Tuesday 12 September 2017

The coming crisis

During the next few years, the entire world is going to see a financial crisis. No one alive has seen this kind of crisis before; no one alive will probably see this kind of crisis again during their lifetime.

This is what will happen during this crisis

  • A large financial institution or a sovereign nation will declare bankruptcy.
  • Because of derivatives, which cannot be honoured by a bankrupt entity, other financial institutions will declare bankruptcy.
  • The world financial market will come to a standstill.
  • People will not be able to buy/sell bonds/shares.
  • Credit cards will stop working.
  • Banks will stop cash withdrawals.
  • Goods will stop flowing because once credit stops, oil delivery will stop.
Here the world governments will have two choices: Hyper-inflation or Depression.

The world will need a new reserve currency. The governments will insist on a new world currency because existing currency will have either lost value (hyper-inflation) or be unavailable (Depression). The World Bank will suggest governments use SDR as their world currency.
SDR is just another fiat currency like Dollar, Euro, Rupee, etc. It will allow the world bankers to create inflation / deflation on a need basis. It will transfer the wealth of the world from the poor and middle-class to the rich; because the rich friends of World Bank will be informed in advance about coming inflation / deflation. So these rich people can play in the financial markets without any chance of a loss.

We, the common-people, can protect ourselves from this coming crisis by performing the following steps:

  • Keep most of your wealth in Gold, Silver, etc. Don’t store this gold/silver in any bank locker. Don’t use ETFs to buy gold/silver. Store the physical gold/silver at location where you can touch it.
  • Use cash or Bitcoin (or some other decentralized crypto-currency) for transactions.
  • Keep minimal cash in banks, fixed deposits, stocks, life-insurance, debt, etc.
  • Pay off your debts early, if possible.
  • Keep cash with you to cover expenses for 6 months or so.
A huge percentage of people across the world will not survive this crisis. But the people, who perform the above steps, will greatly increase their chances of survival. In fact, the crisis will transfer wealth from the unprepared to the prepared.


Monday 4 September 2017

BRICS rating agency

There are three popular rating agencies in world today i.e. Fitch, Moody's and S&P. These rating agencies have consistently given a poor rating to India because

  • Indian taxes are too high and complex.
  • India law&order situation is weak. Justice is not delivered or often delivered late.
  • Indian bureaucracy is big and corrupt. It is difficult to get work done on time in any government department, without paying bribes.

To improve its rating, India had to

  • Reduce taxes
  • Reduce bureaucracy, rules and regulations
  • Privatize many government agencies like BSNL, MTNL, Railways, etc.
  • Stream-line the justice delivery system.
  • Disallow politicians/bureaucrats from interfering in the day to day running of any government owned business.

But instead of making the above changes to improve the life of Indians, the government wants to setup a new rating agency. Reference.
This is akin to a student, who keeps failing in exam. Instead of studying harder, he wants to change the teacher.
With an attitude like this the student (Indians) will not see any real improvement.


Saturday 2 September 2017

Why do Governments hate cash?

Most governments, all over the world, encourage citizens to go cashless. The main reason are

  • Control: If government can see all transactions, then it gives more power to government. The Government can easily see who is participating in anti-government riots, which business house/group is financing its opponents.
  • Taxes: A cashless transaction is a taxable transaction. Cashless means more taxes for government.

What should common citizens do?
A common citizen should not allow government to grow bigger or powerful. So a common citizen should transact using cash (or crypto-currency like Bitcoin). This way government has lesser control over people and taxes may be lesser.

So let us be smart. Pay cash wherever possible.