Richard Maybury describes himself as “The 2,500-year old man,” referring to his deep study of history (economic & otherwise) and how it repeats today.
Back in December Mr. Maybury warned the current deflationary environment would soon flip into a strongly inflationary one [Deflation Xforming to Inflation Soon]. At that time he said, “In any case, when I think the bottom has happened, I will let my subscribers know on the Subscriber Access part of our web site. No guarantees, but I’ll do my best to get it right.”
Yesterday he issued the alert. [Read full text here.]
He says, “The bottom of the deflationary stage of this crisis has arrived. However, it is not an unqualified call to buy every non-dollar asset you can get your hands on.
“As you know, US officials plan to force taxpayers who pay their debts to subsidize those who don’t. This is diverting flows of money, creating larger profits in some areas and larger risks in others. There are colossal opportunities now, but also traps.
“I believe it is highly likely the world is entering the worst economic crisis since the fall of the Roman Empire. Never before in 2,500 years of economic history have people gone through this kind of situation with a world reserve currency that was fiat paper, not gold. We’re trying to ride out an 8.0 earthquake in a house built on sand.”
Subscriber Only Details
As the details are only for subscribers of Mr. Maybury’s excellent Early Warning Report I’ll only summarize it here. Five specific events in March persuaded him to call the bottom.
1) March 23, 2009. China’s central bank governor said the US dollar should be replaced as the world reserve currency. That was the most powerful attack yet on the dollar’s credibility. (China is the largest holder of US dollar assets.)
As foreign holders begin to question the dollar’s viability they will try to dump their greenbacks. Lots of things inside the US are at fire sale prices, so, as these foreign greenbacks are shaken loose, money will flow into the US to buy those bargains. This will increase the money supply in the US, adding to the Federal Reserve’s own inflation of the money supply.
2) Increased fear of the dollar will also contribute to a rise in velocity, both inside and outside the country.
3) March 20th, 2009. At the Independent Community Bankers meeting a Bernanke squeeze doll was handed out, and Bernanke was the target of ridicule. The only thing backing the fiat paper dollar is the credibility of the US central bank. When foreigners see the Fed’s own banking community jeering the Fed honcho, the loss of confidence in the dollar will worsen and contribute to a rise in velocity.
4) March 18th, 2009. The Fed announced it will purchase billions of dollars of mortgages and government bonds. This will inject more new dollars into the financial system, and direct hundreds of billions of them into real estate. The real estate bubble will be re-inflated. [See Dollar Death in May?]
5) Orders for big-ticket durable goods, new homes and existing homes have risen recently. This shows that money is on the move and flowing back into some of the largest sectors of the economy.”
Mr. Maybury thinks for several months we will experience more of a U-shaped bottom than a V-shaped bottom.
For a while, a lot of money may leave the more liquid financial investments such as stocks, bonds and CDs, and flow into real estate. The beginnings of the new real estate bubble could be accompanied by a further deflation of stocks, bonds and perhaps even commodities.
In short, the re-inflation of the housing bubble could be so intense that it will suck money out of the financial markets.
Mr. Maybury expects the first incident in the coming inflationary crisis will be a global monetary disaster, with the dollar plunging in international currency markets.
Mr. Maybury recommends an assertive strategy to take advantage of the opportunities the inflationary trouble generates.
He is currently buying gold, silver, platinum, specific silver mining stocks and a specific solar energy company that he pegs the risk at 2.0 or less – and the three-year profit potential of 1,500%. (Subscribe if you want more specifics.)
And I love the way Mr. Maybury closes his special alert, “You are on my mind constantly, and I am doing all I can to help you stay safe and prosperous.”