by Travis Johnson, Stock Gumshoe | February 11, 2015 10:13 am
We see pitches about the “end of money” all the time — across the spectrum from the goofy spiel for “loyalty points” being the next Bitcoin, to actually trading in Bitcoin, to the more popular “end of America” pitch about the dollar dying and the need to have old silver[1] coins[2] and gold[3] in your bunker that you can trade for sorghum and molasses and ammunition after we enter the next dark age.
But this one’s a little different — and, frankly, more “real” and familiar and less reactionary. The spiel is from Dr. David Eifrig[4] in an ad for his Retirement Millionaire[5], and his tease is really about the next stage of payments and the end of cash and conventional credit cards.
Which is also not necessarily a new idea, of course, our society has been mostly cashless for close to a generation now, since the debit card came into full swing, credit cards became easy to get, and we saw the end of the paper “paycheck” and, before that, the cash payroll distribution… and it becomes more “cashless” every day thanks to the growing ubiquity of electronic payments.
So what investment does Eifrig recommend to play this variety of the “end of money” story? Here’s a little intro from the ad:
“Recently announced 2015 ‘dollar upgrade’ will radically reshape everything we know about money… from saving and spending… to banking and finance… to investing and retirement[6]….
“A new digital currency ‘is coming to town,’ says Fortune journalist Philip Elmer-DeWitt, ‘and I can’t wait to try it.’
“Headline & Global News calls it simply, ‘The next form of currency.’
“Similar to the advent of credit cards in the 1950s… Debit cards in the 1980s… and online banking in the 1990s… this upgrade will completely – almost radically – reshape everything we know about money… from spending and saving… to banking and finance… to investing and retirement.
“Already, the global financial community is quickly gearing up for the massive digital ‘overhaul’ – what is likely be the biggest change to money in the U.S. in decades.”
And then…
“Keep in mind: This upgrade will not replace the dollar.
“It won’t compete against it.
“In short: It’s designed to make the dollar better.”
So what’s he talking about?
This is, as some of you have guessed, another tease that’s largely about Apple Pay — the payment system using Apple’s iPhone and near field communication (NFC) chips to process payments at cash registers using credit or debit cards that you already have (if your bank participates, you really just take a picture of your card, authorize your phone to use that account, then wave your phone at the cash register’s payment thingamajig and verify it with your fingerprint on the phone). Your bank has to be participating for it to work, and the retailer also has to accept Apple Pay, but by all accounts the power of Apple’s market presence has been a big jolt for these kinds of touchless payments — which have been possible for a long time, but haven’t achieved commercial acceptance in the U.S.
Here’s more from the ad:
“It could quite possibly be the single most perfect version of money ever created.
“For most, this is a welcome – and long overdue – change…
“Others are concerned about what the transition to a completely digital dollar might mean for the future of spending, saving, and investing in America—
“But here’s the thing…
“It doesn’t matter whether you’re prepared or not… this upgrade is happening….
“The good news is, it’s still not too late for you to grab your piece of the pie.
Are you getting our free Daily Update
"reveal" emails? If not,
just click here...“I’ll even tell you about a super simple trade you can make right now, today—one that could prove very profitable in the coming months.”
Aaaaand, that’s what we were waiting for, right? The way that this “end of money” will make us some money? He won’t tell you straight out, of course — for that, you’ll need to sign up for his Retirement Millionaire newsletter.
Or, of course, we could figure it out from the clues. That is what we do here, after all. Shall we proceed?
Here’s where Eifrig gets into the meat of the tease:
“The Next Big Money Revolution Is Here
“The new payment revolution I’m talking about is called NFC.“NFC stands for Near Field Communication. In its early form, NFC was used by the military to prevent ‘friendly fire’ accidents. The technology was declassified in the mid-1990s.
“An NFC chip is essentially a tiny radio transmitter – about the size of a ladybug. It’s inactive, until it receives a signal from another NFC-enabled device. The technology operates in a two-way manner, so that information can be passed in both directions. NFC-ready devices must come within a few inches of each other to transfer data….
“If you’ve ever used a ‘smart card’ to unlock a door… or if you have a car with a remote ‘keyless entry’ system… you’re using NFC.
“But now, this technology is being adapted by banks, payment processing firms, credit card companies, and retailers and merchants across America to completely transform the way we pay for things.
“In short, with NFC technology our wallets will be replaced by smartphones….
“According to Visa, Americans are now TWICE as likely to carry a mobile phone as they are cash.
“And those between the ages of 18 and 34… FOUR TIMES as likely.”
He goes on to describe the convenience (lots of cards and accounts on one device, no wallet) and security improvements of NFC (phone is locked and trackable, unlike your wallet, transactions use one-time token codes, not your full credit card number that might be stolen or re-used or hacked), and that’s all true — though whether or not it will lead to mass public (or retailer) acceptance is still probably an open question.
Habits change slowly, and established players want to protect their slice of the pie — and retailers are grouchy about credit cards and the fees they pay so they’d really like to come up with their own payment network that doesn’t rely on Apple, Visa or Mastercard (which is why some retailers, in high-profile actions, have blocked Apple Pay as they work to develop the CurrentC system with their own consortium[7]).
But if we assume that we’ve finally hit the “tipping point” on touchless mobile payments, what is Eifrig’s investment idea?
“I believe NFC is in the same exact position as credit cards were in the 1950s… debit cards in the 1970s… and online banking in the 1990s…
“Which means – right now – we are perfectly positioned to capitalize on this massive new trend….
“So how do you capitalize on this?
“Of course, one obvious trade you could make right now is to buy shares of Apple.
“The consumer tech giant, for example, will get 15 cents for every $100 spent using Apple Pay.
“While that may not sound like much, just consider: If Apple Pay captures even just a tiny percentage of the $13 TRILLION in credit, debit, and cash transactions that occur worldwide every year, Apple’s revenue will surge.
“But here’s the thing. Apple is the largest publicly traded company in America right now. It’s currently trading for over $100 per share. While I believe Apple is a good investment and its shares will continue to rise, it’s likely not going to make you thousands of percent gains anytime soon.”
Hard not to agree with that — Apple is my largest single equity position, and I’m hoping the “network effect” of Apple Pay will help to keep iPhone user loyalty high, their revenue is going to continue to be dominated by sales of iPhones for the foreseeable future. At that fee rate, even if Apple Pay has a hand in processing half a trillion dollars of payments a year at some point in the next few years, that’s still only $750 million in fees to Apple — sounds impressive, but that’s less than a half of a percent of Apple’s revenue. Even if you assume that Apple Pay has no costs (it does) and that number moves straight to the bottom line, $750 million would be less than 2% of Apple’s profits for last year. Doesn’t mean Apple Pay can’t be huge, but it has to scale up dramatically, and globally, to become a meaningful line item for Apple within the next few years.
But that, of course, is just the lead-up to what he says you should buy to play this “NFC Revolution” … he’s got a bigger, short-term (12-24 months) wave of profits he sees for us…
“Major credit card companies are mandating the use of a technology that enables NFC at merchant locations throughout the U.S. by October 2015.
“It’s called the EMV Mandate… and it is a major, major deal.
“You see, the EMV mandate requires virtually every merchant in America to make the switch to ‘chip and pin’ payment terminals by October 2015, or else be liable for fraudulent charges resulting from using outdated machines….
“… ‘chip and pin’ and NFC are two technologies that work together… they complement each other. Think of chip and pin as the contact (or swipe) version and NFC as the contactless version. Because of this connection, the top manufacturers are including both “chip and pin” AND NFC in nearly all payment terminals going forward… as they gear up for the October mandate.
“By 2017, a full 86% of payment terminals in North America will accept NFC, according to research firm Berg Insight….
“With an estimated 9 million retail locations in the U.S., there are literally millions of payment terminals that must be converted between now and October. And remember, the vast majority of these new readers WILL include NFC technology.”
So, as you probably guessed, he’s teasing some companies that will benefit from this rollout:
“… one of the best ways to play this trend is to invest in the companies that supply the necessary hardware that make the technology work.
“Specifically, I’m talking about the NFC chips that go inside the smartphones and the point of sales terminals (soon to be essentially mandated throughout the U.S.)….
“THE premier NFC chip maker in America – this company actually co-invented the technology.
“So it’s no wonder this company commands a whopping 80% of the NFC chip market….
“I wouldn’t be surprised if this little-known firm becomes a household name over the next few years!
“That’s in part because this is the company that supplies the chips for what will likely become the most widely used NFC phone in America… the iPhone 6….
“Shares are up 60% over the last 12 months, but that’s peanuts compared to what I think could happen as the nation-wide EMV mandate approaches – with its implications for the rise of NFC technology. “
This one, as some of you might have already guessed, is NXP Semiconductor (NXPI)[8], a large chipmaker that is indeed the biggest player in NFC chips — though, as we discussed a couple weeks ago when Andy Obermueller[9] was teasing it and a few years ago when David Gardner[10] at the Motley Fool[11] was teasing it.
The stock has been a growth darling this past year, and had another investors.com[12]/020515-738056-nxp-semiconductors[13]-had-strong-q4-results-on-iphone-automotive-sales.htm?ven=yahoocp&src=aurlled&ven=yahoo">solid quarter to end 2014 (they reported last week), and their key growth businesses (NFC and automobiless) are both growing very fast right now, helping them to generate 20% earnings growth both this year and well into the future if analysts are right.
This is certainly the most popular “NFC” investment, and even after a huge run you might consider it cheap if you’re confident the growth will continue at this rate — the stock has a trailing PE of about 17, and a forward PE on 2016 estimates of about 12, so if you’re looking for one NFC chip play this is the market leader and is reasonably priced.
The second largest NFC chipmaker is probably Broadcom (BRCM), though other large firms like Qualcomm (QCOM)[14] offer NFC chips as well and might fight harder for market share as the market grows, and both QCOM and BRCM can benefit by bundling NFC with other chips they supply to phone makers — I don’t know how much being the current leader or having “first mover” advantage will help NXPI to hold on to their market share, but it seems a safe bet that the market will become more competitive as it grows. The other name that comes up frequently as a NFC supplier, also fairly large, is Infineon (IFX in Germany, IFNNY over the counter in the US).
But Eifrig says there’s more in his “How to Cash in on the NFC Revolution” special report, including lots of chatter about NFC’s non-payment inroads into other businesses (like hospitals)… and he also teases the company that makes the NFC chips for budget smartphones. So who’s that?
“In my report, I’ll also introduce you to a company that makes NFC chips for smartphones in the ‘under $150’ market – the so-called ‘budget’ smartphone market.
“Why ‘budget’ smartphones?
“Because the market for these phones is going to absolutely explode over the next few years – as emerging economies like China[15], India[16], and Singapore[17] begin their own adoption of Near Field Communication.
“China Mobile, for example, China’s largest mobile network company, recently announced the launch of an NFC payments service in more than 14 Chinese cities, including Shanghai, Beijing and Guangzhou. Already, 8 banks have signed up to back the initiative.
“Similar NFC initiatives were recently introduced in Singapore, South Korea[18], Japan[19], the Philippines, India, and Turkey.
“By 2017, ‘budget’ smartphones will make up a full 52% of the worldwide market, according to a study from Informa, Telecoms, and Media.
“In short: There are incredible gains to be made and you do not want to overlook this market.
“I expect the company that makes the NFC chips for the ‘budget’ smartphone market to skyrocket in the coming months and years.”
That’s not a lot of terribly helpful clues, but my first guess on that would be MediaTek (2454 in Taiwan, MDTKF on the pink sheets — very illiquid, hardly ever trades in the US), which does have a strong “integrated chip” business with low-cost Chinese smartphone makers, including NFC chips (still a fairly small part of their business, as it is for pretty much all of the chipmakers who make NFC ships), and it is a large cap company with a market capitalization of better than $20 billion… but it’s very hard for US investors to buy.
So, personally, I’m pretty happy just holding on to Apple (AAPL)[20] for now. If I were to wander into the woods of semiconductor chips again to make a bet on rapid NFC adoption, it would probably be with NXPI… but I’d keep a close eye on it, the stock is riding high on momentum.
But enough about me — its’ your money, so what do you think? Interested in investing in NFC chips or in other players in the NFC adoption universe… maybe even including the companies that make the terminals, like Verifone (PAY)[21] or NCR (NCR) or others? Let us know with a comment below.
P.S. And yes, if you stuck around for the entirety of Eifrig’s ad “presentation”, he does also pitch some other things he’s suggested to Retirement Millionaire subscribers — the one we get asked about most is the “how to get free silver from your bank” spiel, if you’re curious about that one we wrote about it here[22].
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Thank you for your comment concerning AAPL. Much appreciated!
David Brown of Sabrient Systems has NXPI as one of his “dozen” for 2015. (For the last few years he has had quite successful picks.)
dear Travis
How will newsletter publishers like you and me collect subscription fees if the buyer is not able to use a credit card and has to flash a cellphone at the website?
v
skype
I recall reading recently but don’t recall exactly where that retailers will be required to have terminals that can read the smart phone enabled chips by this coming October. Since this system is supposed to be more secure than credit cards currently are this implies that new fangled cards with these chips will be available by then. So we can carry the iPhone or our current cards, the Third World will have cheaper and more basic smart phones and somebody is bound to introduce them into the USA, a challenge to Apple which it will meet head on with their own stripped down smart phone much as they may deny it now. To anyone not yet in NXPI (full disclosure, I am) get in it soon and anything else in his space that tickles your fancy.
Jim I have one of those new cards with chip and even in the remote area of my residence readers are available. I foresee notebooks netbooks laptops tablets etc all including a slot for reading much as many do now for memory cards, Very likely online purchases will be mostly handled this way for security , as ubiquitous as USB.. IMHO
Travis is the only bill I actually look forward to because then I know I am safe in my “community” for another year. As a not so rich investor I always try to research carefully before I spend my money. SO far I have been making a nice profit with the help of everyone here. I tend to agree with Travis here. Apple is the way to go. Perhaps the others will make a bundle I don’t know but I do know APPLE isn’t going anywhere so I buy whenever I can. in small increments. Better to own some of the best
IF I had a bit extra maybe some NXPI
on the free silver front my late mother worked for a big bank at its Wall St HQ and always give people with silver wedding anniversaries (me included) 25 silver dollars. the bank insiders can beat the retirement millionaires every time
I tried asking my bank and they said the real silver is always put aside by order of the management
hey that was me way back when
Dear Mrs. H. :
The author of this subject matter is the “Doc” I referred to yesterday, you don’t have t/b retired in case that s/b your question.
Thanks Travis, have been long AAPL and NXPI for a few years now. A tease that makes sense.
Trevena (TRVN) presentation yesterday.This company is loaded with potential.
http://www.veracast.com/webcasts/bio/ceoinvestor2015/14201415646.cfm
Long TRVN.
Cheers,Glenn
Wrong thread, sorry.
Cheers,Glenn
21st Century Technology Profits. The 6th Branch of the Military Technology profits. Will give you up to 23.586% from companies that the goverrnment (OBAMA) has given government contracts, for a 65-Billion cyberwar buildup, to IPO’s and other companies. Who are these contractors?
It’s QCOM
Travis is ontrack. The list is BRCM, MDTKF.OTC, NXPI, SWKS, IFNNY.OTC, MRVL, STM, INGIY.OTC, and PAY . Thanks!
Ok then – long on APPL, NXPI, sorghum, and molasses! Thanks Travis. Seriously – Apple Pay seems like the solution to a huge problem, and that’s where big money is made.
Money is what can be used to buy things. Historically money has first been specie (gold and silver coins), then fiat money which is paper currency and checking accounts (M1) and more recently credit money. The credit money supply is what in aggregate can be bought on credit. Two hundred years ago your ability to take your friends out to dinner depended on whether or not you had enough coins (specie) in your pocket. One hundred years ago it depended on the quantity of currency in your pocket and possibly the balance in your checking account if the restaurant would take checks.
Today it is mostly your credit card that allows you to spend. We no longer have a fiat money system. Today we have a credit money system. Just because there is still some fiat money does not negate the fact that we are on a credit money system. When we were on a basically fiat money system there was still a small amount of specie in circulation. Even today a five cent piece contains about 5 cents worth of metal, but no one would claim we are still on a specie money system.
Fiat money is easy to measure; M1 was $1.376 trillion in 2007 and was $2.535 trillion in May 2013. The effective money supply is the sum of fiat money and credit money. Credit money cannot be precisely measured. However, when the person in California whose occupation was strawberry picker and who had made $14,000 in his best year was able to get a mortgage of $740,000 with no money down and private equity could buy a company like Clear Channel in a $20 billion leveraged buyout, also with essentially no money down, the credit money supply was clearly much higher than today. A reasonable ballpark estimate of the credit money supply is that it was $70 trillion in 2007 compared to $50 trillion today.
The effective money supply is the sum of the traditional fiat money aggregates plus the credit money supply. Thus, despite the claims of Ron Paul and Rick Perry to the contrary, the effective or true money supply has fallen drastically over the last few years….”
http://seekingalpha.com/article/1514632
Lance I absolutely agree with your position that we are on a credit money system. I do not agree with Ron Paul or the author of the link you posted. We are presently on a combo.system of specie ,fiat /currency, and credit of which credit is the largest. Very likely still another system may arise as Emoney (Bitcoin or similar) which will complicate things further as they all in some way mask the effect of the massive world debt which must somehow be serviced. That is a claim on all future earnings and eventually will irreversibly begin to make it impossible to service more debt. That point is reached when money required for survival and debt repayment equal or exceed earning power. Repudiation of debt then is a given and the whole system crashes. When??? No human can accurately foresee the future.
Wells Fargo just replaced my recently updated debit card with one that has a chip.
Is anyone aware of an ETF that’s focused on this sector of the tech companies?
You can look for or create your own on http://www.motifinvesting.com – I decided against an account there because it doesn’t suit my approach to trading but another subscriber here as recommended them if you want to design your own ETF for the cost of a single trade.
Arch1: Very well said.
All: There always will be medium(s) of exchange. Commerce becomes cumbersome when the medium of exchange becomes bulky items like sea shells, horses, cows, even small homes/huts which are not portable at all. In order for a medium of exchange, like U.S. Federal Reserve Notes, to work, it/they must have value. Our Currency does have value, albeit less every year, even every month, especially in places where their (more local) currency has lost it all like 1920’s Germany (we had real Dollars back then: 90% genuine Silver; Silver is still rare today) or current Zimbabwe where the local (printed) currency is toast. In order to have value a medium of exchange must be at least somewhat rare. Things that can be plucked, in large numbers even, out of thin air are not rare. Our Federal Reserve Notes remain rare enough to have value, most fortunately. We are helped by a peg to the Chinese currency, China buys lots of our Dollars to maintain their peg. Saudi Arabia helps us (our Fed Reserve Notes) immensely by insisting on taking only our Federal Reserve Notes hence forcing other Countries to buy our Federal Reserve Notes in order to purchase Saudi Crude Oil. These actions by Saudi Arabia, China and other Countries helps keep our currency both in demand and somewhat rare and, hence and above all: valuable.
With the advent of digital money (most of our Fed. Reserve Notes exist in digital form, credits in Accounts like Checking Accounts) the sky is the limit on medium of exchange production. Not even slowed down by the cost of green ink and special linen paper to print Notes on (1920’s Germany Currency saw such large printings hence making their currency so UNrare that the special paper was worth more blank than it was after the expensive mass printings).
My Point: Any currency that is continually watered down is going to lose it’s value. The Euro, right now, is in water down mode (again again). Our Federal Reserve Notes/Currency, has been in water down mode off and on and then on again big time for a lot of years now. When will China do to our Notes what the Swiss did to the Euro Notes (decouple)? I would love to know (your ideas are most welcome). Ditto the Saudi’s providing our currency with very special, even monopoly, status. When will these actions by large economic powers outside of our borders occur? When it does I predict that cows and horses will jump up in value, bulky as mediums of exchange that they are, that farm land will make a big jump up, that Companies that own much in the way of natural resources will jump, that tangible assets generally, will jump. As to which will become viable alternative mediums of exchange (which exist to a lesser degree today) trading of goods and services goes on): the more portable have a big advantage. To be a better or best medium of exchange the ideal substance is compact (like hi value per ounce) to the point that it can be carried and concealed easily, like in a purse or pocket or small hidden hiding place. Not so easy to hide and/or transport the cows and horses, ditto land which does not transport at all; ditto water which is more transportable than land (unless someone(s) are dying of thirst). Rare paintings and collectibles work but in limited ways.
I do not see how our credit money, which exists in accounts, is much different than our currency. In that the two can and are readily exchanged back and forth – no problems (cash a check or ask a cashier at your bank for cash out of checking or savings account) – it seems just better to view them as pretty much the same. Back and forth, all day long every day, between green ink and special linen paper and “credit money”. They are always on a one to one locked in relationship. Not so a 1900 Morgan Dollar. It’s value has unsteadily gone up as measured in credit/fiat Fed. Reserve Notes. It is not a one to one relationship like currency in either paper (even coin) and account (checking and savings etc.) credit.
I believe a better distinction to make (over credit (plastic) money and paper money – which are pretty much once, certainly one to one) is the difference, which is big, between genuine U.S. Dollars which are 90% Silver (hence inherently rare) and current U.S. Federal Reserve Notes which are less rare, exist in both paper form and credit (plastic and other account) form and are being watered down in waves. Cannot water down genuine Silver Dollars, Silver is rare. Cannot pluck real U.S. Dollars out of thin air very unlike Fed. Notes.
I don’t think the problem is currency or it’s form. It’s what currency represents. In the past currency represented a fixed amount of goods and services. We could count on it because it meant that you worked about as hard to get the dollar as I did to make the product I’m selling to you for that dollar. The problem now is bankers figured out how to not work and still collect dollar bills to use to by your hard earned goods. They did it by replacing the old standard of measure which had a fixed production cycle, could not be copied or manufactured, and could not be destroyed, are replaced it with a system of floating trade value. Mix that with Fractional reserve banking and you realize there is no limit and if your into math you realize there are not enough real dollars to pay back the interest being collected on fake money….ooops….
Actually, the concept of money and the concept of debt are two sides of the same coin (sorry I couldn’t resist). When taxes were collected in ancient times (think Rome, Greece, Mesopotamia), the people paid in sheaves of wheat, goats, chickens, etc. These things were not easily stored by the government so the idea came about for the government to issue a promise of something of value, in effect an IOU, when it bought things for the king and accepted those IOUs as a payment for taxes. Coins were invented as a real tangible means of exchange representing the IOU and the governments no longer needed the stores of goods as they controlled the coinage. The Romans in power et. al. figured out quickly that there were those who could make counterfeit coins as fast as they could so they decided to use rare metals i.e.gold to make the coins and went to great lengths to hoard and control as much gold as possible. Thus the connection of precious metals to money. Fast forward a few thousand years and the new world powers used essentially the same method of controlling the money with the addition of some less valuable metals, predominantly silver. The major powers and a consortium of 40 something nations formalized the gold exchange rate in the Bretton Woods Accords in 1944. This worked for a while until 1971 when Germany exited the system as they saw it as an unfair advantage for the US. Other countries began bailing out and finally Richard Nixon pulled the US dollar peg to gold in late 1971. Since then, the dollar and every other major currency has been fiat currency. It is not backed by anything other than the full faith in the issuer. Regardless of whether their is a peg to anything, there is always a connection between money and debt for the issuing country essentially creates money on one side of the ledger by denoting debt on the other side of the ledger. To say they are somehow different things as Lance does above, is to ignore the essence of what money is. Money and credit simply two representations of a unit of exchange of value.
Tying money to the value of a PM will not fix all the problems of the world money system, and would in fact, make matters worse. Yes, if a currency collapse were to occur, silver, gold, and platinum would become convenient mediums of exchange but so would ammunition, alcohol, rice, or just about anything that can be assigned a relative value and easily transported. The problem is not with the fiat money. The problem is with unconstrained borrowing by sovereign governments and the resultant currency wars that are going on all over the world right now. So long as countries and banking institutions collude to place the burden of a better life for a chosen few upon the backs of the multitudes who aren’t the chosen few, this problem will persist and will occasionally result in panics, massive devaluations, civil unrest, and even wars. Forcing the US Government to live within a certain debt load relative to our GDP would stabilize our currency better than a tie to a PM standard would and would create incentive for policymakers to grow GDP, which currently gets very little policy attention. Carmen Reinhart and Kenneth Rogoff in the seminal book entitled, “This Time It’s Different”, suggest that a nation reaches a tipping point when public plus private debt approaches !00% of GDP and they provide numerous examples to support this claim. The US has flirted with this number since the Great Recession began and private sector debt has been receding during that time. It is estimated that US banks are sitting on roughly 2T in reserves and some question why that money is not being loaned out. It is precisely because there is little appetite for bank loans by private industry when growth is stagnant and the future is not clear. The US has failed to see that its policy burdens are overly onerous for individuals to start up small businesses which is the true fuel of GDP. Though large corporation contribute more as a percentage to GDP, they are slow to grow and they have demonstrated a reluctance to put more people to work so their gains in profitability reward only a few executives and large stockholders. Greed is driving the system towards annihilation much faster than the fiat currency system is. If the citizens of the US can somehow elect a Congress that will limit government debt to a percentage of GDP below say 80, reduce or eliminate the regulatory burdens of starting a small business, and develop a fair tax system that eliminates the multitudes of incentives and loopholes for the rich, the US will flourish again. For that to happen, we will have to eliminate our dependence on the two party system as the Democrats and Republicans have demonstrated over and over that they serve only the very wealthy and they have little interest in preserving the country. We must ignore their ideology, and focus on how they act, which is not and has not been in the interest of the citizens for most of my 58 years. We have to elect Representatives to both houses who are not owned by one of these two parties to have any chance of resurrecting our true potential.
Fantastic post Denis. You hit the nail: “The problem is not with the fiat money. The problem is with unconstrained borrowing by sovereign governments…” – some of us think money should be backed up by tangibles (I actually favor public land for that purpose), but the point is CONSTRAINT on overspending, and most in gov’t and central banks don’t want to be constrained – at all. I think you’re absolutely right about the best solution being a policy “Forcing the US Government to live within a certain debt load relative to our GDP…” and would love to see a Constitutional amendment on that… some bright day in the future, because there sure isn’t enough public interest or will at this time.
Dennis Smalley for PRESIDENT!
Here is a long term chart on interest rates. As interest rates are a trailing result of inflation
check period after WW1 and post Vietnam in 1920s and 1970s and then consider next wave to follow War on terror/War on great recession as to what is likely to come. I think near 20%. do own due diligence DODD.
https://mail.google.com/mail/u/0/?shva=1#inbox/14bbd469df661ae9
Frank,
That link is not working for me, it sends me to my own gmail account.
Thanks,
DS
MY bad try this;
http://e.businessinsider.com/public/3896574
NXPI is getting stronger but less-levered to NFC, it appears — the market, at least in these early moments, is cheering their deal to acquire Freescale Semiconductor. http://www.marketwatch.com/story/nxp-freescale-agree-to-merge-2015-03-02