Three weeks ago the call went out to those who were angry with the greed and shenanigans of Wall Street.
There would be a protest!
There would be a rally!
There would be an occupation!
That, in a nutshell, is the whole thing. There is this group of a few hundred people, in Lower Manhattan, living in private parks – not public parks mind you… private parks – sleeping in the open air, ordering pizza, and generally calling for change and accountability.
The group has gained just a touch of notoriety because a police lieutenant used pepper spray on a few protesters and when some of the protesters began marching over the Brooklyn Bridge the police stopped them and arrested a few.
There has been no violence. There have been no threats. And oddly, there have been no demands. Well, no real demands anyway.
There is the odd call for bankers to go to jail.
Or an end to the era of greed.
Maybe even the cry of taking back America.
But these all ring hollow because there is no path from here to there.
Put a banker in jail? Which banker? For breaking what law?
And That’s the Problem With This Protest
The problem with this protest is that the average person has no idea who should be blamed for where we are today… down the rapids without a paddle.
And that didn’t happen because of a few greedy bankers.
It happened because of the way banking itself is set up in the U.S. Fractional reserve and a lender of last resort (a.k.a the Fed) encouraged greed and reckless behavior over prudence.
“Bankers,” a very loose term we’re using to describe those who operate and trade on behalf of large financial institutions deemed too big to fail, get paid by earnrning profits.
Of course, they can only find these bigger profits at the edge of risky behavior. And then they get paid exorbitant incomes for taking these risks with other peoples’ money. When they failed, the Federal Reserve taxed all of us by printing new dollars.
Each dollar they printed into existence ate away at the value of existing dollars that all of us hold.
So Who IS to Blame?
Here is a short, and by no means exhaustive, list of who is to blame for the extreme levels of greed that have led us to this deflationary precipice right now…
- Congress of 1913 – For creating the Fed in its current form.
- Congress of 1940s – For introducing the “full employment” mandate to the Fed.
- Congress of 2008 – For approving bailout measures.
- The Fed of the 1980s to present day – For pursuing a low interest rate environment to prod greater lending in the face of greater risks… and for bailing out the faltering banks and car manufacturers… and for their quantitative easing programs…
It’s not that “bankers” are not culpable. They have played their part in this particular mess. But they’re playing within the rules that the U.S. governrnment created, amended, and protected.
The bankers know it, and they are laughing all the way to, well, the bank…with our money in their pockets.
So What Can You Do About It?
Just don’t care.
Or at the very least, don’t get too emotionally involved with finding scape goats to blame. There is nothing to gain from it. And who’s at fault is really unimportant in the greater scheme of things, which is that, at the end of the day, consumers still go home after work and buy what they need to maintain their life style and to support their family.
This is essential to remember: it is consumers that drive the economy… not greedy bankers or wall street or even governrnment. Ultimately it’s about you and me, our family, friends and acquaintances… and what we like to – or need to – spend our money on.
Bottom line: when you’re making investment decisions, consider less what the “powers that be” are saying and doing and pay more attention to what consumers are spending their money on.
That’s exactly what we do in our Boom & Bust newsletter. We identify demographic trends, see how they’re driving the markets, and then find investment opportunities to profit. In the deflationary environment we forecast, these opportunities are not your traditional investments.
Following consumers, and knowing the trends leading the opportunities will immediately give you an advantage that most investors miss.
Until next time,
Harry & Rodney
P.S. The biggest demographic trend we’re tracking right now is the move of Baby Boomers from the workforce to the welfare line. It is this trend that is pushing us inevitably into a deflationary period and there’s nothing anyone can do to stop it. If you want to survive and prosper in the decade ahead, we suggest you read our latest book, The Great Crash Ahead. Get your copy here.