QOTD: “…the legitimate question is: How much time does money/credit have left and what are the investment consequences between now and then? Well, first I will admit that my supernova metaphor is more instructive than literal. The end of the global monetary system is not nigh. But the entropic characterization is most illustrative. Credit is now funneled increasingly into market speculation as opposed to productive innovation. Asset price appreciation as opposed to simple yield or “carry” is now critical to maintain the system’s momentum and longevity. Investment banking, which only a decade ago promoted small business development and transition to public markets, now is dominated by leveraged speculation and the Ponzi finance Minsky once warned against.
So our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic – it is running out of energy and time. When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; when lenders desert credit markets for other alternatives such as cash or real assets.” –Jeffrey Carter
As economic conditions around the globe deteriorate and super powers vie for military, political and financial position, governments are increasingly putting their focus on the acquisition of resources.
In China, where the government essentially owns all aspects of the economy, national wealth funds are being rapidly diversified into everything from agricultural resources and international energy exploration, to precious metals and rare earth minerals. Take, for example, the Chinese invasion of Tibet in 2008, which the People’s Republic cited as a political annexation. While politics certainly played a role, there was a much more sinister and strategic power-play at the core of the military occupation. Tibet is rich in one key resource that China lacks for its 1 billion strong population – fresh, clean water. That alone is motivation enough to send in the army when your own rivers and eco-systems have been destroyed because of unsustainable manufacturing practices.
The U.S., for its part, is very much involved in similar strategic machinations. Given the trillions of dollars being generated, who could realistically deny that our primary purpose for military hegemony in the middle east is focused solely on the acquisition of cheap oil resources (Iraq) to keep the U.S. economy afloat and rare earth deposits like uranium (Afghanistan) that provide essential components for the defense industry?
Countries all over the world, large and small, are racing to get their hands on anything of value, and they are actively and without regret nationalizing once private industries across the board.
It’s happening as we speak.
You look at what’s just recently happened in Argentina. In 2012 Argentina basically nationalized the oil sector and with that it had a major spillover effect.
From there, look at Venezuela and Bolivia, and what happened in the last ten years. The same situation.
This is a cold war of resources.
A big pinch of resources is really happening where these national oil companies are kicking out these foreign exploration companies.
And it’s going to become a major, major issue moving forward.
You look at Venezuela… they’ve actually decreased their oil production since Chavez has been in power.
There’s a nationalization of global resources occurring now.
It’s difficult to paint with a broad brush, but I really like following the smart money – the management teams that truly understand, not just the commodity, but the political minefield of where they’re at.
Listen to energy expert Marin Katusa of Casey Research discuss the geo-political strategy of resource domination, learn how to spot trends that will change the face of how resources are shared and acquired over the coming decade, and develop investment strategies to protect and grow your wealth in our ever-changing global landscape:
With the U.S. already in fiscal and economic trouble, leaders of nations all over the world are making moves to restrict our access to key commodities and resources. Some of them, including China and Russia, are no longer using the U.S. dollar in trade, and are switching to gold or other instruments.
They’ve seen how political forces within the U.S. government have progressively weakened the domestic availability of key commodities like oil, food, and our power grid supply originating from coal and nuclear. Special interests, through legislative mandates and regulations, have created a national security situation that could prove disastrous in the future, as the United States will be wholly dependent on foreign supply for essential resources needed to run our country on every level.
With the global grab for resources happening in full force, the long-term effect will be ever more scarcity and higher prices. This is inevitable, because as the global population continues to put more strain on the system and more people in places like India and China increase their quality of life, most political leaders will opt to take care of their domestic requirements before those of the United States.
Thus, the only option for those concerned with this long-term trend is to continue investing their wealth into physical commodities. For some, that’s reserve food, tools, land, precious metals and sustainable energy practices. For others, who have retirement portfolios or personal savings, diversifying into unconventional assets that will thrive when others collapse in value will be the key to maintaining and growing wealth.
Today is Dietrich Bonhoeffer’s birthday. Today I’m honoring his memory. How much do you know about this remarkable man? He was a courageous Christian pastor in Germany during the 1930s and 40s who resisted the Nazi attempt to take-over and apostasize the Church. Bonhoeffer was deeply committed to resisting evil, standing for the Truth, teaching the Word of God, preaching the Gospel, rescuing Jews. What’s more, he secretly discipled young pastors in Germany to do the same. One of Bonhoeffer’s most powerful books was, The Cost of Discipleship. I read it in college and it had a profound effect on me. April 1945, he was hanged for participating in a plot to assassinate Hitler. I’m currently reading Eric Metaxas’ riveting book, Bonhoeffer: Pastor, Martyr, Prophet, Spy, and highly recommend it. If you can go hear Eric speak during his 10-city “Bonhoeffer Tour,”I’d encourage you to do it. The tour begins this Friday.