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December 2017
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No longer free market capitalism

                This morning, pre market, we were down quite a bit as Goldman and others reported earnings.  The initial claims in the morning did not help the mood as another half million people lost their jobs the previous month.  While others are claiming that the markets are healthy and we are back to the path of prosperity, we feel that there is extreme danger for the global economy this next century.

                On the top of the list is the US dollar.  There are so many countries with so many dollars tied up in investments.  A few countries have close to trillions of dollars and many others have hundreds of billions in reserves.  More importantly, there are many individuals who now have billions of dollars to spend that are also tied up in investments and equities.  At some point, investments will not be able to be artificially held up by government and will not yield enough returns.  That’s when the outflow from investments and equities will flood the market purchasing real things such as land and housing.  To add to this issue, foreign countries will quickly try to diversify away from the dollar into other reserves, both cash an commodities.  This will further put pressure on the dollar causing the price of goods for ever day Americans to go up significantly.  The inflation that we will experience will be at a level that few can imagine.

                That’s what happens when your free market capitalism is replaced by subsidized and manipulated capitalism.  We in the US have banished the best and healthiest characteristic of free market capitalism (ability to fail, to deflate, to punish bad investments, reward good investments, and self correct).  Yet, we have managed to keep the bad characteristics of capitalism (greed, fraud, lobbying, influencing and manipulation).

I love free market capitalism, but that’s not what we have in the USA.  Not anymore anyways.  The laws of nature however are perfect and self fulfilling.  So it would be prudent to expect negative consequences from negative actions.

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