Jim Standley 14 hours ago · Stansberry & Associates (customerservice@stansberryresearch) Schedule cleanup 3:14 PM [Keep this message at the top of your inbox] Newsletters To: JAMES STANDLEY Picture of Stansberry & Associates Please Enable Images To See This October 18, 2013 The last, most obvious warning… The secret history of One Chase Plaza… The foreign creditor shopping spree continues… A building – One Chase Plaza – was sold yesterday in New York for $750 million. Not surprisingly, the building was bought by a Chinese asset-management firm, Fosun. Todays Friday Digest is about this deal… and the massive economic forces that lie behind it. The story of One Chase Plaza is the story of how America was sold to its bankers. Its the story of how inflation plundered our wages. Its the story of how credit, rather than savings, came to dominate our economy and transform our way of life. Its the story of how America was packaged and sold to our foreign creditors – mostly the Chinese. Since 1996, the Chinese have made 51 major acquisitions in America, including deals to own or control iconic U.S. assets like computer giant IBM, carmaker GM, meat producer Smithfield Foods, U.S. power company AES Corp., major airplane lessor International Lease Finance Corp., investment bank Morgan Stanley, and private-equity firm Blackstone Group. Theyve also bought trophy real estate around the U.S., like the GM Tower. These deals didnt happen by accident. They happened because the U.S. continues to consume far more than it produces. We finance this consumption with debt thats owned in large measure by foreign creditors. Take the U.S. Treasury debt, for example. At nearly $17 trillion, this is the worlds largest pile of obligations. If you exclude Treasury obligations held by the U.S. government and the Federal Reserve, 54% of the remaining obligations are held by foreign creditors. And these foreign debts continue to grow rapidly – at about $500 billion annually. Debt service on these obligations allows our foreign creditors to continually buy Americas best assets. Today, foreign creditors directly own and control U.S. assets worth more than $25 trillion. Thats roughly a third of all the wealth in America. And thats far more than what Americans own overseas, which equals nearly $5 trillion. Every year that goes by, our foreign rivals will earn more on their American assets than were able to earn on our foreign investments. They will grow wealthier and wealthier… while we become poorer and poorer in comparison. As Warren Buffett famously said about this situation 10 years ago: We have entered the world of negative compounding – goodbye pleasure, hello pain. How did this happen? Why is it continuing? And why is it almost certain to lead to an enormous currency crisis? The story starts with One Chase Plaza… In 1957, America was the most powerful country in the world. We controlled roughly 75% of all of the worlds economic activity, and we owned the three most important corporations in the world: General Motors, Exxon (Standard Oil), and Chase Bank (the Rockefeller Bank). Our countrys products – like the 57 Chevy – were the finest available in the world. We dominated every foreign competitor in manufacturing, energy, banking, and just about every other industry, too. At the time, you might recall, our dollar was literally as good as gold: By international agreement, our foreign creditors could exchange their dollars for gold for $35 per ounce at the Federal Reserve Bank of New York. This firm limit on the value of the dollar protected the middle class in America, guaranteeing that every wage-earner in the economy would share in gains from increased productivity. As productivity increased, the dollar bought more goods and services. As a result, real after-tax income increased. What was good for GM actually was good for America, too. The firm value of the U.S. dollar also protected America from the temptation of credit. By linking the dollar to gold, expansion of credit required an increase in gold reserves. Under these rules, the supply of additional gold bullion (through new production or trade) limited the banks ability to create new credit. This made credit expensive (in real terms) and encouraged savings. Those savings then powered stable investment into our economy. Thus, the U.S. government debt actually declined in 1957, falling by $2.2 billion. Surely, no sane person in 1957 imagined that would be the last time the total debt of the U.S. government would ever again decline on an annual basis. In 1957, work also began on the first modern skyscraper in lower Manhattan. Commissioned by legendary banker David Rockefeller, One Chase Plaza featured space-age materials (anodized aluminum panels) and soared 60 stories high. Covered in glass, it reflected light, unlike the older sandstone buildings around it that absorbed light. The building would serve as a glowing new headquarters for Chase Bank. It was a towering statement proclaiming the banks growing influence around the world. Even today, One Chase Plaza is a signature piece of New York real estate. It remains the 15th-tallest building in Manhattan. Surrounded by Pine, Liberty, and Nassau streets, it offers tenants a direct connection to the Nos. 2 and 3 subway trains. It is even thought of as a key part of the infrastructure of the United States – housing the largest privately owned bullion vault, five stories underground. Winston Churchill remarked that we shape our buildings; thereafter they shape us. Just 10 years after the completion of Rockefellers global banking trophy at One Chase Plaza (construction was completed in 1961)… the link between the dollar and gold would be permanently broken. Richard Nixon closed the gold-exchange window in 1971. America reneged on its debts to foreign creditors. Even more important, banks no longer had to back up their loans with reserves linked to gold. Now, all public and private credit would be backed by Federal Reserve notes – so-called fiat, or paper, money. As a result, banks no longer faced any physical limit to how much credit they could extend. And the U.S. dollar no longer had any firm value. Nothing guaranteed the real value of wages. Nothing linked increases in productivity to increases in wages. Nothing protected the middle class from the rising tide of inflation… or the soaring power of the banks. You can see how the change is destroying the middle class. Today, gains in productivity benefit our creditors… not our wage earners. Take a look at this chart, based on one originally published by the Economic Policy Institute think tank. Based on Bureau of Labor Statistics figures, the chart shows the cumulative growth in hourly productivity for the total economy compared with cumulative growth in inflation-adjusted hourly compensation… These changes transformed our economy and the nature of capitalism itself. No longer would our economy be driven by investments fueled by savings. Instead, our economy is funded by debt. Debt of every kind has soared. Measured in inflation-adjusted dollars, Americas total debt has increased from $5 trillion in 1957 to more than $60 trillion today – a 12-fold increase. Meanwhile, our gross domestic product has only increased from $2.5 trillion to $16 trillion, a six-fold increase. As a nation, weve mistaken credit-fueled booms for true prosperity. But there is a major difference, of course. Credit must be repaid. While real prosperity leads to greater abundances, increasing debt produces greater burdens. The cost of servicing our debts has become so large that our creditors now routinely buy our countrys best assets using the debt-service payments we send abroad. Ironically… the butchers bill of servicing our debts now includes the iconic building that launched Americas credit bubble. On August 16, the New York Times broke the story that One Chase Plaza was for sale. JPMorgan Chase & Co., the successor entity to David Rockefellers bank, was shopping the building through CBRE, the international commercial realty firm. Speculation at the time was that the building might be converted into condominiums and fetch $1 billion. Yesterday, news broke that Fosun bought the building for $750 million. And so… America has become just a little bit poorer. Our ability to generate wealth has been marginally decreased. One of Manhattans most valuable buildings has been sold. The rents will now be sent overseas to China. The real earning power of our currency has declined just a bit. For now, the changes seem small and have such a minor impact that hardly anyone notices. But the compounding nature of this shift in wealth is incredibly powerful and very, very hard to stop. Over time… real wages will continue to fall. Over time… our ability to service our debts without additional inflation will erode. (Thats why the Fed cant stop its bond-buying program of quantitative easing.) One day, no one knows when, the world will simply decide that were not creditworthy anymore. We will have burned too much of the family furniture trying to keep our house warm. On that day, you wont want to be holding U.S. dollars or Treasury bonds… or be dependent on the U.S. government. When that day comes, people will look back on the sale of One Chase Plaza and realize… it was one of the last, most obvious warnings, that something had gone badly wrong with America. New 52-week highs (as of 10/17/13): American Financial Group (AFG), Aflac (AFL), Brookfield Asset Management (BAM), BLADEX (BLX), Blackstone Group (BX), Chubb (CB), Chicago Bridge & Iron (CBI), Chesapeake Energy (CHK), Carrizo Oil & Gas (CRZO), Dominion Resources (D), Devon Energy (DVN), Enersys (ENS), iShares Germany Fund (EWG), SPDR Euro Stoxx 50 Fund (FEZ), Fluidigm (FLDM), Fidelity Select Medical Equipment & Systems Fund (FSMEX), iShares Dow Jones U.S. Insurance Fund (IAK), SPDR International Health Fund (IRY), Kohlberg Kravis Roberts (KKR), KLA-Tencor (KLAC), ProShares Ultra KBW Regional Banking Fund (KRU), Loews (L), Ligand Pharmaceuticals (LGND), Longleaf Partners Fund (LLPFX), Laredo Petroleum (LPI), Medtronic (MDT), 3M (MMM), Occidental Petroleum (OXY), PowerShares Buyback Fund (PKW), Sturm, Ruger (RGR), ProShares Ultra Health Care Fund (RXL), Sequoia Fund (SEQUX), Sanchez Energy (SN), ProShares Ultra S&P 500 Fund (SSO), Steel Dynamics (STLD), Constellation Brands (STZ), Cambria Shareholder Yield Fund (SYLD), Targa Resources (TRGP), Walgreens (WAG), and WPX Energy (WPX). In todays mailbag… some subscribers weigh in on our recent Digest. Send your messages to feedback@stansberryresearch. I read So Long Ben. I enjoyed it and learned from it. Ive recognized the Bread & Circus tactic from Roman history for over a year now – totally agree. I agree with your speculation that there is more digital money than paper and have taken precautions. Earn more money and save is the real way to true wealth, and I may add intangible as well. I use your guidance and really appreciate & need your coaching of the discipline to follow your stops, 12% annual return, etc. (You understand human nature very well.) To save this great country a lot more people need to share your views on liberty, freedom, personal responsibility and work. – Paid-up subscriber Howard Kurz In todays [Digest Premium] column, you repeated what I believe to have become a firm urban myth – the Baby Boomers are bankrupting the U.S. I dont think their time has even come yet, since the first of them just hit the Social Security roles in the last 2 or 3 years. No, Im afraid that its the Greatest Generation that has done the damage to this point. By the time I retire in five years – if I retire – I will have been paying into Social Security for 45-plus years at rates up to 7.65% of my salary (plus the company match). What do you think the chances of my receiving my full entitlement are? On the other hand, virtually every Greatest Generation retiree paid a pittance 1% or 2% of their pay for maybe 25 years into the system. But theyve been collecting far more than they paid in as long as they remain alive. Your aiming at the wrong group when you accuse the Boomers. They havent hardly even begun to wreak their havoc! – Paid-up subscriber Gary Swanson Regards, Porter Stansberry Baltimore, Maryland October 18, 2013 Stansberry & Associates Top 10 Open Recommendations (Top 10 highest-returning open positions across all S&A portfolios) As of 10/17/2013 Stock Symbol Buy Date Return Publication Editor Rite Aid 8.5% 767754BU7 02/06/09 624.7% True Income Williams Prestige Brands PBH 05/13/09 410.8% Extreme Value Ferris Enterprise EPD 10/15/08 237.0% The 12% Letter Dyson Constellation Brands STZ 06/02/11 200.8% Extreme Value Ferris Abbott Labs ABT 05/20/11 192.2% The 12% Letter Ferris Ultra Health Care RXL 03/17/11 177.0% True Wealth Sjuggerud Altria MO 11/19/08 170.1% The 12% Letter Dyson McDonalds MCD 11/28/06 167.2% The 12% Letter Dyson GenMark Diagnostics GNMK 08/04/11 164.4% Phase 1 Curzio Hershey HSY 12/06/07 154.4% SIA Stansberry Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. Top 10 Totals 1 True Income Williams 2 Extreme Value Ferris 3 The 12% Letter Dyson 1 The 12% Letter Ferris 1 True Wealth Sjuggerud 1 Phase 1 Curzio 1 SIA Stansberry Stansberry & Associates Hall of Fame (Top 10 all-time, highest-returning closed positions across all S&A portfolios) Investment Sym Holding Period Gain Publication Editor Seabridge Gold SA 4 years, 73 days 995% Sjug Conf. Sjuggerud ATAC Resources ATC 313 days 597% Phase 1 Badiali JDS Uniphase JDSU 1 year, 266 days 592% SIA Stansberry Silver Wheaton SLW 1 year, 185 days 345% Resource Rpt Badiali Jinshan Gold Mines JIN 290 days 339% Resource Rpt Badiali Medis Tech MDTL 4 years, 110 days 333% Diligence Ferris ID Biomedical IDBE 5 years, 38 days 331% Diligence Lashmet Northern Dynasty NAK 1 year 343 days 322% Resource Rpt Badiali Texas Instr. TXN 270 days 301% SIA Stansberry MS63 Saint-Gaudens 5 years, 242 days 273% True Wealth Sjuggerud Please Enable Images To See This You are receiving this message as part of a subscribers-only e-mail service covering the worlds of investing, finance, and economics. You are receiving this email because you subscribe to one of the investment newsletters published by Stansberry & Associates Investment Research. PLEASE DO NOT REPLY DIRECTLY TO THIS EMAIL. To contact us for any reason, see the notice at the bottom of this message. ALL CONTENTS OF THIS E-MAIL ARE COPYRIGHT 2013 BY STANSBERRY & ASSOCIATES INVESTMENT RESEARCH. ALL RIGHTS RESERVED: REPRODUCING ANY PART OF THIS DOCUMENT IS PROHIBITED WITHOUT THE EXPRESS WRITTEN CONSENT OF PORTER STANSBERRY. Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}: Infringements can be punishable by up to five years in prison and $250,000 in fines. DISCLAIMER: This work is based on SEC filings, current events, interviews, corporate press releases and what weve learned as financial journalists. It may contain errors and you shouldnt make any investment decision based solely on what you read here. Its your money and your responsibility. Stansberry & Associates Investment Research expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. And all Stansberry & Associates Investment Research (and affiliated companies) employees and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation. You're receiving this email at jamesrstandley@hotmail. If you have any questions about your subscription, or would like to change your email settings, please contact Stansberry & Associates at (888)261-2693 Monday – Friday between 9:00 AM and 8:00 PM Eastern Time. Or if calling internationally, please call 443-353-4359. Stansberry & Associates Investment Research, 1217 St. Paul Street Baltimore, MD 21202 If you wish to contact us, please do not reply to this message but instead go to info@stansberrycustomerservice. For faster service, please enroll or log in to your account. You will find a drop down menu with topics already created to expedite your email. Replies to this message will not be read or responded to. We look forward to your feedback and questions. However, the law prohibits us from giving individual and personal investment advice. We are unable to respond to e-mails and phone calls requesting that type of information. To unsubscribe from The S&A Digest and any associated external offers, click here. If you would like to report any mail delivery problems, click here. Too many newsletters? You can unsubscribe or better yet, schedule automatic cleanup. © 2013 Microsoft Terms Privacy Developers English (United States) © 2013 Microsoft Terms Privacy Developers English (United States) Unlike · · Unfollow Post You and Dirk J Fiessinger like this. Mike Mitsoff wow!....not good,Jim. 13 hours ago · Like Eric Boren Good post backed up by root cause and hard data. I cant argue with any of it. Congratulations, we agree! 13 hours ago via mobile · Like · 1 John Saylor ......i guess the question is whether to learn Mandarin or Sichuan....... 13 hours ago · Like · 2 Eric Boren John, I just order by the numbers on the menu. 13 hours ago via mobile · Like Kathy Newcomb-Cole Well this is certainly depressing. Any ideas?? gold? silver? 13 hours ago via mobile · Unlike · 2 Eric Boren Yuan apparently. 13 hours ago via mobile · Like · 1 Jim Standley Looking at the major debt holders, you may also have Japanese, Russian, and Hindi to choose from 13 hours ago · Like Jim Standley The events that Stansberry warns of are already underway. Fed up with our irresponsible, money printing ways, the major industrialized nations have held numerous meetings over the past few years(and guess who was not invited) to address eliminating the...See More 12 hours ago · Like Kathy Newcomb-Cole Thanks Jim. I appreciate your honesty and your sharing this very informative affirmation of what we all have long suspected was happening. Guess another visit to the financial planner is warranted. 12 hours ago via mobile · Unlike · 2 Eric Boren I wonder if they sell stock in General Tsos chicken? 12 hours ago via mobile · Like · 1 Paul Newcomb sorry...fat finger syndrome again.Two essential reads for me ...Bubblequake and Aftershock.precious metals will ultimately increase in value because they will be useful when bartering for essentials...and it will come down to essentials.When the moment comes the dollar is no longer recognized as the worlds reserve currency it will happen before you can do anything to protect your dollars if you have not been proactive and diversified your wealth.I am hopeful that rental property will help me and my family but if people have devalued dollars getting rents will be difficult but it will be something of some worth when the corrections of our economy finally take place.Paying down as much debt as possible is a top priority for me right now.I pray that our country will stop this insanity of printing fed money and allow the correction to begin.The longer we put it off the more disruptive the correction will be.Two more Bubbles to go.Thanks for the gut check Jim and prepare for the worst....pray for the best. 10 hours ago · Like · 1
Posted on: Sat, 19 Oct 2013 13:02:03 +0000
Trending Topics
Recently Viewed Topics
© 2015