Monday, June 16, 2014

Mike Maloney on "The Death of the Dollar"

This presentation by Mike Maloney  on all the events that are leading to the end of the US Dollar as a global reserve currency is worth the time to watch. Normally I don't link to presenations that are connected to sites that sell a product. But this presentation is so well done and so well documented I will make an exception here.

What makes this so good is the history and background Mr. Maloney lays out in support of his analysis. Then he methodically walks the listener through the many events that are leading towards the end of the US dollar as reserve currency. He does a great job of illustrating how dollar negative events are happening more often and closer together time wise.  The visual impact of the presentation is powerful.

For those so inclined  there is a link on the page for this presentation that will take you to an additional more detailed presentation  that is also excellent. However, I will warn you upfront that to view that more detailed presentation, they require you to give them an email address (so they can send you promotional material by email). I don't mind this for myself if the information is worthwhile (as it is in this case). However, I wanted to advise readers ahead of time. The first presentation linked above however is accessible on Youtube without having to provide any information.

I can give a quick summary of the more detailed version for those interested since I did watch it. Mr. Maloney makes a compelling case for why he thinks we are headed towards a massive deflation event

He has been predicting (and still is) that the Central Banks will lose their battle to stave off deflation and explains why using very solid demographic data. He explains that in the US the "baby boom" generation is entering a phase of life where as a group they can be expected to start doing things that shrink the supply of credit and capital (paying off loans and mortgages, selling stock for retirement, etc). Up until now they have doing things that expand the supply of credit and capital (borrowing and investing). So this is a massive demographic shift he illustrates with a great visual graphic in the detailed video (it shows the baby boomers moving through the system in a wave over time).

He feels the FED is fighting an uphill battle against this massive demographic shift and will lose the battle. He then expects a more desparate attempt to try and reflate again which will lead to a massive spike in asset classes like precious metals and other hard assets because a lot more of that expanded money supply will make it out into the economy and juice up the velocity of money as well. He also believes the financial authorties will do a sudden revaluation of gold (increase the price of gold relative to other asset classes) to stablize the system when this crisis arrives. But the key is that he sees the deflation event coming first; contrary to many others who see the reflation event coming first. He gives a time frame of between now and 2020 for these events to take place.

While the web site owned by Mr. Maloney is in the business of selling precious metals, I think his presentation is credible and worth the time to watch. He doesn't just throw out scary sounding phrases with no supporting facts. He methodically supports his analysis with data and graphics. This is what I look for in deciding who to present here on this blog. Keeping an open mind and listening to those who do solid analysis is something I will always try to do here.

Just understand that he has a bias towards precious metals and a profit motive in selling them. Like Jim Rickards, he provides solid data and logic to support why he favors hard assets as part of a person's insurance portfolio. I have no problems with how he presents his case and agree with his basic concept that it is wise for everyone who can afford it to include precious metals as part of a balanced portfolio. Done correctly, they become like insurance and not a speculative bet (something I do not believe is wise).

Added note: Later this week we will take a look at events in Iraq and the recent move by the ECB to implement negative interest rates to see if these could be significant in terms of leading to monetary system change or triggering any kind of crisis. There is a lot happening all around the world. We will try our best to stay on top of it.

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