WHAT TO DO WITH CASH?
Rich people, around the world, have a major problem. If you have a pile of cash stored somewhere, you can watch its value disappear as taxes, inflation, and competing currencies erodes its purchasing power. This is the reason why intelligent investors buy paintings and other art rather than government bonds or stock certificates.
A good example is Lord Andrew Lloyd Webber, composer of Phantom of the Opera, who owns a half a billion pounds worth of paintings in his London home. Lord Webber doesn’t want British Pounds or European Euros or American Dollars – those pieces of paper becomes worthless with time.
A painting by Rembrandt or Da Vinci becomes rarer and more valuable as each year passes. But, not everybody knows how to purchase paintings or other art. Buying art requires a vast knowledge of which art is good and will be wanted in the future, and, even more difficult, knowing its true present price.
If you do not purchase art and you cannot decide what is a safe investment – what do you do?
HOW MUCH MONEY DO YOU HAVE?
This is the first question that rich people ask themselves? It is also the first question that RICH BUSINESSES ask themselves.
Today, throughout the world, there is a gigantic over-supply of cash, sitting in banks or governmental treasuries, waiting to be invested, with Money Managers scratching their heads as they wonder: Where is a SAFE place to put our cash?
The quantity of this cash is beyond the ability of private or public accountants to calculate. It is the sum of all the idle cash or cash- equivalents held by individuals, financial institutions and businesses across the world.
The term Trillion is too narrow to describe this vast hoard of money. One has to realize that this capital exists, not only in the U.S. and Europe, but in Africa, the Middle East and Asia.
IDLE CAPITAL IS THE BIGGEST THREAT FACING MANKIND–IN TERMS OF A STABLE WORLD ECONOMY!
When this capital is finally inserted into the world market place, it will catapult certain nations into rich juggernauts of wealth and others into sacks of poverty.
WHAT THE POLITICIANS ARE IGNORING
Politicians across the planet are ignoring the fact that Capital is a Commodity like Gold, Wheat or Petroleum.
It goes where it can get the highest price. If it is taxed in a country, it will disappear in that country. If it is over-regulated in a country, it will disappear. Politicians cannot control it.
In the Great Depression of the 1930′s, capital left the U.S. for banks in London and Switzerland, where the capital was stored until the Second World war and was then very carefully and slowly extracted and used in the market place.
Like a shy animal, Capital is hiding today. It will only go where it feels safe and will be fed.
THE PUZZLE OF THE 1930′S
Students of economics who are studying the Great Depression of the 1930′s, which originated in the U.S., are always puzzled by the disappearance of capital which in the 1920′s was plentiful in America.
These students note that there was almost no taxation during this period and that for two decades prior to the 1930′s the economy had been explosively good. But, in the 1930′s, suddenly no capital could be found and hundreds of banks had to close their doors.
The lack of capital was so severe that the U.S. Federal Government declared a Bank Holiday so that the small banks could be re-capitalized, and runs on the banks could be avoided.
WHAT HAPPENED TO THE CAPITAL?
The Capitalists at that period were, nominally (in name) Americans, but they were essentially Europeans, with their hiding places for wealth in London, and other major European money centers.
For half a century prior to the economic collapse in 1928, they had brought in “cheap labor” from Europe. Millions of Europeans had migrated to America, looking for work in the thousands of factories.
Simultaneously, a new social event was rapidly unfolding: The Birth of Communism.
The USSR was born in Russia and Eastern Europe with blood baths everywhere. The American and European capitalists were paralyzed with fear.
What if the millions of poor new immigrants suddenly decided that America should be communist as well? The fear was overwhelming. The first thing the American Capitalists did was ship all their capital to London. The banks became empty.
Then they passed laws, outlawing communism in the USA. That was the beginning of the Great Depression of the 1930′s.
A similar event occurred in 2008. Millions of immigrants were here, but the capital had been shunted abroad. No longer afraid of communism, but afraid of losing their capital, the capitalists of 2008 needed to store their capital somewhere.
Where?
CHINA IS THE BEST LOCATION
At the moment, the wealthy holders of capital, both individuals and businesses, are eyeing China as the location of where they would like to invest their riches.
China is booming. Its businesses are growing quickly and strongly. The Chinese population, backed by its government, is eager to work, produce and sell.
Although it has corruption, the Chinese Government is not hesitant to use the 9 mm bullet as a means of controlling avaricious businessmen or governmental employees or even major Communist Party Directors. The thought of a 9 mm bullet is enough to give any over-eager predator pause.
This type of control exists nowhere else on the globe.
WHAT WILL CHINA DO WITH NEW CASH?
The Chinese know what to do with new capital: Build an infrastructure for the newest Empire on the Planet.
They have the people, the factories and the know-how. They only need clean energy, roads and sufficient housing.
We will see the capitalists of the world build a new China.
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