Thursday, September 10, 2009

"Who Gets Hurt And Who Is Spared"

Robert Prechter:

At some point during a financial crisis, money flows typically become a political issue. You should keep a sharp eye on political trends in your home country. In severe economic times, governments have been known to ban foreign investment, demand capital repatriation, outlaw money transfers abroad, close banks, freeze bank accounts, restrict or seize private pensions, raise taxes, fix prices and impose currency exchange values. They have been known to use force to change the course of who gets hurt and who is spared, which means that the prudent are punished and the thriftless are rewarded, reversing the result from what it would be according to who deserves to be spared or get hurt. In extreme cases, such as when authoritarians assume power, they simply appropriate or take de facto control of your property.

You cannot anticipate every possible law, regulation or political event that will be implemented to thwart your attempt at safety, liquidity and solvency. This is why you must plan ahead and pay attention. As you do, think about these issues so that when political forces troll for victims, you are legally outside the scope of the dragnet.

For those who understand the big-picture intersection of monetary policy, statism, and the exigencies of a system in which all of Wall Street is explicitly and permanently backstopped, preparation and protection -- and that means a mix of national borders as well as assets -- should be paramount right now. When and how the state will try to prevent savers from protecting themselves is another issue. More soon.


Anonymous Anonymous said...

what's Prechter's market forecast at this point?

9/11/2009 1:46 AM  
Anonymous KAIMU said...


FDR called those anti-Americans, "hoarders" back in 1933. However the US government was happy to remove the burden of those anti-Americans with one single confiscatory Executive Order. Presto-changeo and now FDR was the official anti-American "hoarder". Its okay for the US government to be anti-American just not its own citizens and taxpayers, the backbone of the US Constitution and the Declaration of Independence. You get what you vote for ... In the Declaration Of Independence it is called a "long train of abuses". The solution is spelled out exactly in that document and it goes even further as to confer this as a "Right" of every American in order to restore Freedom and Liberty. But as Bob Marley wailed you gotta have balls to "get up, stand up ... stand up for ya Rights!" So he had that in common with our Founding Fathers ...

9/11/2009 5:47 AM  
Anonymous goldhoarder said... and silver bullion...and a shovel...and rural property.

9/11/2009 10:25 AM  
Anonymous Anonymous said...

Let's look at Iceland and what options they had when the hot money came piling in. If my facts are incorrect please correct me.

1: The carry trade started because they had relatively high interest rates

2: they let the Krone strengthen

3: They raised interest rates

4: carry trade continued as vicious cycle

rinse, repeat

After all that cheap money fell into their laps, Icelanders decided to do the usual things when people get free money, they squandered it; buying English football clubs, supermarkets, whatever.

The CB had done all the doctrinaire policies, all of which fed the fire.

So at what point does the amount of hot money coming in need to be controlled thru capital controls?

Obviously it should be the action of last resort, but there has to be some sort of boundary at which it becomes reasonable.

9/11/2009 7:15 PM  

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