DINARRECAPS8 6/3/24 DINARRECAPS8 6/3/24

Gold Will Soon Displace The US Dollar, And Americans Are Missing Out

Notes From the Field By James Hickman (Simon Black) June 3 2024

Next month will mark 80 years since the US dollar was formally anointed as the world’s reserve currency.

It was July 1944. And with the war in Europe near its denouement, governments were already trying to plan what the postwar world would look like. Most urgently, they needed to figure out how to rebuild their devastated economies.

Just think about the mess they were in: nearly every industrialized country in Europe had been destroyed by war. Manufacturing and farming were both in the dumps, and they had very little savings to invest in economic revival.

They also had a gigantic mess when it came to international trade. Dozens of countries each had their own currencies, so commercial trade meant each government keeping 20-30 currencies in reserve.

France, for example, would have to hold Austrian schillings, British pounds, Spanish pesetas, Italian lira, Dutch guilders, Soviet rubles, etc. in reserve, just to be able to trade.

Gold Will Soon Displace The US Dollar, And Americans Are Missing Out

Notes From the Field By James Hickman (Simon Black) June 3 2024

Next month will mark 80 years since the US dollar was formally anointed as the world’s reserve currency.

They also had a gigantic mess when it came to international trade. Dozens of countries each had their own currencies, so commercial trade meant each government keeping 20-30 currencies in reserve.

France, for example, would have to hold Austrian schillings, British pounds, Spanish pesetas, Italian lira, Dutch guilders, Soviet rubles, etc. in reserve, just to be able to trade.

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A much, much simpler solution was for every country to use the same currency to trade with each other. And there was no question about which currency would be the right choice: the US dollar.

In 1944, the United States still had a strong and powerful economy. It had robust capital markets and a well-developed financial system. It was the only country left standing.

So, representatives from more than 40 nations gathered that summer in picturesque Bretton Woods, New Hampshire and formally agreed to use the US dollar for international trade and commerce.

More specifically, each country fixed its exchange rate to the US dollar, while the US dollar was fixed to gold.

It only lasted about thirty years. By the early 1970s, the original Bretton Woods deal had been completely undone. Currencies floated freely against each other (including the dollar), and the US dollar terminated its link with gold.

And yet (thanks in part to Saudi Arabia agreeing to sell oil in dollars), the US dollar has continued to remain the dominant reserve currency through today.

For the most part that was still a sensible bet; the US has been the world’s #1 economy for the past five decades. But the cracks are obvious.

The US federal debt is a national embarrassment. At $35 trillion, the debt is far larger than the entire US economy… and it gets worse every year.

The US government is also completely dysfunctional. The vitriol and enmity, among the parties and within the parties, is so extreme that virtually nothing productive or beneficial ever takes place. The business of government now is merely two sides screaming that the other is a threat to democracy.

The President barely knows where he is half the time, and the other half he spends shredding the Constitution to engage in some anti-capitalist, inflationary, fanatical woke climate agenda.

Sadly, this isn’t a one-time blip. America’s governance and finances have been deteriorating for most of this century-- starting with the endlessly expensive War on Terror, through the free-spending Obama years, to the pandemic… and now the very real prospect that the next four years could look very similar to the previous four years.

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America is supposed to be a reliable, stabilizing force in the world. But today’s America has lost its grip. And foreign nations have noticed.

Most people alive today don’t remember a world in which the dollar wasn’t #1 and therefore cannot fathom a world in which this is no longer the case. But it’s irrational to assume that something will continue indefinitely, forever, simply because of the status quo today.

It’s not 1944 anymore. Back then there were no other options… and no one who even came close to rivaling the military and economic superiority of the United States.

Today both of those are in decline. It’s not to say the military can no longer fight or that the economy is in complete shambles. But America no longer has the unrivaled position it enjoyed for so long.

More importantly, the trend isn’t looking good. From an economic perspective, the national debt is set to increase by another $20 trillion over the next decade… likely triggering a nasty run of stagflation like the US experienced in the 1970s.

The US military, meanwhile, continues its downward slide. Recruitment is absolutely abysmal. Key weapons systems, fighter jets, tanks, and naval vessels are borderline obsolete.

The US Navy’s fleet of ships and submarines (which would be critical in any conflict against China) is the oldest and smallest it’s been since the end of World War II. Nearly 1,000 military aircraft will be retired from service in the next five years alone, and there is no concrete plan to replace them.

Nor is there any money to do so.

Frankly it is exceedingly difficult to believe that, in light of America’s declining power and prestige, the rest of the world will continue accepting the US dollar as the global reserve currency for much longer.

We’re already seeing signs of this change; plenty of countries are starting to trade with one another in different currencies, including Chinese renminbi and Indian rupee, and this trend will likely accelerate over the next several years.

I think it’s even possible there could be an event of some sort-- perhaps the US government defaults on its debt, or there’s even a shooting war or cyberattack-- which triggers a new Bretton Woods style conference.

The key difference between now and 1944 is that there was only one option back then-- the US. And pretty much everyone had confidence in America.

That’s not the case today. Few rational people have the same level of confidence in the US government. Yet almost no one trusts the Chinese either.

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But just like 1944, there is an obvious solution… and one that everyone already trusts: gold.

Nearly every country already holds gold as a reserve asset, so there would be very little change to the way they currently do business.

I’ve written about this before-- I believe this is why so many central banks around the world have been on a gold-buying spree. In fact, this is THE reason why gold is near its all-time high: central banks have been buying it by the metric ton.

You have to understand that central banks aren’t speculators. They don’t care about price. They buy for strategic reasons… and I believe that the central bank gold purchases that have been occurring over the past few years are a key sign that the global financial regime will be changing.

Individual investors, meanwhile, have been selling gold.

North American investors have sold off more than $4 billion worth of gold ETFs in the first four months of this year, with $2 billion of that just in the month of April. And gold ETF holdings are now at their lowest level in four years.

Central banks are buying. Individual investors are selling. It seems pretty clear that people aren’t paying attention to the warning signs.

Yes, gold is near its all-time high. But that doesn’t mean it can’t go much higher… especially if there’s a catalyst. And there absolutely is.

As a final point, I would point out again that even while gold is near its all-time high, shares of high quality, profitable, dividend-paying gold miners are laughably cheap.

That’s because central banks only buy physical gold bullion (which has pushed up the price of gold). They do not buy gold stocks… hence many of these businesses are available for outrageous bargains.

To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/gold-will-soon-displace-the-us-dollar-and-americans-are-missing-out-151007/

DINARRECAPS8 6/1/24 DINARRECAPS8 6/1/24

4 Purchases Financial Experts Regret and What They Wish They Had Spent Money On

Laura Bogart Thu, May 30, 2024

Financial advisors may know a lot of things about wisely spending money, but they don’t know everything. Even the best educated, most experienced and all around savviest financial expert is still, at the end of the day, a human being trying to make the best decisions based on the information they have on hand.

Sometimes, these advisors regret their decisions in hindsight. And sometimes, looking back on the purchases they regret the most will teach the experts in a more intimate way than they’d get in their studies or on the job.

GOBankingRates talked to some financial experts about the purchases they most regret and what they now wish they’d purchased instead.

Investing In a Startup

As the co-founder and CEO of Reliant Insurance Group and Helping Hand Financial, Ben Klesinger is a seasoned financial professional. But that doesn’t mean that he didn’t have to acquire some of his expertise the hard way by making investments he would come to regret.

4 Purchases Financial Experts Regret and What They Wish They Had Spent Money On

Laura Bogart Thu, May 30, 2024

GOBankingRates talked to some financial experts about the purchases they most regret and what they now wish they’d purchased instead.

Investing In a Startup

Early in his career, Klesinger invested heavily in what he called “a promising but unproven fintech startup.” Citing generally high levels of enthusiasm for technology, he put in about $200,000 of his own capital. Though he expected to see quick returns, what he got was a whole lot of headaches.

“The startup struggled with regulatory issues and market competition. In the end, we lost nearly the entire investment,” he said. “I learned the hard way that even if a business idea sounds revolutionary, proper due diligence is indispensable.”

In hindsight, Klesinger wishes he’d applied a more balanced approach, like investing in a diversified portfolio of mutual funds or even tech-focused ETFs, which would have allowed him to get exposure to the tech sector without taking on such a high risk.

A Fancy Car

Like many people who have worked hard and want to show off their success, Klesinger once purchased “an extravagant car” that he also hoped would serve as a solid investment. Unfortunately, that car which cost him $150,000, ultimately proved more trouble than fun by depreciating much faster than he anticipated.

“The maintenance costs also piled up, diminishing the overall value,” he said. “I realized afterward that investing the same amount in rental properties or a mix of dividend-yielding stocks would have generated consistent income and appreciated over time.”

DINARRECAPS8 5/30/24 DINARRECAPS8 5/30/24

Would You Pay €1 For This House?

Notes From the Field by James Hickman (Simon Black) May 29, 2024

In 2007, Giuseppe Ferrarello found himself facing a monumental challenge as the newly-elected mayor of Gangi, Italy — an incredibly picturesque yet dwindling town nestled in the mountains of Sicily.

Like many rural communities across Italy and beyond, the village of Gangi was grappling with depopulation and economic decline. Once home to 15,000 people, its population by 2007 stood at just 7,000. Young people in particular were leaving to seek job opportunities in northern Italy and elsewhere in Europe, leaving behind aging parents and empty houses.

At first glance, the situation seemed hopeless. Gangi’s inland location far from the coast rendered it unattractive to tourists.

Would You Pay €1 For This House?

Notes From the Field by James Hickman (Simon Black) May 29, 2024

At first glance, the situation seemed hopeless. Gangi’s inland location far from the coast rendered it unattractive to tourists.

But Ferrarello refused to give up and adopted a bold strategy to revitalize his town through the “One Euro Houses program” — a pioneering initiative aimed at attracting new residents and rejuvenating abandoned properties.

Under the program, buyers could purchase local derelict houses for a symbolic price of just one euro... but with strings attached. New owners had to commit to restoring the properties within four years.

Ferrarello’s idea was successful in attracting foreign investors. And over the next few years, the little hamlet was recognized as the “Jewel of Italy,” and named one of the “The most beautiful Italian villages.”

New residents and tourists from Europe and beyond arrived, to the delight of the local businesses and artisans.

And over the following years, several towns across Italy, Spain, France, and even the UK launched their own projects offering housing at a ‘symbolic price’.

At face value it seems like a stupendous bargain to buy a house in Europe for just 1 euro. But are these offers really worth the strings attached?

Super cheap real estate deals across various EU countries exist because the properties are worthless to their current owners. These often-dilapidated homes are located in small towns far from major population centers and tourist attractions, and many have been abandoned for generations, requiring extensive renovation.

Property taxes, though modest, make these properties a burden. And buyers typically must commit to spending at least €35,000 to renovate the property within two to three years.

If you fail to meet these obligations, you risk losing a €1,000 to €5,000 insurance deposit held by the municipality, losing the property, or both.

Other costs include €1,500 in legal fees, and roughly €3,500 for mandatory civil engineering and architectural plans.

There’s also no guarantee that €35,000 will be enough to complete renovations; many of these properties are “historic,” meaning you can’t do whatever you want. Plenty of local regulations will govern what you can and cannot do.

Therefore, renovating a small, 100 square meter (1,076 sq.ft.) home can cost between €60,000 and €160,000 to bring it to a livable and rentable condition.

Engaging in such a project could certainly benefit adventurous souls with ample free time.

But there are other challenges as well. You either need to speak Italian and be prepared for the complexities of southern European bureaucracy, or you’ll have to spend even more money on project managers.

Even if you persevere through the purchase and renovation process, consider the most probable outcome — an illiquid property in a tiny village lacking appeal to both Italians and foreigners alike. Because most of these towns aren’t as successful as Gangi at reigniting their tiny economies.

But if owning a beautiful home in Italy is your goal (and part of your Plan B), it probably makes more sense to just look at the wide selection of regular cheap properties available throughout the country.

After all, owning an Italian home does offer the allure of breathtaking scenery, cultural richness, relaxation, outdoor activities, and even an investment potential… all in one picturesque package.

Even for as low as €60,000 to €160,000, you can find a nice Italian property with no strings attached — no hunting for reliable information, no applying for remodeling and construction permits, no actual renovation, and no time wasted.

Properties almost anywhere in Italy remain remarkably cheap, as the country has, so far, missed the real estate boom experienced by its European neighbors.

As of March 2024, the average Italian property price per square meter stood at €1,850, just 6.6% higher than the nationwide low recorded in February 2020.

Property prices in Spain average €2,098 per sq.m., and €2,596 in Portugal.

And 22 provinces (out of 106) across Italy have current province-wide prices below €1,000 per square meter. That’s definitely cheap.

For example, in Gangi, the original “€1 house” village, this 151 sq.m., 3-story house in the town center offers great views, is in livable condition, and is selling for just €35,000.

(Personally, I’d rather pay 35k for the finished home than have paid 1 euro and gone through all the time, money, and work to renovate it.)

And it’s not just the cheaper southern Italy that has these deals.

Genoa — a famous port city just south of Milan, and the birthplace of Christopher Columbus — is still 47% below its 2012 peak, with plenty of options below €1,000 per square meter.

Biella — less than 90 minutes from Milan and situated right at the foot of the Alps, next to lakes, mountains, and ski resorts — offers this spacious and modern 250 sq.m. apartment located right in the town’s historic area, selling for €155,000 — a very inexpensive €620 per square meter

Now, believe it or not, this article isn’t really about buying property in Italy. To some people, Italy may be their idyllic retirement dream. Others couldn’t care less. The larger issue is how to think about a “Plan B”.

Remember, the central idea behind a Plan B is to mitigate risks by taking sensible actions — actions which make sense regardless of what happens (or doesn’t happen) in the future.

For a lot of people, a big part of their Plan B is having a second property overseas. A second home abroad, combined with residency or citizenship, is sort of like an insurance policy: you might not ever need it… but in case you ever do, you’ll be damn glad you have one.

A second residence means that you’ll always have a place to go in case, for whatever reason, you need to leave your home country. This could be enormously valuable to you and your family.

But even if that day never comes (and hopefully it doesn’t), it’s hard to imagine you’ll be worse off for owning a nice property in a place where you really enjoy spending time-- which you were able to purchase on the cheap and generate modest cashflow while you’re not using it.

For some people, Italy ticks that box. For others, it doesn’t. And for others, buying a second home isn’t the right move either. Everyone has unique, individual circumstances.

The key idea is that we can apply this same logic to other elements of a Plan B, including our finances.

For example, we have long argued why inflation will grow and become a major problem for the US dollar in the coming years; it will be extremely difficult to take on $20+ trillion in new debt in the next decade without serious, serious inflation.

Real assets are a major inflation hedge. And right now, many real assets-- including key commodities and the companies which produce them — are historically cheap.

We’re talking about high quality gold or copper miners that generate fantastic profits, have virtually zero debt, and pay 8%+ dividends… yet their shares trade at laughably low valuations.

If our inflation thesis plays out as expected, these types of companies will do extremely well, and shareholders could be richly rewarded.

But even if inflation never materializes (which is highly doubtful), it still makes sense to consider owning a strong, profitable business that pays a great dividend.

James Hickman Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/would-you-pay-e1-for-this-house-150891/

DINARRECAPS8 5/29/24 DINARRECAPS8 5/29/24

6 Tools That Can Help You Become Debt Free

J. Arky Tue, May 28, 2024

Close your eyes and just imagine it: Being debt free. For many people working today, that feels like an impossible dream to realize. Between having to take out loans for your education, getting a mortgage on a house and putting expenses on a credit card, debt can feel never ending.

Thankfully, there are some modern tools that can help you become debt free. This doesn’t mean you won’t slip into debt here and there along the way — it’s almost inevitable these days — but these methods can aid you in getting yourself out, managing any future debt and staying in the black going forward.

Here are the six tools that can help you become debt free.

6 Tools That Can Help You Become Debt Free

J. Arky Tue, May 28, 2024

Here are the six tools that can help you become debt free.

Budgeting Apps

Our lives are connected to our smart devices. One of the reasons they are so adept and useful is that you can download apps to help you with anything, such as budget and expense tracking.

“Apps like Mint and YNAB (You Need A Budget) are great for tracking expenses and creating budgets. They help you see where your money goes and identify areas to cut back,” said Rhett Stubbendeck, the CEO and founder of Leverage.

“YNAB teaches you to prioritize every dollar you earn, a fundamental shift that can drastically reduce debt,” added Ben Klesinger, the co-founder and CEO of Reliant Insurance Group. “Mint helps you manage your budget, keep tabs on your bills and track your investments all in one place.”

Debt Snowball vs. Debt Avalanche

Two popular strategies for debt repayment are the snowball and avalanche.

“The debt snowball method involves paying off your smallest debts first, which can provide quick wins and momentum,” Klesinger said. “The debt avalanche method, on the other hand, focuses on paying off debts with the highest interest rates first, saving you more money in the long run.”

Automated Savings Plans

“Services like Digit and Qapital automatically save small amounts of money from your checking account to a savings account based on your spending habits,” Klesinger said. “This incremental approach helps build an emergency fund, which is crucial for avoiding new debt.”

DINARRECAPS8 5/25/24 DINARRECAPS8 5/25/24

Banking Habits You Should Change in Retirement

Jordan Rosenfeld Sat, May 25, 2024

While retirement is often a time when you finally get to stop thinking so hard about many of the little details in life, there are some you want to stay on top of, like your banking habits.

Some of your pre-retirement banking habits may not be as useful, protective or financially savvy after retirement.

Experts explain some banking habits you might still be doing that you’ll want to change in retirement.

Wealthy people know the best money secrets. Learn how to copy them.

Not Saving More Than Before

Retirees should consider having more money in a bank account than they did while they were working and earning an income, according to Chris Urban, CFP, a retirement planner and founder of Discovery Wealth Planning.

Experts: Banking Habits You Should Change in Retirement

Jordan Rosenfeld Sat, May 25, 2024

While retirement is often a time when you finally get to stop thinking so hard about many of the little details in life, there are some you want to stay on top of, like your banking habits.

Some of your pre-retirement banking habits may not be as useful, protective or financially savvy after retirement.

Experts explain some banking habits you might still be doing that you’ll want to change in retirement.

Wealthy people know the best money secrets. Learn how to copy them.

Not Saving More Than Before

“These days, high-yield savings accounts are a good place to earn a reasonable amount of interest while also having access to your cash. These accounts are a great way to insulate your household from the ups and downs of the financial markets, where your other retirement and investment accounts may be invested,” Urban said.

Learn More: 7 Bills You Never Have To Pay When You Retire

Not Keeping Cash Liquid

Consider taking your spending money from this high-yield savings account and replenishing it in a tax-efficient way from your retirement and/or investment accounts in years when they have performed well, Urban explained.

“Sure, you might have what is referred to as ‘cash drag’ by holding too much in cash; however, in my opinion, retirement is much more about optimizing your overall happiness and life than it is about optimizing for investment performance,” he said.

Holding On to High-Fee Accounts

Retirees should steer clear of accounts with high fees, including maintenance fees, overdraft fees and ATM fees, according to Taylor Kovar, CFP, founder and CEO of 11 Financial.

“These fees can eat into retirement savings over time. Instead, consider switching to fee-free or low-fee accounts to minimize expenses and maximize savings,” he said.

Do your research and shop around different banks and credit unions to find accounts with low or no fees, added Lyle D. Solomon, Esq., an attorney who specializes in personal finance issues such as debt relief, taxes and estate planning at Oak View Law Group. “Don’t hesitate to switch if you find a much better deal elsewhere,” he said.

Using Non-Bank ATMs

Retirees should also be mindful of using non-bank ATMs, which often charge hefty fees for withdrawals, Kovar said.

DINARRECAPS8 5/23/24 DINARRECAPS8 5/23/24

9 Ways To Become Rich If You Were Born Poor

Cindy Lamothe Fri, May 17, 2024,

Growing up with wealth is a privilege that lends financial stability and provides greater opportunities for future success. But what if you weren’t born with a silver spoon in your mouth? It’s hard to fathom going from poor to wealthy in a single lifetime, but according to experts, it’s not some distant fantasy. It isn’t easy either.

“Wealth building for individuals starting from a disadvantaged economic position requires a multifaceted approach, focusing on education, smart financial decisions and leveraging available opportunities creatively,” said Dennis Shirshikov, head of growth at Summer.

“Education, both formal and informal, is a cornerstone. It’s not just about earning degrees but acquiring financial literacy,” he added.

Overall, though, some experts disagree on how best to build wealth — especially when starting from a place of financial insecurity. Some say to invest in education, while others suggest skipping the fancy schools altogether.

9 Ways To Become Rich If You Were Born Poor

Cindy Lamothe Fri, May 17, 2024,

“Education, both formal and informal, is a cornerstone. It’s not just about earning degrees but acquiring financial literacy,” he added.

Below are some ways to become rich if you’re starting out with limited resources, according to the experts.

Capitalize on High Demand Skills or Industries

One strategy, according to Shirshikov, is to capitalize on high-demand skills or industries.

“Whether it’s learning a trade, tech skills or entering emerging markets, aligning one’s skillset with market demands can provide a substantial economic uplift.”

Start a Business

Entrepreneurship also plays a crucial role, Shirshikov continued. “It involves higher risks but offers greater control and higher rewards.

“I’ve observed several cases where individuals from modest backgrounds have started their own businesses in fields as varied as cleaning services to tech consultancies, scaling these ventures into substantial wealth over time.”

The key, he says, lies in starting small, minimizing initial costs and gradually expanding as the business generates revenue.

Focus on Getting a Good Education

“The key to building wealth for people starting from scratch is to focus on getting a good education and developing valuable skills,” said Joe Chappius, financial planning and tax expert at TaxClimate.com.

“This builds you a solid foundation that will open doors to better job opportunities and higher income for you later on.”

Melanie Musson, finance expert with Clearsurance, agrees.

“Take a class and read some books. When you don’t grow up rich, you miss out on the lifestyle learning you get just by living in a wealthy household. So, to make up for that, you have to take the initiative to educate yourself.”

DINARRECAPS8 5/22/24 DINARRECAPS8 5/22/24

The Fed Is Already Insolvent. Here’s How We Think This Plays Out

Notes From The Field By James Hickman ( Simon Black ) 5-22-24

On Tuesday, September 15, 1992, the two most powerful financial officials in the British government held an urgent meeting that night to review their plan for when the markets opened the next morning.

The tone of the meeting must have felt frantic… even desperate… because the value of the British pound had been falling for weeks.

Investors and speculators were rapidly losing confidence in the UK government, mostly due to the ridiculous “Exchange Rate Mechanism” (ERM) which essentially pegged most European currencies to the German Deutschemark.

Rational investors viewed the ERM as an almost comical impossibility.

Germany’s economy was light years ahead of everyone else. Germany had vastly higher productivity, far greater savings, low inflation, high growth, and much more responsible monetary policy.

The Fed Is Already Insolvent. Here’s How We Think This Plays Out

Notes From The Field By James Hickman ( Simon Black ) 5-22-24

The tone of the meeting must have felt frantic… even desperate… because the value of the British pound had been falling for weeks.

Rational investors viewed the ERM as an almost comical impossibility.

Germany’s economy was light years ahead of everyone else. Germany had vastly higher productivity, far greater savings, low inflation, high growth, and much more responsible monetary policy.

So, to even pretend that a country like Italy or even Britain could fix its exchange rate to the Deutschemark, i.e. to essentially mirror Germany’s economic performance-- was a total joke.

Britain joined the Exchange Rate Mechanism in October 1990. Prime Minister Margaret Thatcher had spent years trying to keep Britain out of the ERM, viewing it as giving up national sovereignty.

But Thatcher was about to retire. And the new batch of leaders insisted that pegging Britain’s economy to Germany was the way forward.

Their experiment didn’t even last two years. By the summer of 1992, inflation in Britain was more than 3x Germany’s. Plus, Britain had a major budget deficit.

Financial speculators correctly recognized, given the massive disconnect between the British and German economies, that Britain would not be able to maintain its fixed exchange rate with the Deutschemark.

So, traders began short selling the British pound, i.e. betting that the value of the pound would fall because the British government would devalue its currency.

The sell-off reached a crisis on September 15th, when the head of Germany’s central bank suggested to the Wall Street Journal that weaker countries (like Britain) would have to devalue their currencies.

That’s what led the British Chancellor of the Exchequer and head of the Bank of England-- the two most powerful policymakers in British government finance-- to meet that evening.

They knew that the German central bank’s comments would encourage even more traders to dump the British pound. So, the two men pledged to do ‘whatever it takes’ to defend the pound and defeat the speculators.

It didn’t work.

The following morning on September 16th, the Bank of England did everything it could. They raised interest rates, they bought back pounds, they bought government bonds, they made all sorts of outlandish promises.

But speculators didn’t believe any of it. They could see the numbers, and they knew that the Bank of England simply didn’t have the financial resources to maintain such an unrealistic exchange rate.

One of those speculators was George Soros, who famously bet $10 billion against the British pound… far exceeding the Bank of England’s financial resources

By the end of that day, the British central bank had exhausted its capital and was essentially bankrupt. The British government had to bail them out to the tune of 3 billion pounds, and then announce that they were formally leaving the ERM-- proving the speculators right.

This is an important story to understand, because it’s likely that something similar may happen to the Federal Reserve and US dollar over the next several years.

The Federal Reserve is already insolvent.

According to its most recent annual financial statements, the Fed has just $51 billion in equity, versus a whopping $948 billion in mark-to-market losses. This means the Fed is insolvent by roughly $900 billion.

This is a big problem. Remember that the Fed is still a bank, i.e. it has financial obligations, liabilities, and depositors that it needs to pay.

For example, commercial banks like JP Morgan and Bank of America have deposited a total of $3.4 trillion of their customers’ money, i.e. YOUR money, with the Fed. And the Treasury Department holds another $700 billion deposit at the Fed.

The Fed owes money to foreign governments. They owe trillions of dollars from repurchase agreements to banks and businesses across the global financial system.

So, yeah, the insolvency of the Federal Reserve is a pretty big deal. Yet, at least for now, no one is saying a word about it.

But just like the Bank of England in 1992, sooner or later, someone is finally going to say something… and do something… about the Fed’s insolvency.

There’s a good chance that means betting against the dollar… just like speculators bet against the pound three decades ago. And that would ultimately reduce the value of the dollar, increase inflation, and trigger a new ‘Bretton Woods’ agreement in which the US dollar is no longer the world’s reserve currency.

George Soros became known as “The Man Who Broke the Bank of England”. (Though given his malign proclivity to fund progressive activists, he is known by several other names in my household, none of them reverent).

Within the next several years there could be some Chinese or Russian financier who becomes known as “The Man Who Broke the Fed”.

This isn’t sensational. The Fed is already insolvent by $900+ billion, according to its own financial statements. Social Security is insolvent. The US government is insolvent by tens of trillions… and they further anticipate the national debt to grow by $20 trillion over the next decade.

These are facts, not fantasies.

And this is why it makes so much sense to hedge these risks by owning real assets which are scarce, valuable, and uncorrelated to the US dollar.

Gold is a great example. And as we’ve argued before, even though it’s already near its all-time high, we believe it can go much higher from here.

Here’s Why I Regret Being So Extreme Saving Money

I’m a Super Saver: Here’s Why I Regret Being So Extreme Saving Money

G. Brian Davis Sat, May 18, 2024

Most people spend too much and save too little of their paycheck. But it’s possible to go too far in the opposite direction.

While saving more money helps you build wealth and passive income streams, and possibly reach financial independence at a younger age, extreme savings and frugality come with a cost. Before budgeting for a high savings rate, beware of the following pitfalls.

Missed Experiences with Loved Ones

Life is meant to be shared. Sometimes that means spending money to share experiences with your family and friends.

“In their relentless pursuit of savings, I’ve seen many people sacrifice cherished experiences, personal growth opportunities, and meaningful connections with loved ones,” said Abid Salahi, co-founder of FinlyWealth. “One particular client of mine, driven by an insatiable desire to save every penny, missed out on attending important family events and cultivating hobbies.”

I’m a Super Saver: Here’s Why I Regret Being So Extreme Saving Money

G. Brian Davis Sat, May 18, 2024

Most people spend too much and save too little of their paycheck. But it’s possible to go too far in the opposite direction.

Missed Experiences with Loved Ones

Life is meant to be shared. Sometimes that means spending money to share experiences with your family and friends.

Instead of being exclusively focused on saving, he advised, “Prioritize quality time with loved ones, engage in hobbies and activities that bring you joy, and cultivate a mindset of abundance rather than scarcity.”

Tolls on Personal Relationships

Missing out on shared experiences aside, hardline stances can impact your personal relationships.

Carl Rodriguez of NX Auto Transport has seen it firsthand. “One lesser-known downside to extreme frugality is the potential impact on relationships. Saving aggressively can sometimes lead to conflicts with friends or family members who have different spending habits or expectations.”

That proves especially true for your romantic relationships, where your finances intertwine with another person’s. “It’s important to find a balance and communicate openly about financial goals to avoid strain on relationships.”

Lack of Investment in Your Children

The better experiences and education you provide your children, the more likely they are to grow into successful, balanced, intellectually curious adults. But don’t let your desire to save money interfere with being present for your kids.

Mado Eldemrdash from Tireonway.com weighs his own regrets about investments in his children. “I worry it has affected my children, the quality of schools and clubs we’ve sent them to. All these financial behaviors can impact our quality of life and may affect my children’s professional futures.”

Neglected Personal Development

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9 Reasons Banking In-Person Is More Financially Savvy Than Banking Online

I’m a Bank Teller: 9 Reasons Banking In-Person Is More Financially Savvy Than Banking Online

Laura Beck Fri, May 17, 2024

Most of us do our banking completely online now. It’s just a fact of the digital age — when you can deposit a check right into your bank’s mobile app, what’s the point of trekking to a branch? However, veteran bank teller Rachael P. says we shouldn’t abandon in-person banking entirely.

“There are still plenty of advantages to physically going into a branch,” Rachael shared. “Sure, digital banking is easy. But something can be lost when you have zero human interaction with your bank.”

While digital banking is booming, she believes making an effort to head into branches periodically can actually pay financial dividends. Here are the nine reasons you should consider in-person banking over banking online, according to a bank teller.

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I’m a Bank Teller: 9 Reasons Banking In-Person Is More Financially Savvy Than Banking Online

Laura Beck Fri, May 17, 2024

Catch Errors and Fraud Faster

“Something just feels more official when you’re looking at physical statements and documents rather than numbers on a screen,” Rachael said. “It makes it easier to identify errors, missing funds or potential fraud right away rather than just scrolling past it.”

Speaking to a real person can facilitate quicker resolution as well.

Tap Into Professional Expertise

“At the end of the day, we’re trained financial professionals who understand banking, regulations and money management inside and out,” she stated. “Sure, that internet chat rep seems friendly. But you’ll get way deeper insights by actually talking to someone face-to-face.”

Negotiate Better Rates and Fees

You’d be surprised what a teller or personal banker can do if you simply ask politely. Whether it’s lowering fees, getting a better interest rate or waiving penalties, simply walking into a branch gives you way more flexibility than online interactions.

Build Relationships and Get Personalized Service

“When you bank in person, we get to know you as a real individual,” Rachael explained. “Not just an account number. That allows us to treat you as a person and provide much more personalized service tailored to your specific needs and situation.”

Ask Questions More Easily

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An Economist’s Rule for Making Tough Life Decisions

Quartz Sarah Todd

"Whenever you cannot decide what you should do, choose the action that represents a change."

“You must change your life,” Rainer Maria Rilke exhorts readers in the final line of his poem “Archaic Torso of Apollo.” It’s a surprise-twist ending, meant to capture the sudden nature of epiphanies. Having spent the entire poem contemplating the beauty of an ancient Greek statue, Rilke practically reaches through the page to shake readers by the shoulders, urging us to transform ourselves—to use our rapidly-dwindling time on Earth as wisely as Apollo’s sculptor did.

But changing your life is a big deal. It takes a lot of work and emotional energy. And it’s often very difficult to predict if a dramatic turn will actually make us happier and more fulfilled, or if it will be the biggest mistake ever and we’ll shrivel up into little raisins of regret.

An Economist’s Rule for Making Tough Life Decisions

Quartz Sarah Todd

"Whenever you cannot decide what you should do, choose the action that represents a change."

So we waffle over whether or not to quit a job, change careers, start a business, or go back to school, weighing endless pros and cons. In behavioral economics, this phenomenon is known as status quo bias. People are generally predisposed to favor sticking with their current circumstances, whatever they may be, instead of taking a risk and bushwhacking their way toward a different life.

That’s an instinct we should fight against, according to the findings of a new study by Steven Levitt, University of Chicago economist and Freakonomics co-author, published in Oxford University’s Review of Economic Studies.

The study asked people who were having a hard time making a decision to participate in a randomized digital coin toss on the website FreakonomicsExperiments.com. People asked questions ranging from “Should I quit my job?” to “Should I break up with my significant other?” and “Should I go back to school?” Heads meant they should take action. Tails, they stuck with the status quo.

Ultimately, 20,000 coins were flipped—and people who got heads and made a big change reported being significantly happier than they were before, both two months and six months later.

“The data from my experiment suggests we would all be better off if we did more quitting,” Levitt said in a press release. “A good rule of thumb in decision making is, whenever you cannot decide what you should do, choose the action that represents a change, rather than continuing the status quo.”

Do more quitting may sound like strange advice in the midst of a pandemic that’s mauling the labor market. Those lucky enough to still have a stable income and health insurance may be quite sensibly wary of jettisoning those things for the great unknown.

But dig a little deeper, and Levitt’s suggested rule of thumb for decision-making turns out to be decidedly evergreen, and may even have added significance in current upheavals of the Covid-19 era. We’re biased toward upholding the status quo, but it’s a bias that hurts us.

Flip a Coin, Make a Change

There are plenty of caveats to this experiment, which collected data over the course of a year beginning in 2013. For one thing, as Levitt explains, the subject pool wasn’t at all random.

To Read More: LINK

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The Latest Social Security Trustees Report Spurs Angst About The Program's Solvency

Kerry Hannon·Senior Columnist Yahoo Finance Fri, May 17, 2024

Amid uncertainty around Social Security, here's what financial advisers are telling clients

Social Security isn’t shattered, but it’s shaky.

The new report on Social Security, which predicts that the combined retirement and disability trust fund reserves will go broke in 2035, has put more Americans on edge, especially those nearing retirement who are worrying about how much in benefits they can expect.

The 2024 Social Security and Medicare trustees report projects insolvency one year later than last year’s estimate. That scarcely brighter outlook stems from the strong economy and wage growth, which has ramped up payroll tax payments that fund the program. For now, low unemployment has meant that more workers are adding to the program, even while a rising number of baby boomers begin to tap their benefits, the trustees said.

The Latest Social Security Trustees Report Spurs Angst About The Program's Solvency

Kerry Hannon·Senior Columnist Yahoo Finance Fri, May 17, 2024

Amid uncertainty around Social Security, here's what financial advisers are telling clients

Social Security isn’t shattered, but it’s shaky.

The potential depletion of the fund does not, however, translate to an empty till. There will still be money to pay benefits at that stage — though only 83% of what’s been promised to current and future beneficiaries. In other words, without a fix, beneficiaries could see a 17% cut in benefits.

“Congress is painting itself into a corner on fixing Social Security’s pending insolvency,” Mary Johnson, a Social Security and Medicare policy analyst, told Yahoo Finance. “Failure to act on the program in time would lead to automatic benefit cuts.”

How widely would that cut be felt? The program paid nearly $1.4 trillion in benefits last year to about 67 million Americans. For about half of seniors, Social Security provides at least half of their income, and for about 1 in 4 seniors, it accounts for at least 90% of income.

There are several solutions to fix the shortfall, including ratcheting up payroll taxes that fund the program, currently 12.4% split evenly by employees and employers. Other proposals include raising the retirement age for younger workers or lifting the cap on how much of a person’s income is subject to the Social Security tax. For 2024, the Social Security tax limit is $168,600.

Will Social Security be there for you?

One of people’s greatest retirement fears is a reduction in or elimination of Social Security in the future, according to research from the Transamerica Center for Retirement Studies. Seven in 10 people are concerned that Social Security will not be there for them when they’re ready to retire. And nearly 1 in 3 people rely on or expect to rely primarily on Social Security.

I talked to several experts about the advice they’re giving their clients on planning for Social Security as part of their retirement income. Here’s what they said:

1. Assume a reduced benefit