Let me preface this post by saying I am no more qualified to comment on the state of the economy than, well, just about anybody. I will however regurgitate what I have learned from several excellent sources with some of my own input. I am also not anti-USA. In fact, very much the opposite which is why I think people should read this with an open mind.

Once upon a time, in California.....

...people used to buy a house for a living. Yep. That's it, buy a house and you're good to go. The prices of homes appreciated in the 10-25% range for much of the past decade. Why? Bill Clinton decided that every American should be able to afford to own their own home. 'Who me? But I only manage a McDonalds restaurant, I can't afford a home?'

Well yes you can. I, Bill Clinton will create organizations called Fannie Mae and Freddie Mac, and they will back ALL mortgages. I will also offer you extremely low interest rates, and offer payback terms that reach as long as 40 years. Your monthly payments will be much less than you pay in rent! So YES, you will be able to afford a home.

So the USA builds homes, and more homes, and more homes. They can't build them fast enough really. Money is so cheap, and the prices increas so rapidly that many smart people buy 2,3, 4 or more homes! Anyways, every US citizen now owns their home – and incredibly the value of their home has increased exponentially. By golly, they are all very wealthy when you add up their property values, incomes, and various things they own. If I had that much wealth I would buy lots of stuff. And that's exactly what happened.

Those who borrow the most – would profit the most! It's failproof. Let's call these people the US consumer. The US consumer has been the single most important driver of the global economy for quite some time. The jig is up.

Apparently giving away cheap money like that actually isn't sustainable. Eventually either people cannot make their payments or inflation becomes a serious concern.

Whooooooosh............the house of cards begins its collapse.

Now similar to Canada, the USA goverment only has one objective within the next 4 years, and that is to get re-elected. So, instead of doing the right thing and stopping the flow of cheap money, George Bush does excatly the opposite and blows billions on a pointless war. The Americans love it! Build tanks, build bombs, make uniforms, build vehicles – a boon for the economy (too bad most of this stuff or its parts were imported). Let's re-elect this superstar and finish this war.

Who's going to pay for it George asks? I know says Ben Bernanke – the Federal Reserve will! We will just sell treasury notes to China, Japan, Korea, India and whoever else wants are dollars and use that money. In fact, we can make as many of those notes as we want because WE are the Global Currency. Nobody can say squat because we passed a bill in 2007 that says we don't have to disclose how much money we print. Suwheeet.

All the while....the Chinese, Indian, Taiwanese etc citizens are bustin their humps trying to make a living. $2 US a day might actually sound like a pretty nice deal for slugging for 12 hours making t-shirts, or shoes, taking phone calls or other random things. Hey, at least they're getting paid – and they ain't buying much stuff either. They would tend to save, or spend what they have. They would rarely borrow and in fact I believe it's anti-religious to borrow if you are a Muslim.

So poor Obama gets elected and inherits this fiscal disaster! Such a charming young man – as a Canadian he suits my values much better than did the other guys. Gotta love him I say. Love him that is until he attempts to 'Bail Out' the err of the USA's spending habits. Instead of getting to work, getting in, finding and fixing the problems and taking the most painful – but necessry – medicine....he sees the flames burning high and then pulls out the gasoline hose and just pours it on the fire. Ho-Lee-Chow, we in trouble now! (A double ended meaning for those who know the now bankrupt chinese fast food chain).

Bailout? 700 Billion. Hmm. How much is that anyways? Does that mean a little, or a lot. Well, it works out to over $2000 for every single US citizen. Substantial. Don't quote me on this but somewhere in the 1-3% of the entire US kitty. Yep, that's significant.

Well, some view this as reckless behaviour. China, Russia, Japan, Mexico, Korea, Taiwan, India, Brazil, and whomever holds US dollars and those trusty treasurey notes. All those notes they are holding are losing their value! How dare they. They just go and print whatever they want and WE are expected to pay for it??! How annoying. But really....what can we do. We are just one small country. But maybe, just maybe if all join together and take a vote...maybe things will change? (NOT shareholders can understand this, apparently)

Examples of this.

2 Japanese nationals caught smuggling $134B worth of US bonds into Switzerland a few months ago. US claims they were fake – uhhh ya. For sure – because people checking bonds worth billions don't have professionals you know...double checking authenticity. Not covered by mainstream media except for this link and a handful of others.

http://www.bloomberg.com/apps/news?pid=20601101&sid=ayy1QKcwcGN0

Chinese goverment encouraging all domestic holders of US$ to spend them all on hard assets – like revenue producing companies (at cheap prices), commodities, gold etc.

http://www.trendsimwatching.com/2009/08/china-is-spending-excess-dollars.html

Restless economies calling for the end of US cuurency as global reserve currency...

http://online.wsj.com/article/SB123780272456212885.html

They are everywhere if you know where to look.

The global economy is not faring as badly as the US economy. Very encouraging is that recently Australia raised their interest rate – meaning they are wanting to reign back inflation, keep things in check and grow organically. A very good sign. RBC just raised their mortgage rates too, I believe. A good sign for Canada. Hang Seng is all but back to previous levels. The infamous 'green shoots' are showing around the globe – the US just keeps purging jobs and cheers when they lose less than they expected.

So, what does this all mean for the future? Well, fortunately – the global economy is not as reckless as the US economy was in giving away cheap money. The people of Brazil, Russia, India and China will be able to spend some of their hard earned dineros instead of saving them. Even thought the US is a monster when it comes to consuming and spending, the rest of the world still goes on (and the US still does have lots of money floating around albeit soon, nobody is going to want it as much). The bailouts must come to an end, no? The health care plan isn't really viable. That is unless they print the money to pay for it – but US $ holders have already had enough of their $$ being debased.

Instead of holding US$, people will seek something much more stable and proven. This is why we have seen the value of gold increase recently, and why many predict gold at $2000/oz. It's not because gold is increasing in value, it's because the USD is decreasing. Same goes for all commodities. Oil, potash, nickel, rice, platinum etc. There will be a global demand for this stuff and it's intrinsic value will remain – the USD value will increase.

All holders of USD have been losing their 'wealth' over the past few months. It's at new-time lows relative to the Euro. Like the most stealth and invisible pick-pocketer of all time, your wealth is being stolen one day at a time. You don't see it because your dollars remain intact. What you can do with those dollars however, is a whole other story.

Canadians and Americans – get your TV's and toasters now. As our money becomes more worthless the things we are so accustomed to having at our disposal will not be so easy to acquire. Once the inventories have been depleted and Wal-Mart tries to buy their next shipment of 'mom-jeans', they might be surprised how far their dollar has fallen. And surprised that their supplier wants cash up front, and that maybe they don't want your business period – because business is better at home.

The pundits advice? Sell everything and buy gold. My advice? Don't listen to some putz on the internet - but open your eyes to what's happening all around and formulate a strategy of how to best protect your wealth. I bought lots of NOT.

Some other personal thoughts:

I used to visit my girlfriend at the time in Detroit on a regular basis for 2 years. Her and all her engineer friends worked at GM. Man, did they all have great stuff! Boats, new cars, nice homes, cool condos, expensive clothes, expensive tastes, and very generous tippers. It was actually quite odd for me to see. In Toronto, I thought I was quite wealthy relative to my friends. Worked hard at my business and owned my own house at 23 yrs old etc. It was like paradise over there – they could afford anything they wanted. No doubt – the US exchange rate was a killer for me, not so much for them!

I think one of the reasons why Canada has been succesful over the past 20 years is due to their immigration policies. We let skilled immigrants with money into our country. Lots of cab drivers in Toronto were doctors in their home countries! In my opinion, the US could open their doors to wealthy immigrants. This could bring in the wealth they need to sustain themselves. I'm sure many developing country residents could handle the luxe life in the USA. If you have the cash, it's a great place to be.

The fundamental difference between Americans and Canadians – took me a while to figure this out. Anything and everything that has do with money (business, RnD, building, transportation) – the Americans are far more advanced. Anything that has to do with socialism – Canadians are more advanced (environment, sex, human rights, culture).

The Grande point of this wee tirade? Buying NOT is prudent if you feel that the US economy will not recover any time soon. The cycles we were used to seeing are not possible anymore. Their debt is insurmountable and the only card they can play is to print money. This will have consequences – and I am personally striving to learn what those will be on a weekly basis. And you cannot get this from conventional news although I am seeing the public opinion and mainstream media staring to catch on. Kind of the like the global warming thing before An Inconvenient Truh came out.

No offense to any Americans. My ex-girlfriend used to lambast me when I criticized Bush. She was very proud of her country and taught to defend it at all costs – her dad was in the army and worked for the tank building company. It's just a view from up north and always up for debate.

Brattymack