Norway’s sovereign wealth fund, the world’s largest, became the first to pass the $1t in assets mark.  Twenty years ago it was rare to hear of $1b in assets.  Today, there are thousands of people worth more than a billion dollars.  In about 20 years time there will be thousands more individuals, funds and companies worth more than a trillion dollars. 

This means in a few short decades that old tear-down homes will go for a minimum $1m.  The average size homes will sell for over $20m and jumbo size homes for well over $50m.  We will pay $10 for an apple or orange.  A jug of milk will sell for $50.  The average wage will be over $250,000, of which we in Canada will be paying over 50% in taxes.  

In the September 11^th issue of Bloomberg Business Week it stated, “if we can avoid another recession (and that’s a bit if), 1 out of every 10 American households will be worth at least $1m within the next 4 years”.   In other words, the world is marching toward a situation where money loses value.  This is a trend that started about 10 years ago.  Yet, the world is drowning in everything we grow, mine and manufacture.  In theory prices should be falling, not hitting all-time highs. 

Governments around the world, using the excuse we must go green no matter what the cost, will see all power rates soar in the years ahead.  For many, hydro costs will exceed what a family pays for food.  Yet, solar, wind, hydro dams, and so on will not lower Green House Gases (GHG) significantly.  Solar and wind power at their peaks will represent roughly 6% of the total energy we use.  We will experience soaring power prices when it would not be necessary if governments did not meddle. 

There is only one way to stop this nonsense of ever rising prices.  That is world-wide deflation where trillions of currency is wiped out of existence.  This will bankrupt governments, businesses and individuals due to the excessive amount of debt outstanding; exactly what took place from August 1929 to May 1932.   Then, currency becomes valuable and the world starts the next round of 100 years growth. 

Today, we see results of the past decade.  The Dow Jones Industrial Average and the S&P 500 indexes are trading at their all-time highs. Plus, they are trading just shy of their most expensive valuations based on corporate profits.  On the last trading day of 2014, the companies making up the Dow Jones Industrial Average had combined earnings of $106.40.  Today, earnings are up 2.17% to $108.71.  Yet, the index has gone up 28%.  For the S&P 500, earnings were $10.47 compared to $10.40 today.  During this time the index has soared 24.5%. This, as with the real estate market, points to too much money floating around the world resulting in higher prices. 

While Norway’s sovereign wealth fund has exceeded the magic trillion number, the Americans have done the opposite.  Their government debt is $20.1t. However, if you include government obligations, such as pensions and military the liability is $67.9t, or $7,714 per every citizen.  One day this debt mountain will destroy the American economy and the U.S. dollar.  The world is drowning in dollars.  If people lose faith in the Greenback it will collapse in value against all currencies----just history repeating itself. 

When the correction comes is anyone’s guess, but it is definitely coming.  It could be tomorrow or ten years from now.  Those with debt will be destroyed.  There is an old saying which is true today - few learn anything from history and love to repeat past mistakes.