I won’t bore you with a long description of the bad news from around the world. We have enough bad news right here in the good old US of A. We now have around 48 million people on food stamps, around 20 million people who are unemployed or underemployed, and another 10 million people on permanent social security disability. That may sound a lot like a depression to you and me, but, according to Ben Bernanke, the economy is looking up, and he is hoping to cut back on the printing of $85,000,000,000 US dollars each month. The Fed says inflation is very low, but John Williams at ShadowStats.com says inflation is really 6.5%/year if we calculated inflation the same way the US Government did in the 1980’s (yes, our leaders have been changing the way thing are measured to make them look better than they are and hold down the costs of Social Security).
How does this affect our portfolios? Well, our models right now indicate 100% cash. As I’ve written before, we are holding on to the mining company stocks even though they are falling like, well, rocks! When you include the mining stocks in our portfolio models, the models calculate between 19% (conservative accounts) and 30% (aggressive accounts) for those stocks, with the rest in cash. That’s our strategy for now, until some asset classes start to come back.
I would not be surprised if the Fed blinks soon, and talks about INCREASING the money printing. Time will tell.