LA is being engulfed in riots… again.
Footage shows “protestors” storming ICE centers, destroying property, blocking traffic and worse. The media, as usual, is providing moral cover for these actions because apparently the law shouldn’t apply to you provided you support the correct political causes.
As I watch the footage, a thought keeps coming back to me…
Is the U.S. becoming an emerging market?
Everywhere you look, there are signs.
Endemic corruption… a two-tiered society in which more and more wealth is concentrated in the hands of fewer and fewer individuals… jaw dropping levels of debt in every segment of society (corporate, municipal, personal, and of course, national)… phony government data that has no connection to economic realities… a permanent bureaucracy that really runs things, rendering elections almost useless… a weak currency that buys less and less every year… and of course, a class of media gatekeepers who keep telling us everything is fine and that we need to trust decisionmakers.
Of all these issues, the $USD poses the greatest concern. The only reason the U.S. has been able to get away with its obscene debt levels is because it controls the reserve currency of the world. But the defining characteristic of the $USD is that it loses value every year. Indeed, the greenback has lost over a THIRD of its purchasing power since 2008.
Throughout this period, the U.S. added over $25 trillion in debt on a national level while corporations issued $7 trillion in debt, and the private sector took on over $16 trillion in debt. The typical American has over $7,000 in credit card debt, $252,000 in mortgage debt, and possible $25,000 in auto loans or even more in student loans. And incomes for the bottom 20% of earners haven’t grown 20 years.
This is the real reason people are so Fed up. Sure, much of the “protests” we hear about are organized and funded, not organic, but would people really be signing up to go protest if they were happy with their lot in life? Does anyone with a decent job who doesn’t feel like the system is rigged really want to go lose their mind in public on a weekend?
Who knows. But all of this is feeling more and more like the U.S. has crossed some line… some point at which things no longer make sense when you look at them from the perspective of a civilized society.
What does this mean for the markets?
The defining characteristic for an emerging market economy is higher inflation due to a weak currency. The U.S. certainly looks to be heading that way. Most of the stock markets’ returns in the last decade have been due to the $USD losing so much value, NOT real organic growth. If you price stocks in gold, the S&P 500 is trading at the same levels it hit in 2013!
Put simply, the only way to maintain your purchasing power or better yet, grow your wealth, is to have exposure to investments that profit from inflation.
We recently detailed three such investments in a Special Investment Report titled How to Profit From Inflation. It shows you where to put your capital to ensure that your money is working for you, not falling behind due to a weak $USD.
Normally, we’d only share this information with our paying clients, but with the U.S. exhibiting more and more signs of becoming an emerging market, we are making 99 copies available to the general investing public.
To pick up yours…
Best Regards
Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research
