Tags: Wealth | Transfer | Investor | Ultimate Wealth Report

How to Be a Part of the Next Major Wealth Transfer

By    |   Sunday, 01 March 2015 01:50 PM


Biblical history shows us that there have been at least six major wealth transfers before.

The first one was between Abraham and Pharaoh in Egypt. You can read about it in Genesis chapters 12 and 13. Pharaoh ended up giving him sheep, oxen, servants, cattle and “much wealth.”

In fact, it goes on to further confirm that Abraham was rich in cattle and silver and gold.

The second major wealth transfer came (in Genesis chapter 26) to his son, Isaac in Gerar, the land of the Philistines. God made him rich while he was there. He increased so much in flocks, herds and servants that it said the Philistines envied him.

The third major wealth transfer came to his son, Jacob. In chapters 30-31we see that God increased abundantly the portion of Laban’s flocks that were to be Jacob’s.

The fourth major wealth transfer happens to Joseph as wealth comes from Pharaoh. God saw fit to give Joseph favor with Pharaoh as he interpreted a dream which took them through seven years of famine. Joseph wore Pharaoh’s signet ring that stamped everything into law.

He was made second in command of all of Egypt’s business and economy. (Genesis chapter 41).

The fifth major wealth transfer came to Israel as they were released from Egypt. As they went out they were given much of the wealth of Egypt. In Exodus chapter 3 it says they were given gold, silver and raiment (clothes with jewels on them).

The sixth biblical wealth transfer came to Solomon as people came from all over the place to seek out his wisdom. And for that wisdom they bestowed gifts upon him. By the time it was all said and done, 1 Kings 10:23 says that King Solomon exceeded all of the kings of the earth for riches and for wisdom. He was the “Bill Gates” of his day.

Today, I want to talk to you about the latest wealth transfer going on and how to get in on it. It has to do with the inflation game and how to position yourself on the correct side of it.

So here goes:

People love to debate whether we’ll have inflation or deflation in the future. Heck, some even think we have deflation right now. But really what we’ve had is disinflation.

Disinflation is a decrease in the rate of inflation. Deflation is a negative inflation rate. We haven’t gotten there. And if we do, the central bank will fix that quickly.

How do we know? Well, the only time we had prolonged deflation was in the 1920s and 1930s. Then we had shorter bouts of deflation in the 1940s and 1950s. Since then, we’ve not had any periods of deflation except for the global crisis we had in 2008.

That period caused a brief period of deflation in 2008 and we spent most of 2009 in deflation. And ever since, we’ve been in a period of inflation.

So since we’ve not experienced ANY deflation since the 1950’s except for when the whole globe almost melted down in the 2008-09 period, you can count on it that there’s a definite reason why we haven’t had any deflation but have always had some amount of inflation, whether small or great.

The reason is that central banks (and governments) fear deflation much worse than they fear inflation.

Why?

When deflation persists, your purchasing power is greater the longer you wait to buy a product or use a service. So you’re encouraged to save and delay purchases and you’re discouraged from using services.

This means that businesses don’t fare as well and they make less money. When they make less money, they have to trim costs. What is their biggest cost that they can cut? Payrolls!

Therefore, unemployment begins to increase and people have less money and they’re even LESS inclined to spend, which deepens deflation all the more. And the vicious, negative cycle continues to feed on itself.

Inflation, on the other hand, programs society to know that costs will be greater in the future, not cheaper. Therefore, it encourages them to spend today and not well into the future. The increased spending causes businesses to do better as they make more money. As the demand for their products and services increases, they’ve actually got to get “more hands on deck” by hiring more people.

Employment increases and more people have more money in their pockets which further makes them more likely to spend once again, which causes the cycle to repeat itself all over again.

The down side of inflation, of course is that life becomes much more expensive in the future and you lose more purchasing power as time goes on.

But as you can see, central banks and governments would rather deal with this picture than the former, deflationary picture.

Additionally, I believe inflation will continue because of our debt burdens here in the U.S. and around the world.

Our debt burdens relative to the size and growth of our economy can be measured by looking at the debt-to-GDP (Gross Domestic Product) ratio. Much of the time, we’ll see this expressed as a percentage.

(Note: Gross Domestic Product is simply the monetary value of all of our finished goods and services produced within the year. More specifically, its consumer spending + government spending + business spending on capital + our next exports).

In a nutshell, it’s a way to compare what we owe to what we produce.

Well, right now, there are nine countries with debt-to-GDP ratio percentages between 300 percent and 400 percent. That means that their debt load is three to four times the worth of what they produce.

There are 39 nations that have a debt-to-GDP ratio percentage above 100 percent, which means they also owe more than they produce.

Could you image owing more in debt than you make in a year? Let’s say your family makes $100,000 per year but you racked up debt of $300,000 that year…that’s not good is it? Well, it’s not good for nations to get out of whack like that with their debt loads either.

What‘s the solution (in their eyes)? It’s to inflate their way out of it. By inflating assets like stocks, real estate, food and other commodities, it makes the price of things much greater and it helps the GDP level to hopefully outpace the debt level.

Also, do they want to pay back debts in the future with more expensive dollars or with cheaper dollars? Cheaper dollars, of course! That will make the debt loads a bit easier to pay back.

But in order to have cheaper dollars and a larger, inflated GDP, you’ve got to pull the rug out from under your currency by printing more dollars and making each one worth less.

Additionally, by having more dollars chasing a finite amount of goods, it drives up the cost of those goods (inflation).

So you have to realize that the government’s “solution” ends up becoming your problem.

What? Yep! UNLESS, you know the rules of this inflation game and play accordingly.

Well, this is what we do in the Ultimate Wealth Report. We buy stocks that will benefit from the rise of inflation and the drop in the dollar. These assets will rise and not only keep pace with inflation but outpace inflation’s rise over time, thus more than preserving your purchasing power going into the future.

So if you’d like to learn how to be on the correct side of the inflation game and play by the government and central bank’s rules, then come join over 100,000 other subscribers at www.ultimatewealthreport.com.

God bless!

Proverbs 13:22

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust.
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Well, this is what we do in the Ultimate Wealth Report. We buy stocks that will benefit from the rise of inflation and the drop in the dollar.
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