We are in a major paradigm shift that like a tsunami starts slowly and ends with the landscape wiped clean. The paradigm shift is from paper assets to real tangible assets. This shift happens every generation or so,where one asset class dramatically outperforms the other. The 40′s and 50′s paper assets like stocks and bonds were the place to be. In the 60′s and 70′s real assets like oil,cattle and precious metals were the best performing assets. In the 80′s and 90′s paper assets once again reigned supreme. Since 2000 there has been a real rush form paper assets to real assets once again. This paradigm shift will be much more dramatic than anything we have seen in our life time. This asset shift is going to coincide with a major shifts in demographics,politics,and world power.
The collapse of paper assets will not only include stocks and bonds,it will be the collapse of the entire basis of our society,the dollar. The dollar is the nexus of all commerce and is our way of life. The almighty dollar has terminal cancer and it will not recover to live to see the next paradigm. This shift from paper assets and real assets is driven by money/debt creation. Since our dollar IS debt,it is necessary for more debt to be created every year in excess of the debt AND interest accrued the year before. The majority of this debt was created during boom times when no one feared debt. When the inevitable slow down came,the Elite created more money/debt to keep the system going. This new money/debt creation,relative to the amount of real goods and services in a slowing economy,produces more inflation which naturally boosts the value of real assets.
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