthy in the coming years.
As my multi-millionaire friend Doug Casey says, it's the ONE THING you should own in the years to come.
I don't want to say any more about it than that, here in this letter. The truth is, the fewer people who know about this investment secret, the better.
So how can you begin taking these simple steps, right away?
Well, my company, Stansberry & Associates Investment Research, is a financial research firm.
We have a staff of about 50 people, and our main objective is to find safe and profitable investment ideas that you are not likely to hear about anywhere else.
Since we started this business a decade ago, we have helped a lot of people make a lot of money...
Harold Thiessen from Montana wrote recently to say: "My IRA has gone from a low of $315,000.00 to the present high of $952,000.00. I can only thank [you] for changing my life so much."
Dan Koffin, from San Diego, also contacted us recently to say: "Since joining, my portfolio has grown by several hundred thousand dollars. I look forward to a long and prosperous relationship."
We even got an interesting note recently from a reader named Ulysses Reuter, who says he has been making a "small killing" – enough to buy a nice-sized boat and a house in Mexico. Here's the photo he sent (below). He writes:
Mr. Reuter added: "We took delivery of her 3 weeks ago and are cruising the Bahamas. In October we will take her through the Panama Canal over to the Pacific side since I just bought a home in Mexico..."
Then there was the nice note from Mitchell Donavan, from Ithaca, New York. He said: "I was working long hours with overtime to make a living when I joined you. The excellent results have allowed me to retire early."
Believe me, nothing makes me feel better than receiving notes like these.
But I have to tell you, right now, I am really worried that a lot of our subscribers and many, many hard-working Americans are going to get caught totally by surprise when this inevitable crisis hits.
That's why I created this presentation, and that's why I'd like to send you the full details on exactly how I believe this is all going to unfold... and exactly how to protect yourself and even prosper during this crisis.
Remember: The government is not going to save you:
If the government couldn't save one small city from the disastrous news coming, then how is it going to save all of us when the [beep] really hits the fan?
You can either let things happen to you... or you can take a few simple steps and take charge of your family's fate.
As I mentioned earlier... when we began writing about the looming collapse of the bond market and the risks to the U.S. dollar, a lot of people called us "right-wing nutjobs" or "gold bugs."
But that was when silver was still less than $20. When gold was under $1000. That was before food prices soared. Before the Fed began to print trillions of new dollars every year and to use these dollars to buy our own bonds in one of the greatest Ponzi Schemes of all time. That was before folks realized most of the states are going bankrupt... before they saw that even doubling taxes wouldn't end our annual deficit.
We knew all of these things were going to happen... even though it was hard to believe our own conclusions.
And, we know all of these problems are going to get a lot worse. The fact is, we can't afford our debts. We can't stop printing money. And as a result, we're going to see a massive dollar crisis.
The only question is, what will it take for you to recognize the crisis I've been warning about? How high will gold have to go? How many banks will have to be seized by the FDIC? How high will oil have to soar? Or food prices? Or foreign currencies? When will you finally realize there's a problem...?
Even the Wall Street Journal can see the writing on the wall. They ran a story on March 2nd of this year called: Why the Dollar's Reign Is Near an End
I hope you will act now. When the situation finally turns, it will happen suddenly. If our government suddenly finds itself unable to sell bonds at a reasonable price, the rule of law will evaporate overnight.
Most people will do nothing. They will continue to assume tomorrow is likely to be pretty much the same. These people are going to get wiped out.
Please, don't let that happen to you and your family.
The nice thing is, you can give my research a look, and receive everything I've mentioned here, at absolutely no risk or obligation.
Simply let me know you'd like to take a trial subscription to my monthly newsletter, called Stansberry's Investment Advisory, and I will immediately give you access to:
Research Report #1: The 4 Investment Assets You Do NOT Have to Report to the U.S. Government
Research Report #2: The Gold Investor's Bible
Research Report #3: Secrets of the Silver Market
Research Report #4: The 100% Secret: The Easiest Way to Make Money When Stocks are Risky.
Research Report #5: The World's Most Valuable Asset in a Time of Crises
Also, on the first Friday of each month, I'll send you my monthly newsletter, Stansberry's Investment Advisory. I'll keep you up to date on exactly what's going on regarding this financial crisis, and I'll show you some unusual and incredible ways to make money now and as it begins to unfold.
We have found some great ways to make a fortune as the government continues to try to bail out one failing industry after another.
I'll also keep you up to date on what I am doing to protect myself. I'll make sure you stay abreast of changes to the laws and government interventions.
And... every day the markets are open, I'll send you my paid-subscribers-only e-mail called the Stansberry & Associates Digest.
In short, I report on all the work my firm is doing... the most interesting investment ideas... what we're researching now... and what we expect to happen in the months to come.
So how much does my work cost... and how can you get started?
Well, a one-year subscription, including everything I mentioned here, normally costs $99 per year – that's what many others have paid.
But right now, you can try my research, for HALF-OFF the normal rate. You'll pay just $49.50 for an entire year.
Why so cheap?
Well, to be honest, our business really only works if our subscribers stick with us for the long-term. But we realize you've got to try our work first, to see if it's right for you.
And that's why, through this letter, we're making it so cheap, and essentially risk-free to try. What I mean is, you'll have the next four months to take a look at the Research Reports I've just described, plus the next four issues of my newsletter... and the next four months of my daily Digest reports.
If you decide for any reason my work is not right for you, just let us know and you can receive a full refund... and keep everything you've received so far.
In other words, by taking me up on this offer, you are agreeing only to TRY my work to see if you like it.
I hope you'll consider this offer seriously. I know in my heart it will be one of the best financial moves you ever make.
To get started, simply click on the link below, which will take you to a secure order form. Your order will be processed immediately, and you'll have access to all of my work in a matter of minutes.
Founder, Stansberry & Associates Investment Research
LEGAL DISCLAIMER: This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. Stansberry & Associates Investment Research expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. And all Stansberry & Associates Investment Research (and affiliated companies), employees, and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation.