First Blog

I'm becoming weary of how the mainstream media paints the picture of how our world is operating and feel the need to reveal some of the "truths" in current events. In revealing the truths of current events, I provide stock trading strategies catered to these truths. In future blogs I may provide trading strategies based on other inclinations I have.

The wildfire that started in Egypt has spread to another Middle-Eastern country, Bahrain. There are riots and intense protests in Bahrain, similar to what happened in Egypt. Although Bahrain is a small country, it exports significant amounts of oil. Oil prices skyrocketed yesterday by as much as $6 a barrel, depending on which oil index is being talked about. Oil prices will continue to climb as a result of Bahrain unrest.

The unrest in the Middle-East, I am predicting, will not remain in the Middle-East. The expanding money supply, which is a direct cause of rising oil costs and food prices (and rising commodity costs in general) will cause people in Europe to become angered with their condition and begin displaying their anger in the form of protests. This is a different reason then what caused the riots in Greece last year. Those riots were caused by austerity measures taken by the Greek government, including cutting government workers’ pay.

The United States continues to expand our money supply. Our central bank justifies doing this by monitoring an index which they created. This index is “core inflation” and takes into account inflation EXCLUDING food and energy. Thus the U.S. government measures inflation without taking into account oil prices or food prices. Hold on now – isn’t food a basic requirement of human existence? Isn’t oil fundamental to the life of the U.S. consumer? And haven’t both of those commodities risen quickly in the past year, as evidenced when we go to the grocery store and gas station? The result of this “core inflation” index has led the U.S. government to ascertain that inflation for the months of December and January hasn’t been rising very fast.

Dictionaries in the 1960s defined inflation as an act of money-printing. I find it somewhat humorous that dictionaries today do not include money-printing in the definition of inflation. Our government obviously had some bearing on the definition of the word “inflation”.

I have been using the word inflation several times in this blog. Inflation is an increase of money in the money supply. The main-stream media may tell you otherwise, but this is what inflation is. The federal government is currently performing “Quantitative Easing”, also referred to as QE. QE in actuality is money printing.

What does QE do for an economy? Let’s take an example. Suppose five people have $100 in their pockets, and those people go to an auction to purchase a car. If those same five people live in an environment where the money supply has increased significantly (ie through inflation), then each may have $1000 in his pocket at that auction to purchase a car. What has happened here? Inflation caused the value of the good, in this case the car, to increase. Looking at this another way, inflation caused the purchasing power of the money - in this case, a single dollar- to be worth less than what it was.

In the next blog I will disclose my long-term investment strategies based on current events. Don't get too anxious now! Stay tuned.