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I asked this question all the time and never get the right answer. So, here goes.
Rome was an empire. Rome at it's peak had conquered all its neighbors. Empires can demand and get tribute from those it has vanquished in the form of gold, grain, slaves, spices, silk, olive oil, wine, wild animals for the coliseum sports etc. The United States of America has been the empire in the world for the past 100 plus years. We have over 725 military bases around the world. So, don't tell me otherwise.
What, how and why did we get our tribute? Tribute is a Roman word for pay as an acknowledgment of subjugation for protection from invasion, etc. We ruled the seas, the air, the markets. We were strong. We were and still are the policeman of the world. That was part of the reason Rome fell, by the way. Spending all their money trying to police their empire. We are rich. Wall Street ruled the world markets for years. Business across the land flourished. We had natural resources (gold, iron, coal) and fertile farm land. We deserved it and I say we got tribute. In spades! How? I say we deserved and we got tribute. We lived the high life all these 100 years and exported our inflation to other nations. Yes, the rest of the world had to take our fiat paper money that was consistently losing value. The U.S. dollar of 1913 is now worth only 4 cents. We made out like bandits. They had to take our paper money that was losing 5% per year in value some years. The world is awash with it. While we lived high on the hog. We exported our inflation to other countries. We lived it up at the expense of the whole rest of the world with our made-up monopoly money.
95% of all U.S. paper money ever printed is in other nations. There is a huge market hedging interest rate risk on our dollars in Europe. It's a debt instrument on the commodity exchange called Euro dollars - not the Euro currency. Total open interest 8/6/2010 was a whopping - $7,830,000,000,000.
Our empire is ending. The GREATER DEPRESSION started in year 2000, according to Robert Prechter's book CONQUER THE CRASH 2002 with the dot com stock market peak. China will be the next empire. What happens when all that money and the $860 billion that China holds tries to come back?
You can plan on big time drops in prices of real estate, stocks, corporate and municipal bonds, commodities (yes, gold and especially silver, palladium and platinum since the are all industrial metals) and antiques/art/collectables in the deflation economy.. This will be a nightmare. I expect "Antiques Roadshow" to go off the air. You can't eat that stuff. I was watching it the other night and someone on the program said some prices were down by 33% in some areas of collecting.
We are firm believers in Robert Prechter's Elliott Wave analysis. How markets and indeed all nature seems to work. Socionomics is his new study of the marriage of sociology and economics in relation to societies mood swings from positive to negative and someday back to positive. For now, Prechter sees societies mood waning (pessimistic) until 2016. He says the effect on investment markets will be disastrous due to the fact that man is a herd animal and always seems to over do it and over invest at the tops of markets. He says we had a mania that will now correct in a Grand Super Cycle depression three time longer and three times bigger than the one we had in the 1930's. Prechter is on record as saying most assets may drop 90 percent from peak.
Robert Prechter has found it is better to be a contrarian investor. When the direction of the cycle wave changes to a deflation economy in the coming GREATER DEPRESSION, he says to be cautious. Cash will be King!
That's my tribute to tribute. Copyright 2010 - http://www.deflationeconomy.com Reprint rights allowed with attribution back.
What is deflation? How to survive and get rich in the deflation economy and GREATER DEPRESSION. Get FREE 90 page DOWNLOAD "Understanding Deflation Guide" at: http://www.deflationeconomy.com
Delwyn Lounsbury THE DEFLATION GURU He is an Eagle Scout. He has been and award-winning real estate agent in California since 1968. He published The Economic Survival Letter in the late 1970's.
Email: delwynlounsbury@aol.com
Phone: 925-575-1735
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