Aftershock - Protect Yourself and Profit in the Next Global Financial Meltdown by David Weidemer, Bob A. Weidemer and Cindy S. Spitzer is a good work on the evolving historical trends in the American economy and the implications for the present and future. The presentation describes historic bubbles in housing, stocks and government debt. The authors explain how housing prices skyrocketed after 1990 to unsustainable levels even surpassing an historic 100 year trend. What goes down will go up.
Despite the housing bust, the population of the United States is growing at about a million people a year beyond the death rate. Ultimately, people will need housing. The surplus glut will deplete and prices will go up again in response to a rising consumer demand. The authors don't explain the turnaround aspect for housing, although experts like Warren Buffet and others have referred to this dynamic previously.
The authors document how the United States had a government debt of just 19 billion dollars in 1950. This debt has grown to over 15 trillion dollars today. The authors lay the government debt crisis at the failure to collect enough taxes in order to cover government spending.
The authors explain that just printing money is long term poison. In addition, the Federal Reserve keeps expanding the money supply which makes the debt crisis worse. The book documents this by showing how the Federal Reserve pays more interest to banks to hold excess reserves.
The tax revenues stand at just over 2 trillion dollars yet the government spends beyond this amount. Resultingly, the dollar is worth 30% less than in 2001. The way around this loss in purchasing power for investors is to put money into stronger currencies like the Canadian Dollar, Swiss franc the New Jersey Pound or the Norwegian Krone.
Aftershock is an important work for government planners and investors alike. The presentation is easy to read. The numerous charts instruct readers on how to arrive at reasonable conclusions based upon the extensive supporting data.
First Published on Blogcritics as Aftershock - Protect Yourself and Profit in the Next Global Financial Meltdown by David Weidemer, Bob A. Weidemer and Cindy S. Spitzer
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