Todd M. Siebert: The world has become a circus but America may have just the ringleader it needs

“Every country gets the circus it deserves. Spain gets bullfights. Italy the Church. America Hollywood.” — Erica Jong, bestselling author.

Americans need a street fighter, not an Oxford MBA, to help us battle our way back to the top economically and militarily. It is going to get ugly and even bloody, but at least Donald Trump could be in there swinging. And that is a hope our once great nation has.

Let the Prime Ministers of nations like Canada and Denmark play by the Queensberry rules. They can be light in the Testoni Italian shoes, but America needs a president ready to get down and dirty. And that man is a billionaire who walked the streets of New York as a kid.

Even for me the jury is still out on Trump. More importantly, is he the people’s champion that he says he is? He will have to be, if the United States as we have known it is to remain in any semblance the country that we recognize. That is because a recession, perhaps even a depression, is building throughout the United States and the European Union. I pointed out in the January 6, 2016 issue of Personal Liberty Digest^® that treacherous times for the markets are at hand — and thus for the economy — primarily because of the precipitous decline in the prices of petroleum and other hard assets.

Scores of comments flooded in that cheaper oil, while making the United States more energy dependent, would lower transportation costs and save America money. After 45 years in the business of following trends and picking winning strategies, I was convinced then and now that another shoe is going to drop — equity prices.

Since 2008, the CRB Commodity Index has fallen 69 percent. That is the steepest eight-year decline since the index was created in 1957. Hard assets across the board are now worth just a fraction of what they fetched eight years ago.

Finally, oil prices may be hitting bottom but there is still talk of $1 per gallon gasoline by summer, which may happen in part because of the economic policies of President Barrack Obama.

My big homerun, but thrown out at the plate

The highest recorded price for crude oil was $147.02 set on July 8, 2008. Scant days before I sent my subscribers at “Myers’ Secret Stocks” an urgent alert to liquidate all oil and gas investments, from the multi-nationals to the plethora of juniors that had sprouted up during oil’s record run.

It wasn’t that great of a call and I believe that this is the first time I have mentioned one of my calls in the nearly eight years I have had the opportunity to write for Bob Livingston at Personal Liberty.

Based on long wave analysis it was painfully clear in ’08 that oil was overbought, even though some newsletter writers were predicting it would hit $200, even $300 per barrel.

As for not talking more about my picks, I find a distaste in it because of my first job which was to read what other newsletter writers were claiming and then back-check them. This was the investment newsletter golden years of the early 1980s. What I found was that many newsletter writers were correctly pointing out their hits, but they had terrible cases of amnesia regarding their misses.

Over the decades I’ve tried to steer away from the subject, but it wouldn’t be fair to talk about my actions on oil prices in 2008 if I failed to tell you I screwed up, or more accurately the feds in Washington screwed it up for me.

I’ve been investing my own money in stocks for decades. And when I went to liquidate my oil positions I believed that big board stocks were going to fall. In the past they always had. Oil and equity values typically travel in tandem. So in the early summer of 2008 I bought puts (a bet over a limited period of time that an equity price would fall). I was in great shape, I thought, with my puts in petroleum and blue chip stocks.

The market did to me what it has done half a dozen times to me and to everyone else; it showed us that we are not near as smart as we think we are. In 2008 equity prices did go down, but it was only a hiccup. With their wisdom and with their own money locked into the system, Washington insiders instituted the Troubled Asset Relief Program (TARP) which pumped $700 billion into the investment banks thereby raising all ships or in this case, all yachts.

And nothing with the U.S. economy was fixed. Instead, Obama added $8 trillion to the federal deficit to keep the economy barely afloat.

Now, after eight years Obama is finally leaving and America is left with one hell of a hangover.

The U.S. posted a crippled recovery of 0.7 percent economic growth during the fourth quarter of 2015. This meant the annual growth rate was an anemic 2.4 percent. The average annual economic growth rate for Obama’s first six years was a dismal 2.2 percent, one of the worst economic recoveries since World War II.

And remember, the Obama recovery was paid for with $8 trillion in taxpayer money.

Obama is “dead last compared to six other recession recoveries since 1960,” said economist Stephen Moore of the Heritage Foundation. He reported that historically the average recovery is a robust 4.0 percent while the Reagan era recovery averaged a “sizzling” 4.8 percent over six years.

The one thing that the Obama economic team was excellent at besides hollowing out the domestic petroleum industry was creating new money.

A common measure of money, M2, has risen from about $8 trillion when Obama took office to $14 trillion when he leaves office. In simple terms, Diamond Barry will have played with our life’s savings at the casino for eight years and brought back just half of what we staked him.

Squirt-gun economics

Cash levels across the board have almost doubled since Obama took office. And that gets us to the key concept of confidence and monetary velocity. Having money in itself does very little for the economy. It is when people are spending money and businesses are leveraging and investing money that economies become turbo-charged.

Decades ago my father, a publisher and one of the original gold bugs, explained the concept of monetary velocity.

My father once spent several weeks hunting big game in Africa. The rifle he relied on was a .300 Weatherby Magnum. First sold in 1944, my dad liked the weight and balance of the rifle. And through it he explained to me the importance of money velocity. He said there were many elephant guns, but his gun had almost equal stopping power because the bullet had a velocity of almost 3,500 feet per second. It was the speed of the bullet that could compensate its smaller size.

It is the same when it comes down to cash in the economy. When money is moving quickly it will offset stagflation. The key to increased velocity is confidence; confidence in economic programs, confidence in congress and above all else, confidence in the President.

Currently, the confidence in the president and congress is abysmal. But a new president who could restore confidence in America, the way Ronald Reagan did, would be invaluable. I think Trump could be that kind of president. I have to hope he is because the slugs that have been in the White House since Reagan left office have eroded confidence and worst of all, are allowing the United States to forget its core values.

Just maybe Trump can turn things around. With the establishment of both parties holding him in terrible disregard, he must have something going for him.

Yours in good times and bad,

— John Myers

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