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Threats to Digital Wealth Creates Need for Tangible Backup

Recent high-profile cyber security breaches at Equifax and other financial institutions highlight the perils of an all-digital economy. When wealth can be evaporated or expropriated at the stroke of a key, how secure can your finances really be? Obviously, there is a big difference between wealth you can tangibly hold and wealth that exists only in electronic form. One advantage of paper cash is that it can’t be hacked or stolen digitally. Paper money isn’t by any means hard money like gold and silver, but it does at least provide some of the privacy and convenience features that come with […]

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The Wealth S-Curve That’s Driving Current Global Macro Trends

The graph above shows a logistic function that maps out a sigmoid curve… otherwise known as an S-curve. This function was popularized by mid-19th century scientist Pierre Francois Verhulst who applied it in his study of population growth. Verhulst found that population growth follows a certain S-curve. It grows at a steady state until it hits a certain point where it grows exponentially. This exponential growth sustains until the system hits a saturation point where it slows and eventually stops. The S-curve is one of those strange universal laws that shows up all over the place. Similar to how power […]

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Precious Metals Can Protect Your Wealth from Hackers

Could your wealth be hacked? It’s a threat most investors overlook. But they do so at their own peril. If elections can be hacked, then so can bank and brokerage accounts, as well as any online platforms for digital currencies. More than five months into Donald Trump’s presidency, the “Russia hacked the election” conspiracy theories still won’t go away. They’re expanding to also implicate Russian hackers for meddling in elections in France and elsewhere. The latest Russian hacking story centers on Qatar. According to the Guardian, “An investigation by the FBI has concluded that Russian hackers were responsible for sending […]

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Diamonds: A New Option for Portable Wealth

Since 1971, the year Nixon decoupled the dollar from gold, fiat currencies have been used as the accepted store of wealth and medium of exchange. And globally today’s currencies are backed by nothing except confidence. Now, as governments and central banks pursue questionable policies and politicians reach further into the lives of their citizens, this confidence is being eroded. Central banks are printing money to buy debt. Currency manipulations, government misrepresentations, reactive equity markets, historic income disparity, and surprise election results have combined to raise alarms. Change Is Certain India’s recent clampdown on cash banknotes demonstrates that countries will aggressively […]

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Energy limits: Why we see rising wealth disparity and low prices

Last week, I gave a fairly wide-ranging presentation at the 2016 Biophysical Economics Conference called Complexity: The Connection Between Fossil Fuel EROI, Human Energy EROI, and Debt (pdf). In this post, I discuss the portion of the talk that explains several key issues: Why we are right now seeing so many problems with respect to wealth disparity and low commodity prices (Answer: World per capita energy consumption is already falling, and the energy/economy system needs to reflect this problem somehow.) Why the quest for growing technology leads to growing wealth disparity (Answer: The economy must be configured in more of a […]

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This Will Be the Largest Evaporation of Wealth in Modern History

If there’s anything the Chinese have going for them, it’s savings. Only a handful of countries have a higher savings rate than they do. For a still relatively poor emerging country with GDP per capita about a fifth of that in the U.S., the Chinese get an A+ in this area. But if diversification and asset allocation are the key to preserving wealth, then the Chinese get an F! The reason: 75% of their wealth is in real estate, with the rest largely in cash. They’ve overinvested in one illiquid and bubbly asset that they wrongly believe can only go […]

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Global Stocks Enter Bear Market: One-Fifth Of All Worldwide Stock Market Wealth Is Already Gone

It’s official – global stocks have entered a bear market.  On Wednesday, we learned that the MSCI All-Country World Index has fallen a total of more than 20 percent from the peak of the market.  So that means that roughly one-fifth of all the stock market wealth in the entire world has already been wiped out.  How much more is it going to take before everyone will finally admit that we have a major financial crisis on our hands?  30 percent?  40 percent?  This new round of chaos began last night in Asia.  Japanese stocks were down more than 600 […]

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Economic growth: How it works; how it fails; why wealth disparity occurs

Economists have put together models of how an economy works, but these models were developed years ago, when the world economy was far from limits. These models may have been reasonably adequate when they were developed, but there is increasing evidence that they don’t work in an economy that is reaching limits. For example, my most recent post, “Why ‘supply and demand’ doesn’t work for oil,” showed that when the world is facing the rising cost of oil extraction, “supply and demand” doesn’t work in the expected way. In order to figure out what really does happen, we need to consider […]

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Yes, This Is A Financial Crisis – 11 TRILLION Dollars In Stock Market Wealth Was Wiped Out In The 3rd Quarter

Did you know that 11 trillion dollars in global stock market wealth was wiped out during the third quarter of 2015?  When I was emailed this figure by a friend, I was stunned for a moment.  I knew that things were bad, but were they really this bad? When I first received this information, I had just finished a taping for a television show in which I had boldly declared that 5 trillion dollars of stock market wealth had been wiped out around the world.  Unfortunately, the final number has turned out to be much larger than that.  Over the […]

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Do You Know the Role Education Plays in Wealth Inequality?

There’s any number of figures out there that paint a grotesque picture of wealth inequality: The top 5% owns some 62% of all the wealth (maybe you’ve seen it higher), the top 1% holds four-fifths of all stock market capitalization… the list goes on. Our current stock and economic bubble doesn’t help the situation. When we’re in a “fall” economic season like we’re in today — and like we saw peak in 1929 — the top 1% can hold over 50% of the net worth for all financial assets. That can fall to as low as 26% in the late […]

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