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How To Beat Inflation

Protecting the purchasing power of your wealth
Friday, July 29, 2016, 3:31 PM

Executive Summary

  • Taking Advantage of Subsidies
  • The Importance of Adding New Income Streams
  • Income-Producing Assets
  • Hedges, Cost-Controls & Other Strategies

If you have not yet read Part 1: The Burrito Index: Consumer Prices Have Soared 160% Since 2001, available free to all readers, please click here to read it first.

In Part 1, we compared official rates of inflation with hard data from the real world, and found that it’s not just the cost of burritos that has soared over 100% while inflation has supposedly been trundling along at 1% or 2% per year. The real killer is the soaring cost of big-ticket essentials such as rent, higher education and healthcare.

So what can we do about it? There are only a few strategies that can make a real difference: either qualify for subsidies (i.e. lower household income), own assets and income streams that keep up with real-world inflation, or radically reduce the cost structure of big-ticket household expenses.

Qualify for Subsidies

Though it runs counter to our philosophy of self-reliance, we have to address incentives offered by the system we inhabit. One powerful set of incentives is entitlement subsidies for lower income households: rent subsidies (Section 8), healthcare subsidies (Medicaid and ACA/Obamacare), college tuition waivers, food subsidies (food stamps), free school lunches, and so on.

These programs were designed to aid households that cannot earn more income, but for households on the borderline between paying full freight (no subsidies) and receiving some subsidies, it makes sense to work less, earn less and qualify for substantial subsidies.

I am not recommending gaming the system, I am simply noting that subsidies exist and those who earn just above qualifying incomes are in effect punished for earning a bit too much.

In many cases, we assume subsidies are reserved for “poor people” and we don’t qualify. For entitlements such as food stamps (SNAP), this is generally the case. But other programs offer some subsidies to households with incomes that are substantial... » Read more

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Hoping For A Market Crash

If we inflate much higher, the fall is likely to kill us
Thursday, July 28, 2016, 1:32 AM

We desperately need to have new national and global conversations about everything from how we’ll feed everyone in 2050, to developing a coherent sustainable energy policy, to the fact that each year is hotter than the year before, to the idea that we’re living with a soul crushing sense of scarcity in a world of abundance.

There’s lots that needs addressing, and the process should begin with letting go of the old narrative so that we can make space for assembling the new one. » Read more

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Off The Cuff: The Message Is Spreading

And reaching more influencers than we realized
Friday, July 22, 2016, 9:46 PM

In this week's Off The Cuff podcast, Chris and I summarize our experiences last week at Freedom Fest, as well as Chris' subsequent trip to the Opal wealth conference in Newport.

The quick synopsis is that the Peak Prosperity message is spreading. And influencing more decision makers than either of us realized.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Strange Happenings in Japan

Reckless leadership with a hidden agenda
Monday, July 11, 2016, 8:22 PM

The whole world now waits to see which central bank is up next to do the heavy lifting for the next round of stock and bond propping.

And so Japan is now front and center on that stage again. Especially since Bernanke just traveled there to conclude a "secret" meeting with Prime Minister Abe and Bank of Japan head Kuroda. » Read more

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Investing For Crisis

The future of stocks, gold & safe havens
Friday, July 8, 2016, 3:03 PM

Executive Summary

  • Which coming developments we can predict with certainty
  • Why the next crisis won't be like 2008
  • Why what worked post-2008 won't work this time
  • Where stocks and gold are headed
  • Where to find safe haven for your investment capital

If you have not yet read The Great Market Tide Has Now Shifted To Risk-Off Assets, available free to all readers, please click here to read it first.

In Part 1, we reviewed the market’s risk-on, risk-off gyrations and laid out the case for long-term declines in confidence, political stability and profits.  What does this new era of uncertainty mean for individual investors?

What’s Predictable?

We can start by asking—is there anything we can predict with any certainty?

I think we can very confidently predict that future central bank monetary policies will fail to generate sustainable growth or fix what’s broken in the global financial system.

I think we can predict that uncertainty will only increase with time rather than decrease. This rise of uncertainty will predictably lower the attractiveness of risk-on assets, other than as short-term speculative bets after some central banker issues yet another “whatever it takes” proclamation.

It’s also a pretty good bet that if central banks and states continue expanding credit/money that isn’t matched by a corresponding expansion of goods and services, the purchasing power of those currencies will decline.

We can very confidently predict that the authorities will continue to do more of what has failed spectacularly until they are removed from power or the system breaks down.

We can predict with some confidence that issuing more debt will provide little productive results.

I also think we can hazard a guess that the next financial crisis will be of a different sort than the 2008-09 Global Financial Meltdown.

Just as generals prepare to fight the last war, with predictably dismal results (unless the exact same war is replayed, which rarely seems to happen), central bankers are fully prepared to stave off a crisis like the one in 2008: a financial crisis that emerges from leveraged bets going bad in money-center investment banks.

My basic presumption is... » Read more

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Off The Cuff: Something Crazy Is Getting Ready To Happen

The next major crisis is set to blow
Thursday, July 7, 2016, 4:45 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • The FBI Findings Regarding Clinton's Emails
    • It really does seem there's a different set of rules for the privileged
  • Something Crazy Is Getting Ready To Happen
    • Why the next major crisis is set to blow
  • Watch The Bank Stocks
    • When they've dropped this far, you know there's trouble
  • The New Bull Market For Gold & Silver
    • Many mining stock are up 300-500%

Wow, so much ground to cover this week. And Chris and John do a great job of covering as much as they can. What does the FBI's hands-off approach to Clinton say about the fairness of rule of law in today's society? What systemic fault lines has Brexit opened for the EU, as well as the rest of the world? Why is the banking system suddenly looking so sick? What does the recent surge in precious metals portend?

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Off The Cuff: The Prosperity Pie Is Shrinking

The root macro challenge of our time
Friday, July 1, 2016, 11:16 AM

In this week's Off The Cuff podcast, Chris and Mish Shedlock discuss:

  • The Battle Behind Brexit
    • An underlying story of the masses vs the elites
  • The Prosperity Pie Is Shrinking
    • The macro issue of our time
  • Election Rigging
    • A near-certainty at this point
  • Gold & Silver Streak
    • Finally! Some upward momentum

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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How My Personal Portfolio Is Positioned Right Now

You've asked. I answer.
Friday, June 24, 2016, 4:46 PM

Executive Summary

If you have not yet read Part 1: Fortunes Will Be Made & Lost When Capital Flees To Safety available free to all readers, please click here to read it first.

So, given the conclusions in Part 1 -- as well as the larger risks to the economy and financial markets that we analyze daily here at Peak Prosperity -- how am I positioning my own personal investments?

I get asked this question often. Often enough that I'm deciding to open the kimono here and let it drop to the ground. Everyone interested to look will get the full frontal.

Before I do though, let me make a few things absolutely clear. This is NOT personal financial advice. The investment choices I've made are based on my own unique situation, financial goals and risk tolerance. And I may change these choices at any moment given new market developments. What's appropriate for me may not be for you, so DO NOT blindly duplicate what I'm doing.

As always, we recommend working with a professional financial adviser to build an investment plan customized to your own needs and objectives. (If you do not have a financial adviser or do not feel comfortable with your current adviser's expertise in the market risks we discuss here at PeakProsperity.com, consider scheduling a free consultation with our endorsed adviser)

Suffice it to say, any investment ideas sparked by this report should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good...

OK, with that out of the way, let's get started. I'll walk through the asset classes I own and my rationale for holding each.

The strategy behind my portfolio allocation is of my own devise, though it has been influenced in no small part by the good folks at New Harbor Financial, Peak Prosperity's aforementioned endorsed financial adviser.

At a high level, it has been constructed to address my strongly-held conclusions that:

  • Prices of most asset classes are dangerously overvalued
  • The risk of another economic contraction on par with (or greater than) the Great Recession within the next 2-4 years is uncomfortably high
  • The most likely path is we will experience a short period of coming deflation, followed soon after by one of high inflation as central banks starting printing currency without restraint (the Ka-POOM theory)
  • Capital will increasingly want to flow from paper assets (tertiary wealth) into tangible ones (primary and secondary wealth)
  • This is a time to prioritize protecting capital (defense) over speculating on how to grow it (offense)
  • Diversification is wise: just be emotionally prepared that some of your bets, by definition, will not pay off
  • In today's world of financial repression, no asset class is truly "safe". As such, asset performance is all relative.

This is not a swing-for-the-fences portfolio. It's much more of a prepare-for-the-storm approach... » Read more

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Brexit Shocker!

Making sense of what just happened
Friday, June 24, 2016, 10:30 AM

The political and financial landscapes have been altered by last night upset "Leave" vote in Britain and now we have to try and make sense of the new terrain.

This is huge. Not that a Brexit 'Leave' vote has anything at all to with, say, Caterpillar’s earnings over the next few quarters. It has nothing at all to do with anything fundamental, but these “”markets”” have been anything but fundamental for years.

They've become gigantic, globally interconnected, leveraged speculating casinos. Nothing but a massive set of bubbles in search of a pin.

It looks like they may have just found one... » Read more

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Dreamstime

Off the Cuff: Things Are Toppy

Even the big players are starting to lose
Tuesday, June 21, 2016, 10:34 PM

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more