Two Graphs

There is a simplicity to owning stuff that will keep you alive and store your wealth.

Of course, simplicity does not feed money transfer institutions like banks and government. Thus, we are programmed to wallow around in the mud pen of paper money and "investments."  Once we are slopping this pen, the farmers can muck around. Like in Vegas, sometimes someone wins and keeps us all slopping around.

Below is a simple graph that shows how the S&P, for our purposes the established stock market, is doing, as defined in the purchasing power of the wealth reflected in the S&P, as determined by including the Consumer Price Index. To put it another way, the actual value of the S&P is the dotted line, when you consider what the wealth therein can buy.

The end-time to the graph is not marked, but it is roughly now.

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The Real S&P is moving negatively for the thirteen years, yet T.V. will echo how great it is that the stock market is in a rally. The stock market is assumed to be the economy for T.V.watchers.  The great delusion, then, is that  all is well, so don't worry. However, you instinctively know your purchasing ability is declining.  You also know, the dollar is purposely being devalued and will be for years.  

The graph shows the same old story: starting in the 1990s, the economy began the internally generated distortion. The market exploded, crashed, exploded, crashed, and now is touted as a great place to invest, apparently, it will never crash again. All that time, the true value of the S&P deteriorates - where is the wealth going?  You may want to look to the farmers.

Here is another graph: 

This is easily understood. On the left is an analysis of how sectors grew after a recession in the past.  On the right, after the 2008 crash profits have jumped, but labor lags. This is because companies figured out how to retain profits through cost-cutting and using efficient techniques, not because employees returned.  I didn't include the graph that shows, using 1990s definitions, the unemployment rate is a constant 9.9%.  Even the Wall Street Journal will not publish the real numbers and sticks with Obama numbers. No one wants to say the boat is sinking.  Just like with the dollar, one can get nice numbers by ignoring history.

What will happen, if not already in the process, businesses will run out of clever things to do. In order to survive, then, they will begin to lay off more people.  When the socialist medical plan hits, more people will be put off full time employment, as well as find their insurance premiums doubling. 

So, stick to simple.  Have a nice parcel of land where the pig farmers don't tax the land so much.  Become your own farmer and all the complexity vanishes.  Bad times are here, moving slowly, and you don't want to have your money invested in the Cyprus or your 401k.

On the 401k, the farmers are waiting for their chance to take retirement accounts, so consider that risk against the ACTUAL deterioration of your wealth as it sits in stocks.  Would you prefer having gold or stock since 2000?  

One hears arguments about how gold is not an investment.  It is not an investment in the sense of placing money on a roulette table. It is a way to park assets and retain value, unlike investing in your house, the last ponzi scheme.  The spot price of gold is down, these days, to around $1,600.  Terrible considering that is only a 400% increase in "dollar" value.  I should add that, silver is the place to park money, as gold will likely be confiscated again.