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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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Condensed Articles

September 3, 2013

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(Condensed interview with Swiss asset manager Egon von Greyerz)

We are at the end of a major era, both in the U.S. and around the world.  When you look at debt worldwide it’s out of control.  Total debt-to-GDP in most countries in the world is at a staggering 300% to 400%, and we know this is debt that can never be repaid.  Not only is the debt continuing to grow, which forces the U.S. to borrow more, but also the Fed has to buy all of the debt.  The Fed now owns $2.2 trillion of federal debt, in Treasury bonds, out of $3.6 trillion.  In 2013 the Fed has purchased all of the debt that has been issued.

Federal spending is up 300% in 40 years, and yet earnings are only up 24%.  It’s just unsustainable.  This leads to highly bureaucratic countries with the government taking away the initiative and the entrepreneurial spirit of the individual.  50 to 70 years ago each $1 of debt produced up to $4 of additional GDP in the United States.  Now it’s producing no additional GDP.  So we are running on empty.  

Looking at the short-term, the bond market is the biggest bubble in the world.  The yield on the U.S. Treasury has doubled in 12 months.  Governments cannot hold long-rates down.  The market will force rates higher.  The increase in rates will have a massive effect on global debt servicing and world debt is somewhere around $230 trillion and growing.  As interest rates go up above 10% in the next few years, printing presses around the world will be working overtime.  Just the recent spike in rates has cost the Fed almost $200 billion.  

Bank leverage in developed nations around the world is still at an astronomical 25 to 30 times.  That means a 3% to 4% loss will wipe out the entire banking system, and that level of loss is guaranteed.  This leverage of 25 to 30 times excludes derivatives.  So very little has improved since 2008.  The only improvement for the banks has been in their profits and bonuses.  But their balance sheets certainly haven’t improved much.  The euro is now breaking up from a 2-year downtrend.  This will mark the beginning of the end of the U.S. dollar as the world’s reserve currency.