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: April 2014

Janet Yellen went before Congress and confidently

declared that "the economic recovery gained greater
traction in the second half of last year" and that
"substantial progress has been made in restoring the
economy to health". This resulted in glowing
headlines throughout the mainstream media such as
this one from USA Today: "Yellen: Economy is
improving at moderate pace". Sadly, tens of millions
of Americans are going to believe what the
mainstream media is telling them. But it isn't the
truth. As you will see below, there are all sorts of
signs that the economy is taking a turn for the
worse. And when the next great economic crisis
does strike, most Americans will be completely and
totally unprepared because they trusted our
"leaders" when they told us that everything would be
just fine.
It is amazing how deceived people can be. Just
consider the case of 56-year-old Brian Perry. He is a former law clerk that has applied for nearly 1,500
jobs since 2008 without any success. But he says that he is "optimistic" that he will get another job
soon because he believes that the economy is recovering . . .
By his own count, Brian Perry has applied for nearly 1,500 jobs since being let go as a law clerk in 2008.
The 56-year old Perry lives in Rhode Island, where the 9.1 percent unemployment rate is 2.5 percentage
points above the national average.
Perry remains optimistic that a job is forthcoming. He thinks a more robust economy would create
better opportunities for the long-term unemployed like him.
Let us certainly hope that Perry does find a new job soon. But if he does, it won't be because we are
experiencing an "economic recovery". Just consider the following facts...
-In January, we were told that the U.S. economy "created" 113,000 new jobs. But that figure was
arrived at only after adding a massive seasonal adjustment. In reality, the U.S. economy actually lost
2.87 million jobs in January. During the past decade, the only time the U.S. economy has lost more jobs
in January was during 2009. At that time, the U.S. economy was suffering through the peak of the worst
economic downturn since the Great Depression.
-Prominent retailers are closing hundreds of stores all over the United States. Things have gotten so bad
that some are calling this a "retail apocalypse" . . .

Copyright 2014 InterAnalyst, LLC

: April 2014

JC Penney, which lost $586 million in three months in 2013, is planning to close 33 stores in 19
states and lay off 2,000 people. JC Penneys stock has lost 84 percent of its value since February
2012.

Sears has decided to shut down its flagship store in Downtown Chicago, and it has closed 300
stores in the United States since 2010. Stock analyst Brian Sozzi noted that Sears inventory
levels have fallen by 23.7 percent since 2006. He also noted that Sears had $4.4 billion in cash
and equivalents in 2005 but $609 million in cash and equivalents in 2012. Sozzi, who calls
himself a guerrilla analyst, has a blog full of disturbing pictures of empty Sears stores.

Macys, one of the few retail success stories, is planning to close five stores and
eliminate 2,500 jobs.

Radio Shack is preparing to close 500 stores, according to The Wall Street Journal.

Best Buy recently closed 50 stores and eliminated 950 jobs at stores in Canada.

Target announced plans to eliminate 475 jobs and not fill 700 empty positions to reduce costs.

Aeropostale is planning to close 175 stores.

Blockbuster has closed down all of its stores.

McDonald's is reporting that sales at established U.S. locations were down 3.3 percent in January.
In January, real disposable income in the U.S. experienced the largest year over year decline that we
have seen since 1974.
The number of "planned job cuts" in January was 12 percent higher than 12 months earlier, and it was
actually 47 percent higher than in December.
Only 35 percent of all Americans say that they are better off financially than they were a year ago.
What is happening to the U.S. stock market right now very closely resembles what happened to the U.S.
stock market just before the horrific stock market crash of 1929. Just check out the chart in this article.
Meanwhile, things continue to unravel all around the rest of the globe as well.
I have detailed how the reckless money printing by the Federal Reserve has inflated massive financial
bubbles in emerging markets all over the planet. Now that the Fed is "tapering", those bubbles are
starting to burst and we are witnessing a tremendous amount of economic chaos. Here are three more
examples...
#1 Ghana:
Ghanaian Economist Dr. Theo Richardson says Ghanas economy will crash by June this year if the Bank
of Ghana continues with its kneejerk measures to rescue the cedi.
The government is facing liquidity problems and if we dont get the appropriate remedies to address
the issues at hand the situation may worsen and by June the economy may crash, Dr. Richardson said.

Copyright 2014 InterAnalyst, LLC

: April 2014

#2 Kazakhstan:
With only $24.5 billion left in FX reserves after valiantly defending major capital outflows since the Fed's
Taper announcement, the Kazakhstan central bank has devalued the currency (Tenge) by 19% - its
largest adjustment since 2009. At 185 KZT to the USD, this is the weakest the currency has ever been as
the central bank cites weakness in the Russian Ruble and "speculation" against its currency as drivers of
the outflows (which will be "exhausted" by this devaluation according to the bank). The new level will
improve the country's competitiveness (they are potassium heavy) but one wonders whether, unless
Yellen folds whether it will help the outflows at all.
#3 India:
In the wake of a global stock market sell-off driven by worries over slower growth in emerging markets,
the head of India's central bank, Raghuram Rajan, criticized the U.S. Federal Reserve as it pressed on
with plans to dial back its monthly bond purchases: "International monetary co-operation has broken
down," said Rajan, who added that "the U.S. should worry about the effects of its polices on the rest of
the world."
We have reached a "turning point" for the global financial system. Things are beginning to fall apart
both in the United States and all around the world.
The red flags contained in the national and global headlines that have come out thus far in 2014 should
have spooked investors and economic forecasters. Instead the markets have barely noticed. It seems
that the majority opinion on Wall Street and Washington is that we have entered an era of good fortune
made possible by the benevolent hand of the Federal Reserve. Ben Bernanke and now Janet Yellen have
apparently removed all the economic rough edges that would normally draw blood. As a result of this
monetary "baby-proofing," a strong economy is no longer considered necessary for rising stock and real
estate prices.
But unfortunately, everything has a price, even free money. Our current quest to push up asset prices at
all costs will come back to bite all Americans squarely in the pocket book. Death and taxes have long
been linked by a popular maxim. However, there also exists a similar link between debt and taxes. The
debt we are now incurring in order to buttress current stock and real estate will inevitably lead to higher
taxes down the road. However, don't expect the taxes to arrive in their traditional garb. Instead, the
stealth tax of inflation will be used to drain Americans of their hard earned purchasing power.
I explore this connection in great length in my latest report Taxed By Debt, available for free download
at www.taxedbydebt.com. But diagnosing a problem is just half the battle. I also present investing
strategies that I believe can help Americans avoid the traps that are now being laid so carefully.
The last few years have proven that there is no line Washington will not cross in order to keep bubbles
from popping. Just 10 years ago many of the analysts now crowing about the perfect conditions would
have been appalled by policies that have been implemented to create them. The Fed has held interest
rates at zero for five consecutive years, it has purchased trillions of dollars of Treasury and mortgagebacked securities, and the Federal government has stimulated the economy through four consecutive

Copyright 2014 InterAnalyst, LLC

: April 2014

trillion-dollar annual deficits. While these moves may once have been looked on as something
shocking...now anything goes.
But the new monetary morality has nothing to do with virtue, and everything to do with necessity. It is
no accident that the concept of "inflation" has experienced a dramatic makeover during the past few
years. Traditionally, mainstream discussion treated inflation as a pestilence best vanquished by a strong
economy and prudent bankers. Now it is widely seen as a pre-condition to economic health. Economists
are making this bizarre argument not because it makes any sense, but because they have no other
choice.
America is trying to borrow its way out of recession. We are creating debt now in order to push up
prices and create the illusion of prosperity. To do this you must convince people that inflation is a good
thing...even while they instinctively prefer low prices to high. But rising asset prices do little to help the
underlying economy. That is why we have been stuck in what some economists are calling a "jobless
recovery." The real reason it's jobless is because it's not a real recovery! So while the current booms in
stocks and condominiums have been gifts to financial speculators and the corporate elite, average
Americans can only watch from the sidewalks as the parade passes them by. That's why sales of
Mercedes and Maseratis are setting record highs while Fords and Chevrolets sit on showroom floors.
Rising prices to do not create jobs, increase savings or expand production. Instead all we get is debt,
which at some point in the future must be repaid.
When President Obama took office at the end of 2008, the national debt was about $10 trillion. Just five
years later it has surpassed a staggering $17.5 trillion. This raw increase is roughly equivalent to all the
Federal debt accumulated from the birth of our republic to 2004! The defenders of this debt explosion
tell us that the growth eventually sparked by this stimulus will allow the U.S. to repay comfortably. Talk
about waiting for Godot.
To actually repay, we will have few options. We can cut government spending, raise taxes, borrow, or
print. But as we have seen so often in recent years, neither political party has the will to either increase
taxes or decrease spending.
So if cutting and taxing are off the table, we can expect borrowing and printing. That is exactly what has
been happening. In recent years, the Fed has bought approximately 60% of the debt issued by the
Treasury. This has kept the bond market strong and interest rates extremely low. But a country can't buy
its own debt with impunity indefinitely. In fact the Fed, by winding down its QE program by the end of
2014, has threatened to bring the party to an end.
Although bond yields remain close to record low territory, thanks to continued QE buying, we have seen
vividly in recent years how the markets react negatively to any hint of higher rates. That's why any
indication that the Fed will lift rates from zero can be enough to plunge the markets into the red. The
biggest market reaction to Yellen's press conference this week came when the Chairwoman seemed to
fix early 2015 as the time in which rates could be lifted from zero. That possibility slapped the markets
like a frigid polar wind.

Copyright 2014 InterAnalyst, LLC

: April 2014

Janet Yellen may talk about tightening someday, but she will continue to move the goalposts to avoid
actually having to do so. (Or as she did this week, remove the goalposts altogether). As global investors
finally realize that the Fed has no credible exit strategy from its zero interest policy, they will fashion
their own exit strategy from U.S. obligations. Should this happen, interest rates will spike, the dollar will
plunge, and inflation's impact on consumer prices will be far more pronounced than it is today. This is
when the inflation tax will take a much larger bite out of our savings and paychecks. The debt that
sustains us now will one day be our undoing.
The Federal Reserve Seems Quite Serious About Tapering So What Comes Next?
Will this be the year when the Fed's quantitative easing program finally ends? For a long time, many
analysts were proclaiming that the Fed would never taper. But then it started happening. Then a lot of
them started talking about how "the untaper" was right around the corner. That hasn't happened
either. It looks like that under Janet Yellen the Fed is quite determined to bring the quantitative easing
program to a close by the end of this year. Up until now, the financial markets have been slow to react
because there has been a belief that the Fed would reverse course on tapering the moment that the U.S.
economy started to slow down again. But even though the U.S. middle class is in horrible shape, and
even though there are lots of signs that we are heading into another recession, the Fed has continued
tapering.
Of course it is important to note that the Fed is still absolutely flooding the financial system with money
even after the announcement of more tapering on Wednesday. When you are talking about
$55,000,000,000 a month, you are talking about a massive amount of money. So the Fed is not exactly
being hawkish.
But when Yellen told the press that quantitative easing could end completely this fall and that the Fed
could actually start raising interest rates about six months after that, it really spooked the markets.
The Dow was down 114 points on Wednesday, and the yield on 10 year U.S. Treasuries shot up to
2.77%. The following is how CNBC described the reaction of the markets on Wednesday . . .
Despite a seemingly dovish tone, markets recoiled at remarks from Yellen, who said interest rate
increases likely would start six months after the monthly bond-buying program ends. If the
program winds down in the fall, that would put a rate hike in the spring of 2015, earlier than
market expectations for the second half of the year.
Stocks tumbled as Yellen spoke at her initial post-meeting news conference, with the Dow
industrials at one point sliding more than 200 points before shaving those losses nearly in half.
Short-term interest rates rose appreciably, with the five-year note moving up 0.135 percentage
points. The seven-year note tumbled more than one point in price.
But this is just the beginning. When it finally starts sinking in, and investors finally start realizing that the
Fed is 100% serious about ending the flow of easy money that is when things will start getting really
interesting.
Can the financial markets stand on their own without massive Fed intervention?

Copyright 2014 InterAnalyst, LLC

: April 2014

We shall see. Even now there are lots of signs that a market crash could be coming up in the not too
distant future. For much more on this, please see my previous article entitled "Is 'Dr. Copper'
Foreshadowing a Stock Market Crash Just like It Did In 2008?"
And what is going to happen to the market for U.S. Treasuries once the Fed stops gobbling them up?
Where is the demand going to come from?
In recent months, foreign demand for U.S. debt has really started to dry up. Considering recent
developments in Ukraine, it is quite certain that Russia will not be accumulating any more U.S. debt, and
China has announced that it is "no longer in Chinas favor to accumulate foreign-exchange reserves" and
China actually dumped about 50 billion dollars of U.S. debt during the month of December alone.
Collectively, Russia and China account for about a quarter of all foreign-owned U.S. debt. If you take
them out of the equation, foreign demand for U.S. debt is not nearly as strong.
Will domestic sources be enough to pick up the slack? Or will we see rates really start to rise once the
Fed steps to the sidelines?
And of course rates on U.S. government debt should actually be much higher than they are right now. It
simply does not make sense to loan the U.S. government massive amounts of money at interest rates
that are far below the real rate of inflation.
If free market forces are allowed to prevail, it is inevitable that interest rates on U.S. debt will go up
substantially, and that will mean higher interest rates on mortgages, cars, and just about everything
else.
Of course the central planners at the Federal Reserve could choose to reverse course at any time and
start pumping again. This is the kind of thing that can happen when you don't have a true free market
system.
The truth is that the Federal Reserve is at the very heart of the economic and financial problems of this
country. When the Fed intervenes and purposely distorts the operation of free markets, the Fed creates
economic and financial bubbles which inevitably burst later on. We saw this happen during the great
financial crisis of 2008, and now it is happening again.
This is what happens when you allow an unelected, unaccountable group of central planners to have far
more power over our economy than anyone else in our society does. Most people don't realize this, but
the greatest period of economic growth in all of U.S. history was when there was no central bank.
We don't need a Federal Reserve. In fact, the performance of the Federal Reserve has been absolutely
disastrous.
Since the Fed was created just over 100 years ago, the U.S. dollar has lost more than 96 percent of its
value, and the size of the U.S. national debt has gotten more than 5000 times larger. The Fed is at the
very center of a debt-based financial system that has trapped us, our children and our grandchildren in
an endless spiral of debt slavery.

Copyright 2014 InterAnalyst, LLC

: April 2014

And now we are on the verge of the greatest financial crisis that the United States has ever seen. The
economic and financial storm that is about to unfold is ultimately going to be even worse than the Great
Depression of the 1930s.
Things did not have to turn out this way. Congress could have shut down the Federal Reserve long ago.
But our "leaders" never seriously considered doing such a thing, and the mainstream media kept telling
all of us how much we desperately needed central planners to run our financial system.
Well, now those central planners have brought us to the brink of utter ruin, and yet only a small
minority of Americans are calling for change.
Soon, we will all get to pay a great price for this foolishness. A great financial storm is fast approaching,
and it is going to be exceedingly painful. But there are steps investors can take to help mitigate the
damage, particularly by moving assets to those areas of the world that are not making the same
mistakes that we are.
In other words, use your wealth preserver subscription to help guide you on which country exchange
traded funds will experience growth through flight to safety. And we will keep you posted as to when
and where in the Current Investment Guide section of this newsletter.

The situation with Russia should give investors and traders a reason to brush up on their history, as
current events take root in things that happened 50, 100, and 200 years ago. To understand this, can
provide perspective, during an information war, where it's not easy for some to separate facts from
beliefs and propaganda (on both sides). The relationship between US and Russia has always been
interesting, as we shall explore.
The cultural divide
The US and Russia have very similar cultures. Both; superpowers, with a vast countryside, dominated
mostly by white Christians. Both have vast resources, difficult to invade, and both have been the victim
of European and other external politics. Of course Russian culture is much older, and has a different set
of influences and experiences than the US, situated in North America.
There's probably more misinformation in between the two cultures than any other, because for 60 years
both have spent significant effort in propaganda. So it's difficult for most
Westerners to be objective on this topic.
One theory on the divide between the two similar cultures was the decision for
Russia to accept Christian Orthodoxy, started by Peter the Great (thus creating
a divide between their Catholic neighbors, such as Poland, Croatia, Latvia and
others). If you look the dividing lines of political and economic alliances in

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Europe, historically, there seems to be a correlation with the dominant religion. Not that any of these
countries are of significant importance, but if all examined through this eyeglass, it seems that differing
ideologies happen to be divided along these lines. Many of the anti-Russia US hawks for example, are
either of Jewish or catholic heritage.
The American Revolution
One interesting fact not reported much was Russian support for America during the American
Revolution, both directly and by financing France, and through diplomatic and trade ties. Not that
Russia was doing the US any favors in that time, it simply supported their situation, and that they had an
interest to not support the British. But it should not be forgotten, that Russian support was crucial for
the Americans in their struggle against the British.
Alaska
Ironically, considering the current US policy about Crimea, the Alaska purchase happened due to
circumstances during the Crimean war:
After the Crimean War (1853-1856) Russia felt concern that the British would seize Russian America if a
war broke out, strengthening the British in the north Pacific. To avoid this and to raise money, Russia
offered in 1859 to sell the territory. In 1867 the United States purchased the whole of Russian
America (Alaska) in the Alaska Purchase. All the Russian administrators and military left Alaska but some
missionaries stayed on because they had converted many natives to the Russian Orthodox faith.
US annexations
The larger territory of the current United States was largely purchased or annexed. Since the
Revolutionary War, the US has acquired most of its territory by this method. In that time the US was a
new country. These new acquisitions were exploited by the US, and helped fuel the US industrial
revolution, and finally, what enabled the US to build a war machine during the 1940's.
World War 2
World War 2 was the defining moment in American history when the US rose to superpower status,
eventually creating the US Dollar as the dominant currency for trade in the world. Before World War 2
(and more so before WW1) the US was largely isolationist, not seeing the relevance of foreign
affairs. But due to a number of circumstances, and the influence of the British (again, ironically) the US
entered WW2 which changed world history. It should be remembered however, that this was a new
idea. Before WW2 the US Army was largely comprised of Calvary soldiers on horseback. There was no
real Army capable of fighting in that time, the US was not prepared for war. There was not a significant
Navy, and certainly no advanced military technology, and no nukes. While most of the world was at
war, the US was able to convert its industry, organized by powerful US corporations, to build munitions
instead of consumer goods and other products (guns vs. butter).
This gave the US the advantage, finally 'winning' the war, and leaving many nations indebted to the
US. This is important because this is the origin of American power, and many of these relationships,
such as US-German relations, and US-Japan relations, exist to this day, because of WW2.

Copyright 2014 InterAnalyst, LLC

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Since WW2, most countries choose to use the US "Petrodollar" - for a number of reasons. But the
system is very fragile; as we can see from its origins. For example the deciding factor of 'winning' WW2
was the Manhattan Project, composed of many refugee German scientists.
Historians have explored that Germany was in fact working on a similar bomb, but due to their extensive
obligations in their operations, were not able to complete it. That, and other advanced technology
being developed by Nazi scientists, certainly would have created a different world, economically
speaking.
European influence
Both the US and Russia have been largely influenced by Europe, both in trade and politics. But
differently, Russia has been invaded many times by aggressive forces, which the US has not (aside from
Canadians burning down the White House but this was not militarily significant). Yes, Japan bombed
Pearl Harbor, but only because Roosevelt threatened to cut of their oil supply. And it certainly was not
an 'invasion' - such as happened to Russia during WW2. In many ways, Russia is more the victim; or at
least to say has experienced more hardship as a nation, due to circumstances beyond their control,
mostly created by outside influences.
Origins of the Cold War
Henry Kissinger had recommended to Nixon that one of the most important strategic alliances for the
US to pursue was with Russia. His logic was that both countries were culturally similar (more so than for
example China) and that a deal with Russia would have cemented both countries long term supremacy
and boosted trade. This was never pursued (and maybe never considered) in favor of a hostile policy
thus creating the cold war, but it allowed huge spending into the military industrial complex. Since then,
the US instead chose to have a special relationship with China, which is now on the verge of a major
financial bubble.
The highly credible HSBC/Markit Purchasing Managers' Index (PMI) of economic demand in China
reported that demand in China's factories fell for a second month in a row and hit a seven-month
low. Markit Research also reported that production turned negative for the first time in seven months
and hiring expectations fell to a new five-year low. Although the Chinese government continues to
produce an array of rosy economic statistics each month, China's industrial competitiveness is fading
fast. Coupling the production contraction with banking problems and a fall in the HSBC/Markit
Employment Index to a five-year low, it appears that China's economic bubble is bursting.
Markit Research compiles "flash" indicators each month for demand and operating conditions in China's
manufacturing sector. The report is based on surveys responses from executives inside approximately
85%-90% of China's most important factories. A Markit flash score above 50 means that activity is
expanding and a score below 50 means that activity is contracting. Although the final reports are not
published for another two weeks, the Markit flash reports seldom differ from the final reports.
The Chinese Lunar New Year festival began this year on January 31 and most workers tend to go on
vacation for two weeks back to their family homes. Consequently, economic activity during the Lunar

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: April 2014

holidays is an excellent indicator of the pace of domestic consumer demand. The purchasing managers'
index falling from a weak 49.5 in January to a seven-month low of 48.3 in February is a strong indication
the accelerating contraction in demand is being driven by weak domestic consumption.
Former Chinese President Hu Jintao and Premier Wen Jiabao in 2010 published "Report on the Work of
the Government" and report of the National Development and Reform Council (NDRC) that formed the
basis of China's Five Year Plan (2011-2015) to discard the economic model followed for the past three
decades of emphasizing export manufacturing and to focus the nation's economic and development
efforts into building a modern consumer economy. The main features of the new policy orientation
were: converting China from being the
"world's manufacturer" to becoming the
"world's consumer"; upgrading its
scientific and technological capabilities
with an emphasis on innovation;
expanding educational coverage; and
improving the living conditions and
increasing the wages of the people,
especially those in the rural areas.
Over the next five years, China's leadership
encouraged "new measures" that included
widespread property tax changes that released huge amounts of agricultural land for housing
development. State-owned-banks were commanded to increase lending in just five years by $15 trillion,
twice the entire Chinese annual gross domestic product (GDP). As a result, housing prices increased in
major cities like Beijing from an average of $1,150 per square meter in 2005 to $11,400 per square
meter today. Condos that would have sold for $3,500 in 1994 are now listed for sale at $833,000.
Over the last six months, real estate demand and prices have been contracting faster in cities beyond
the nation's relatively wealthy "first-tier" metropolises of Beijing and Shanghai. According to
the Securities Times newspaper, housing developers in the industrial city of Hangzhou cut prices this
week by an average 19% in a scramble to sell about 120,000 newly-built apartments. The current
inventory of new, unsold units now exceeds the total number of housing units offered for sale in Beijing
and Shanghai combined. A study by Shanghai's Tongji University said real estate has been especially
shaky in the northeastern city of Wenzhou, where new-home prices have fallen every month for the last
two years.
The borrowing binge in China was not just restricted to state-owned lenders; approximately $3.5 trillion
in private loans made to individual speculators at up to three times the interest cost of bank borrowing.
Many of these loans were made to shady business operators who bought coal mines to speculate on the
growth of electricity demand. But most of those loans became insolvent as the economic slowdown
caused the price of coal to be cut in half over the last year.

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Chinese banks over the last six months have been forced to borrow large amounts of short-term money
as income from their loan payments have slowed. The Sunday edition of London's Daily
Telegraph published a story that, "Currency crisis at Chinese banks could trigger global meltdown". The
article warned that short-term foreign currency borrowing by Chinese companies has almost quadrupled
in just four years to more than $1 trillion. "Any substantial appreciation of the U.S. dollar -- and many
analysts are indeed expecting gains this year -- could open up a dangerous cross-currency mismatch,
forcing Chinese borrowers to default and inflicting shattering losses on international lenders."
According to Beijing's State Administration of Foreign Exchange, at the end of 2013 China had foreign
liabilities of a stunning $3.85 trillion; roughly 40% of total GDP. The bulk of those liabilities consist of
$2.32 trillion of highly illiquid foreign direct investment for plant and equipment. Another $374 billion is
foreign investments in China's stock and bond markets that could be sold at any time. But most
investors are unaware that money is also locked up because China's qualified foreign institutional
investor program has strict limits on the size and frequency on withdrawing money from country.
The contraction of HSBC/Markit Purchasing Managers' Index to 48.3 during China's biggest annual
holiday seems dire when coupled with the PMI's Employment Index fall for a fourth month in a row to
46.9, its lowest point since the depth of the financial crisis in February 2009. Over the last five years,
Chinese central planners drove GDP per capita from $2,204 to $3,348, the fastest expansion of any large
economy in the world.
Communist party leadership would obviously like to continue to inflate China's economic bubble with
more lending. But with banks facing massive loan losses and scrambling for short-term funding just to
survive, central-planners seem powerless to prevent China's economic bubble from bursting.
During this era, the CIA did and intensive analysis of the potential military
risk of Russian aggression. The CIA concluded that the Russians have no
intention and no capability of posing any risk to the US. But in a press
conference, Rumsfeld eloquently said that "Just because we didn't find
any threat or capability, doesn't mean they don't have one" and based on
this reasoning, we entered the cold war.
This information indicates, it was US hawks that initiated an aggressive
policy against Russia first. General Patton has pleaded with his
commanders to fight the Russians in Germany. Although the cultures are
similar, there seems to be some genetic mistrust (or can be explained in a
number of different ways, but its not rational). In any case, billions have been spent on propaganda
demonizing Russians that they are 'criminals' - according to one prominent propaganda film,
Communism is an "International Criminal Conspiracy"
Although it was Wall Street that financed the Bolshevik Revolution.

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As this winter season unfolds between 2000 and

2030, here are some of the things you can
expect:

Unemployment will move higher again,

to roughly 15% nationwide. It could go as
high as 25% when you include long-term
unemployed in the numbers.

Housing prices will fall an additional 15%,

despite the biggest stimulus plan in
history and the lowest mortgage rates in
40 years.

Personal bankruptcies and property

foreclosures will soar as much as 30%.
Consumers are simply saddled with too
much debt $42 trillion or $140,000 for
every man, woman and child in America for there to be any other outcome. Falling income
will only make matters worse.

State and municipal governments will be forced into default, especially at the city and country
level. Their budgets are already in crisis and the Federal Reserve is running out of money with
which to cushion these institutions.

The Federal deficit will balloon from to as much as $5 trillion because of huge revenue
shortages.

The global credit crisis will continue to spread around the globe like a contagious virus. Greece is
already down. Spain will be next and it will without a doubt come to the USA.

A second banking crisis will out, despite the lessons learned in 2008. Mortgage companies
have resumed offering low interest, no principal teaser loans. Investment banks have begun
taking un- necessary risks again. And this time, therell be no money for a bailout.

All of this will put the Dow and other indexes onto a volatile roller coaster ride that will end with the
Dow Jones losing as much as 80% by 2025.
To survive, you must implement the right strategy for this season.
So heres your guideline of what to do. . .

Copyright 2014 InterAnalyst, LLC

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: April 2014

The Chart below is a general guideline for each season.

ETFs

75%

25%

50%

10%

25%

15%

80%

20%

20%

20%

10%

30%

30%

ETFs

ETFs

ETFs

ETFs

ETFs

ETFs

ETFs

If your pension or retirement accounts do not have index funds, make a phone call and find out which
funds hold very similar assets to the indexes represented above.
I would not own gold, but if you must, then purchase it via a highly liquid ETF.
I would not own bonds yet, but if you must, then make them Treasury or very solid municipal bonds.
I would commence growing your Money Market account with any new contributions.
I would continue to own Investments until the Wealth Preserver finds Rule 2. Always use ETFs for your
diversification vehicles as they are extremely liquid and can be moved swiftly.
The table below represents how your stock market diversification should look during this season
depending on your personal risk profile; which can be determined here.

ETFs

50%

30%

5%

5%

10%

40%

20%

15%

15%

10%

20%

20%

20%

20%

20%

ETFs

ETFs

ETFs

ETFs

ETFs

For the final leg of this shakedown change your portfolio allocations again.

Continue to stay very close to your Wealth Preserver and Wealth Maximizer subscriptions. It is
likely we will be in strong position to sell all equity positions in all sectors globally.

Copyright 2014 InterAnalyst, LLC

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: April 2014

Convert it all back to T-bills or money markets.

Then keeping a close eye on Wealth Maximizer, we will help guide you to selectively buy back
into leading sectors like health care, financials, and technology.

Absolutely stay away from East Asia ETFs (China, Japan, and South Korea). These markets will
correct into the early to mid-2020s.

The value of seeing the economic cycles ahead extends beyond your investment plans. You can also use
this knowledge to better position yourself financially for each season. We will alert paid subscribers
when the time is right to get into these markets.

Lower returns and higher risks will characterize this shakeout winter season. It will also reduce the cost
of living and the future costs of real estate and assets.
Do not take any chances.
Do not gamble.
Do not leverage.
If you have the money, pay off your highest interest debt first.
If you have the money, pay off your cars and mortgage.
Save and become more conservative.
Heres what to do with real estate . . .

If you want to retire and buy a house in Southern Florida, the Caribbean, Arizona, Idaho,
Vermont or British Columbia, wait until 2015 at least.

If youre financing a home between 2011 and 2015, lock in at a low 30-year fixed rate. Look to
benefit from falling short-term rates in the final slowdown from around mid-2017 into 2023.

Heres what to do with cars . . .

If you want to buy a car this year, dont. Rather lease it for the next two years. Buying now will
only result in significant depreciation. Instead, let the bank take the risk of falling car prices!

The best time to buy a car is in mid-2014. The economy will be weakest then and youll get a low
interest rate.

Heres how to maximize your retirement income and the assets you pass on to your children . . .

Maximize your 401K and matching contributions because surviving this winter shakeout is about
accumulation.

Copyright 2014 InterAnalyst, LLC

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: April 2014

Buy variable annuities and variable universal life policies. These are important tools for deferring
taxes during your earning years, minimizing taxes during your retirement years, passing down
as- sets to your children and offering some protection against downside risk. You will use the
Wealth Preserver signals within both variable policies.

Implement strategies to defer earned and unearned income, use Roth IRAs where possible,
skew investments toward tax-free items such as municipal bonds and minimize your real estate
footprint to avoid property tax.

As a starting point, use the guidelines we have given you to position your investment portfolio and
financial affairs to sail smoothly through whats ahead.

During the decade ahead, timing will become increasingly important to your success. Thats why you
MUST follow our monthly Wealth Preserver and our weekly Wealth Maximizer. In addition, you should
read the InsidersPower newsletter in detail. Thats where well tell you whats coming next, and what to
do about it. You will also learn how to adjust your financial plans and investment portfolio for maximum
benefits and minimum pain.
In short . . . keep reading this newsletter and we will keep you up to date.

Copyright 2014 InterAnalyst, LLC

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: April 2014

In 1986, Livio S. Nespoli wrote is first Investment Book called Invest with
History. In it, he revealed how an investor could use historical precedent along
with social mood and demographic trends to accurately predict the direction of
the markets, sometimes decades in advance.
Since then, Livio had delivered countless seminars to thousands of professional
and amateur investors teaching them how to accurately identify booms and
busts well ahead of the mainstream. He gained international national attention
for his warning investors of the 2000 peak and 2008 stock market collapse
months before they happened. But this was not the first time he was on the money with his big picture forecast.
For example, in February of 2000 Livio accurately forecast the stock market collapse and the multi-decade
economic collapse that would begin. In other words, his proprietary indicators, which are now available to all
investors, accurately predicted the major economic and stock market events that could have made you
substantially richer over the past 18 years.
How does he do it? Well, while most economists focus on short-term trends, policy changes, technical indicators,
elections, things that are volatile, unstable and can change from day-to-day. Livio has always focused on long-term
trends and cycles, not the day trader mentality. Demographics. Business cycles. Socionomic patterns. Things that
have demonstrated themselves over hundreds and even thousands of years to be consistent, predictable and
measurable.
In addition, through over 80 years of research he has found that most of the largest financiers have known of these
proven and predictable Socionomic patterns. He has provided devastatingly accurate market entry and exit points
by helping you follow those historically proven cycles.
He studies the past to forecast the future, an approach that enables subscribers to position themselves with an
incredible degree of accuracy. Then he makes minor tweaks and adjustments in response to intermediate term
events that occur along the way.
And thats what he brings to you on his InterAnalyst subscriptions so youll know whats coming next, where the
immediate opportunities are, and where to park your money for the longer term.
As an InterAnalyst subscriber, you will know, for example, when its time to start profiting from the rise of specific
economies and exactly what investments will hand you the fastest profits.
Youll learn when commodities will likely reach their peak in their cycle and how to ride the gains. Youll also learn
when theyll turn down and what investments to make to profit from any moves down.
And youll learn when the property market will turn up again. Youll learn when, money markets and bonds would
be a better investment than equity allocations and when not. Youll be ahead of the markets on every boom and
bust and access the tools you can use to prepare yourself to profusion.

Copyright 2014 InterAnalyst, LLC

17

NEWSLETTER DISCLOSURE
This financial newsletter is a description of how financial markets behave and how we read current market
conditions. There may from time to time include commentary describing different investment theories
that may increase market accuracy. The purpose of our market-oriented publication is to outline the
progress of markets to educate interested parties in the successful application of the information within
the financial letter. While a course of conduct regarding investments can be formulated from such
application information. At no time will this financial letter make specific recommendations for any
specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice
is intended.
InterAnalyst does not scribe all articles; rather, we sift through thousands of current economic and
financial articles written by hundreds of contributors from around the globe. Like InterAnalyst, our
contributors do not care which direction the markets are going. Our contributors offer articles that help
us discern which way the markets may trend in the future.
InterAnalyst is solely responsible for the design, some articles, the current investment guideline herein,
the Wealth Preserver and Wealth Maximizer signals on the InterAnalyst.us website.
This financial newsletter is neither a solicitation nor an offer to buy or sell security of any kind. No
representation is being made that any account will or is likely to achieve profits or losses similar to the
illustrations herein. Indeed, events can materialize rapidly and thus past performance of buy and hold,
trading system, or any other methodology is not necessarily indicative of future results particularly when
you understand we are going through an economic evolution process and that includes the rise and fall
of various governments globally on an economic basis and the fact that economies continually cycle.
Past results of any individual or trading strategy published are not indicative of future returns.
Hypothetical or simulated performance results have certain limitations. Unlike an actual performance
record, simulated results do not represent actual trading. Also, since the trades have not been executed,
the results may have under-or-over compensated for the impact, if any, of certain market factors, such as
lack of liquidity. No representation is being made that any account will or is likely to achieve profit or
losses similar to those shown.
The indicators, strategies, columns, articles and discussions (collectively, the information) are provided
for informational and educational purposes only and should not be construed as investment advice or a
solicitation for money to manage since money management is not conducted. Therefore, by no means is
this publication to be construed as a solicitation of any order to buy or sell any security. Accordingly, you
should not rely solely on the information in making any investment. Use the information only as a starting
point for doing additional independent research in order to allow you to form your own opinion regarding
investments. Dont trade with money you cant afford to lose and never trade anything blindly.
Always consult with your licensed financial advisor before making and investment decision. Its your
money and your responsibility.

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