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A Word to the Wise- The ant versus the Grasshopper

I recently participated in a conference with some well-known economists and investors. They introduced me to the Foundation for the Study of Cycles, an independent institution founded by Herbert Hoover that has drawn on the major universities and the federal economic boards to find patterns and trends in our economy. Since 1971 this Foundation has predicted with amazing accuracy every market turn in stocks, bonds, currencies, real estate and commodities. What are they saying lies ahead for us now? Hold on to your pants!

The Foundation sees 5 major cycles, one of which is a 500-year cosmic shift, all bottoming together at the end of 2011 and the start of 2012. They are saying that the worse hasn’t even happened yet. With the deficit growing dramatically from bailouts and earmarks, they expect the dollar to began a long decline, making everything you buy typically cost more and more. Usually wages lag behind prices, with strikes and shut-downs becoming more numerous. Government printing money without limit devalues the currency while raising taxes to cover its shortfall in income taxes will retard any economic recovery.  Due to the decline in available oil reserves, gas and everything that depends on gas– produce transported to market –will cost more. With unemployment at an unofficial 17% and housing sales at the slowest on record, they foresee a double dipped recession, if not worse. The deceptive recovery of the stock market is largely based on the government bailout money which the banks invested! There’s not much more of that likely with the people screaming about government deficit spending. The future looks cloudy. “Seven fat years, seven lean years” sort of stuff. Short term issues may slow the process, such as weakness in the Euro due to Greece’s default or lack of demand for oil by slowly recovering countries. But the market and dollar will sink and prices will rise. Take that to the bank.

What’s a mother to do? Traditional wisdom says, “Get out of debt.” Find additional streams of income. Move out of dollar-denominated instruments.  One noted-author– normally optimistic — has even published a manual on “suburban survival,” recommending the storage of foodstuffs and drinking water in your basement. While I don’t think the “sky is falling,” I think one would be wise to secure any incomes they can and to watch and diversify their resources as best they can. May I suggest our way of developing a stream of income online?

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