THE
PLAGUE OF THE
BLACK DEBT:

How to survive
America’s Next
Bubble Collapse

Millions of middle-class Americans are about to suffer the biggest wealth wipe out in history as a $110.7 trillion debt avalanche buries the economy…

It’s too late to reverse course… But it’s NOT too late to protect yourself and your family…

In fact, by following the steps in the 3 FREE crisis investing reports below you could look back on the coming collapse as the greatest chance in your lifetime to get rich…

In them you’ll find out how to:

• Cash in on a mining exploration company that has one full ounce of silver backing each one of its shares (trading now for under $1)
• Make $20,000 a year from an obscure type of bond
• Make 50% gains from toll roads

Dear Concerned Citizen,

You don’t have to be a conservative, a liberal or anything at all to understand America as we know it is about to get flattened.

Just consider the chart below:

Pretty bad, huh? Now consider this chart:

That’s right, folks...

If President Obama’s economic projections are on target, he’s going to add $10 trillion on to the federal debt in the next 10 years.

That’s more than four times the deficits of George W. Bush’s presidency... and more than all of the other presidents – combined.

Let’s be clear. These are the largest deficits as a percentage of GDP since 1945, when the country was paying for World War II.

Now I want you to look at a third chart. These are my projections:

There you have it. It’s a graphic picture of a freight train – and it’s heading towards you.

It doesn’t matter whether you prefer my figures or President Obama’s. We’re merely talking about different shades of disaster.

When you’re dead you’re dead. There aren’t some people who are “more dead” than others.

The debt plague that’s coming will wipe out trillions more in Americans’ savings.

Millions of hard working people will see their precious last dollars wiped away as America teeters... and then loses her economic footing... a victim of the greatest accumulation of debt the world has ever seen.

This is guaranteed to happen. It’s too late to reverse course. President Obama is speeding up the coming collapse, not slowing it down.

But by following the simple instructions contained in the 3 FREE crisis investing reports below, you could still end up looking back on this time of great uncertainty and change as the biggest opportunity  of your lifetime.

This Is How America Ends

Last year alone the US government spent $433 billion of your money on interest payments to the holders of U.S. debt.

The interest the government pays on its debt is the fourth largest expense in the federal budget. Only defense, social security and health spending eat through more public money.

Already, in this year’s budget, 21 cents out of every dollar of federal income taxes is needed to pay just the interest on the debt.

Very shortly, it will take all our income taxes just to pay the interest.

The charts you just saw show the debt curve going almost straight up. But of course that’s not going to happen.

Long before your debt reaches “infinity” you go broke. You are unable to pay even the interest on your debt, much less the principal, and nobody will lend you money anymore. That’s what happens to people like you or me.

If you are a government, you have another choice: You print money to get out of your fix. Then inflation takes off… interest rates take off... and the dollar becomes worthless.

We’re closer than you think to these grim scenarios.

It’s too late to reverse the situation. President Obama’s spending program certainly does not do so.

Either he will be forced to default on such obligations as Social Security, Medicare and military pensions…  Or the government will pay for everything in full – with worthless money.

In a moment, I’ll tell you more about which one it’s going to be.

We’re simply out of time.

Short term here are some events I expect to play over the next decade.

• No matter who you are, your taxes will go up. The government will continue to raise taxes in an attempt to keep its spending programs alive. The Obama administration is already planning to raise corporate taxes, already the second highest in the world. The costs of this will be passed on to you whenever you buy something.
• The US dollar is already being undermined as the world’s reserve currency as US debt holders led by China, Russia, India and Brazil move to protect themselves against dollar depreciation. Soon the dollar will lose its reserve currency status.
• The Social Security Ponzi scheme will collapse. The government will be unable to borrow the funds it needs to replace all the money it has already spent from the Social Security trust fund.
• Interest rates in the U.S. will rise to 6% plus as the government needs to raise the rate to stimulate foreign demand.
• Excessive government borrowing will push up mortgage rates and trigger another leg down in the housing market. Huge numbers of prime borrowers have already begun to default on their mortgages, triggering what is destined to become another wave of toxic asset writedowns at banks.
• The government will default on Social Security payments and Medicare and Medicaid obligations. It will not do so in an open way. Instead, it will fail to accurately index-link Social Security benefits to the cost of living… it will ration hospital stays and doctors visits… and it will deny expensive treatments and medication to state-insured patients (beginning with the elderly)
• The US will enter a long period of economic stagnation coupled with inflation.
• In years to come, the period between 2008 and 2018 will be known as America’s “lost decade.”
• Oil prices fall to $25 a barrel before breaking through their July 11 2008 high of $147.90 a barrel.
• Unemployment rates will rise to 20%.

It’s too late to stop these events.

But it’s not too late for you to protect yourself.  It’s urgent that you take action now.

The purpose of this report is to help you decide what to do – and even help you get rich during the coming bad years.

GM’s Collapse Is a Preview
of Our Future Economy

They say history repeats itself.

This means that you can understand it well enough to profit from its predictable patters.

In other words, if you know what trends to expect you can reap huge wealth.

I’ll jump ahead here a little bit and tell you something else: The forces at work right now are the most powerful forces in over 500 years.

Terrible suffering will occur. Things most of us never imagine. But big money is going to be made at the same time.

Did ordinary Americans know they were in something called the “Great Depression” in 1930?

No.

They thought their problems would blow over. But they were wrong. US stocks didn’t reach their 1929 level for another 25 years – until 1954.

To understand where the US economy is headed, look no further than the collapse of General Motors.

"I think it is important to recognize that General Motors is a canary in this country's economic coal mine; a forerunner for what's to come for the broader economy,” warned legendary billionaire bond investor Bill Gross in a recent note to investors.

GM’s mistakes have been America’s mistakes… And its problems will be America’s problems.

Take the enormous unfunded health care and pension problems shared by GM and the U.S.

“Reportedly, $1,500 of every GM car sold in the dealer showrooms goes to pay for current and future health benefits of existing and retired workers,” Gross points out.

GM is liable for nearly $60 billion in health-care costs. But the total future healthcare liability for all U.S. citizens can be measured in the tens of trillions.

Just as GM’s debt problems lead to its collapse, Washington’s addiction to debt will lead to the collapse of America’s economic standing in the world.

Here’s something the Obama administration doesn’t want you to know: We cannot solve a debt crisis by issuing more debt.

It’s as simple as that.

Obama and his cronies in the Federal Reserve are on a fool's errand. In the end, all debts – private and public – must be serviced out of earned income.

And since the country’s income is falling as its debt burden is rising, this debt must also come down.

The Bubble of All Bubbles

The US is the world’s biggest debt addict.

And government debt is now expanding faster than ever.

Most people don’t stop to think about it. But America has the biggest deficit of any serious country in the world.

The US deficit is 13% of total annual economic output. Compare that to Russia at 2.6%... Spain at 6%... France at 5%... Brazil at 1.3%... Even Argentina has a much smaller deficit than the US – at only 3.6%.

And that’s only the beginning…

Even if we ignore the relentless build-up of spending on Social Security, Medicaid and Medicare, the cost of bailing out the banks and failed industrial behemoths like GM and Chrysler will soon send the federal-debt-to-GDP ratio to well over 100%.

Then there’s Obama’s ambition to spend trillions more on health, the environment and education. Each of these programs will force the White House to borrow trillions more dollars from foreign powers such as China, Russia and Japan.

There come the “unfunded liabilities” of Social Security, Medicare and Medicaid.

It’s difficult to believe. But there is currently no funding mechanism in place for Social Security’s unfunded liabilities. They amount to $13.6 trillion – only slightly less than a year’s worth of US GDP (around $14 trillion).

This is small change compared to the gaping hole in Medicare funding.

There are three components to Medicare:

1. Medicare Part A covers hospital stays. Its unfunded component is $34.4 trillion.
2. Medicare B covers doctor visits. Its unfunded component is worth $34.0 trillion.
3. Medicare D covers the drugs benefit. Its unfunded component amounts to $17.2 trillion.

The total unfunded liability for Medicare is $85.2 trillion – just over 600% of US annual GDP. And Medicare and social security together have unfunded liabilities worth 700% of last year’s US GDP.

The Plague of the Black Debt
(Plus the Most Profitable
Investment in the U.S.)

In three years, from 1347-50, about one person out of every three in Europe died of bubonic plague.

This was the famous Black Death.

Whole villages were wiped out, left to return to the wilderness. In cities, thousands of houses were boarded up and deserted.

I call the coming disaster in America the Plague of Black Debt.

The coming tidal wave... the ultimate collapse of this debt pile... is actually in plain view.

It’s right there in President Obama’s record debt projections... in the spiraling deficits and pork-laden federal spending programs.

Barack Obama knows... and Ben Bernanke knows... that as soon as the printing presses stop... the whole swindle will come to light.

That’s because the sucker’s rally in stocks… and the glimmer of hope it brings… is all based on the printing presses in Ben Bernanke’s basement stuffing those duffel bags with brand new, sequential dollar bills.

No, I don’t expect millions to die (although it’s possible if society collapses.)

What I do expect is that the world will be changed, totally and permanently. Things will never be the same again.

Let me put it simply as simply as I can. The coming debt plague will destroy America's economic leadership.

Unless you prepare urgently now, it will leave you in indentured servitude. You will be left behind to pay the greatest accumulation of bad debt the world have ever seen.

Budget experts estimate that federal taxes would have to rise by 64% to cover the unfunded liabilities of the federal government. And that doesn’t even include your share of the cost of the ongoing multi-trillion-dollar bailouts and stimulus programs.

There’s no way to sugarcoat what’s happening.

Remember, the Congressional Budget Office’s own estimates say Obama will add almost $10 trillion to the total federal debt by 2019.

That’s about as much total debt as was outstanding at the beginning of 2007!

This will trigger the worst financial calamity in America’s history… far worse than what we’re experiencing now.

In fact, I believe it will become the greatest economic disaster in recorded history.

Consider the following facts...

There’s roughly $11.5 in debt outstanding. Then there’s another $10.1 trillion for the on-balance sheet Obama spending. Another $99.1 trillion is coming for unfunded entitlement programs such as Social Security and Medicare.

That’s something close to $120.7 trillion by 2019.

And it’s roughly another $120,700 in debt for each of the 100 million families in America.

Now, I know this all sounds meaningless. The kinds of numbers we’re talking about are the kind of numbers that used to be used in astronomy, not economics.

But “120 trillion” has 13 zeros: 120,000,000,000,000.

To put that in perspective, in 1980 that national debt was just $930 million.  Not even $1 billion!

This will have a devastating social impact:

• I see social security benefits being cut to the bone. They’ll probably only go to the neediest.
• I see at least 21 million unemployed or in make-work public assistance jobs.
• Sick and elderly will be cared for at home. Almost nobody will be able to afford nursing home care.
  
• I see millions more homeowners “upside down” – with a mortgage bigger than the value of the home.
  
• Washington will continue subsidizing and nationalizing US industries. Government interference in commercial markets will have far-reaching repercussions that your average bureaucrat couldn't fathom.

Now, picture yourself in a neighborhood where the houses on either side of you are empty and for sale.

Windows are broken out. Homeless and squatters break in and sleep there.

There are no police to stop them because local government is broke and the tax base has fallen sharply.

For the same reason, the streets are full of potholes and the streetlights are broken. Power outages are common. In this dark, menacing environment, crime runs wild.

Almost everyone drives a “clunker” because few people can afford a new car anymore.

Mountains of green garbage bags pile up, stinking to heaven, because it’s three weeks between trash pick-ups.

In short... The suburbs will become slums. It has already happened in communities that went broke. Just look at most of modern day Detroit.

It is going to happen in many more communities – perhaps even yours.

Somebody Will Still Be Rich

It doesn’t give me any pleasure to predict these things. But I want to get this information to as many people as I can… because you can prepare yourself.

You and those you love can avoid this catastrophe. And the more of us who preserve our wealth, the better it will be for our country when the time comes to rebuild.

One way to do this is to subscribe to my investing research service Strategic Investment.

Alongside other Strategic Investment members, you could not only protect your wealth but also profit in these trying times.

I've been able to give my subscribers consistent results even in these turbulent times. Here are just some of the winning recommendations I've made over the last six months:

• 62% gain on Wits Gold
• 33% on Petrobras
• 20% on the Van Kampen California Muni Fund
• 16% on the PIMCO Income Fund
• 14% on the Gold Double Long ETN
• 24% on the Dow UltraShort ETF
• 31% on Brazilian government bonds
• 39% on the Direxion Daily Financial Bull 3x ETF

Although I’ve created high returns for members, at no point did I compromise the safety of their portfolios. You'll notice that most of my recent winners are simple bonds and ETFs.

As I’ve always said, your most valuable asset is between your ears. And if you use it properly, your only job could be investing the money you could make in the next few years.

You could check out of the collapsing welfare state – for good.

This is your wake-up call. Pack your bags and check out now.

Is this too alarming?

Some people would certainly say so. You’re simply not going to hear what I’m telling you now from the talking heads on TV or from the slick new bunch of politicians occupying Capitol Hill.

But I’m not the only one who understands how bad things really are. According to Warren Buffett, “The economy will be in shambles throughout 2009 – and for that matter, probably well beyond..."

The Most Profitable Investment
In the United States

There’s a profit angle to all this.

The government has only two ways deal with its debt problem: default on the debt or inflate it away.

It will choose to inflate. Governments have always done this in the past when the debt burden was exceptionally high.

The Treasury could signal it will not choose inflation. It could replace dollar-denominated debt with foreign-currency-denominated debt or debt that rises as inflation rises (what economists call “index-linked debt”).

But there is no sign of this. The government continues to issue debt in dollars that it can inflate away whenever it wants to.

This is not really a “choice,” of course.

The feds must borrow to pay for its mammoth spending... they must borrow to try to plug the holes in Social Security, Medicare and Medicaid... and they must borrow to pay for their boneheaded bailouts of failed banks and automakers.

If the government doesn’t inflate this debt away, it faces a third world-style default or massive tax hikes.

The markets are slowly waking up to the threat of inflation as a ‘solution’ to America’s debt addiction.

Central banks have their eyes on deflation now. But in a short time inflation will take hold. And an inflation rate of 15-20% is likely by 2012.

(If you choose to take a 3-month trial of Strategic Investment, I’ll send you all the details on how to protect yourself from this wealth obliterating inflation cycle in your 3 FREE crisis investing reports along with your monthly Strategic Investment updates.)

Who am I to be saying all this? Where’s the proof.

I’m glad you asked…

Where We Get Our Information:
An Investor’s CIA

More than 35 years ago, I founded a group called the National Taxpayer’s Union. We’ve been sounding the alarm about deficits and unfunded liabilities ever since.

The NTU has grown to become one of the most powerful and respected citizen’s organizations in the United States.

Our 350,000 members are citizens who are sick of taxes and deficits. And we’ve fought to hold the line on taxes and keep spending under control.

Obviously, our concerted efforts have fallen short.

I’m sorry to say it, but federal and state spending have zoomed out of control. And taxes are destined to become confiscatory in the near future as a result.

My involvement with these efforts has not been a total waste of time. It has given me access to America’s most powerful people. The fact that I went to Oxford University – as Bill Clinton did – has also given me valuable contacts.

Right now, though, I’m not writing to you as a representative of the NTU but as a private person who’s worried that we’re heading into a debt collapse far worse than the collapse of subprime mortgages back in 2007.

I’ve written several books on America’s economic and social crisis. Three were international bestsellers: Blood in the Streets, The Great Reckoning: Protecting Yourself in the Coming Depression and The Sovereign Individual.

In 1984 I founded a private investment research service called Strategic Investment with Lord William Rees-Mogg.

Apart from being a good friend of mine, Lord Rees-Mogg is the former editor-in-chief of The Times of London, Vice Chairman of the BBC and confident of powerful British figures such as former prime minister Margaret Thatcher and Lord Rothschild.

Rees-Mogg and I share a passion for studying the past to better understand the future.

History does repeat itself, as I said earlier. In this report, I want to show you exactly how it repeats itself and what now lies ahead. This way you can reap the benefit of our years of research.

Strategic Investment accurately forecast many seismic historic events – including the collapse of the Soviet Union, the 1991 Nikkei crash and the fall of the Berlin Wall.

Some left-wing critics often mistook Strategic Investment for the CIA because of its uncanny predictions of world events.

We’re flattered, in a way. But they’re mistaken.

Markets Don’t Move at Random

The success of Strategic Investment is built on a key insight.

It’s illegal to profit from inside information about stocks. But there is no such problem with inside political information.

Let’s face it. Markets don’t move totally at random. They move because somebody decides to do something. People move markets. And powerful people move them powerfully.

And thanks to the current crisis and Washington’s response to it, when stocks shoot down or up, it is now largely because of actions taken in Washington.

Think about the 20% rise in stocks after Tim Geithner announced that his public-private partnership would soak up banks’ bad loans... Or the 10% drop in the dollar since Ben Bernanke said he would buy up over $300 billion worth of government debt (aka the Japanese quantitative easing ‘solution’).

Simply put, Washington is the only real player left in the game. As I said before, it already controls a staggering 30% of GDP.

Understanding what Washington will do next means you can also understand how the market will react...

Turning Chaos into Cash:
3 Slam-Dunk Investments for 2009

Lord Rees-Mogg and I called our first book Blood in the Streets. Its subtitle was “Investment Profits in a World Gone Mad.” A lot of people thought we were overdoing it just a bit.

But consider the forecasts we made that came true:

• The Crash of 1987.
• The crash in Tokyo stocks and real estate, with losses in the trillions. (Our readers tripled their money on the fall in Japanese stocks… with a low-risk investment you could buy from any U.S. broker.)
• The end of the Soviet Union and the Cold War
• The fall of the Berlin Wall and German reunification

And more recently:

• The credit crisis
• The collapse of the U.S. housing market
• The recent government bailouts and the nationalization of U.S. banks

All this is history now. And we are now faced with far more treacherous economic times than ever before.

Our objective at Strategic Investmentis to protect you from the bad news and to help you actually grow wealthy from it.

Following are three investments. They are my short list of ideal money-makers during the coming bad years. (They are yours along with many more in your monthly issue of Strategic Investment, should you decide to take me up on my no-risk introductory offer. Scroll down to the bottom of this letter and click the link to get your complimentary report right away.)

1. Low-risk and High Returns from this Giant Emerging Market Bank

Brazil’s banking system is solvent. It has no problem with non-performing subprime loans.

That is one of the reasons that I recommend Banco Itau (NYSE:ITUB), the largest bank in the southern hemisphere. ITU was also the most profitable bank in the world a few years ago.

Buying ITUB is a bet that a crisis in the US and Europe is no longer an occasion to deleverage credit in the BRIC economies.

The 80% rally of the Bovespa from the bottom in Q4 2008 suggests that the local market is convinced that Brazil is prepared to find a way forward, even if the US and other major northern hemisphere economies remain stalled out in the aftermath of the credit crisis.

Two key advantages will help Brazil on its way: its large currency reserves and that its main trading partner is now China.

ITUB has averaged a 26.8% return on equity over the past three years. And unlike the large US banks, it’s well-funded and doesn’t have a balance sheet riddled with toxic assets.

Credit card loans, for instance, only make up 8% of their loan portfolio. The bulk of their loans, 38%, has been issued to corporations expanding rapidly within Brazil.

In addition to being the largest bank in Brazil, ITU has significant presence in 11 other countries. If Brazil motors forward to become the next economic superpower, as I expect, ITUB will continue to post stellar results.

2. Your Road to a 50% Return on Investment

Another bet on future growth in Brazil is CCR Rodovias-ON NM (Bovespa: Sao Paulo: CCRO3)

CCR Rodovias is the largest operator of toll roads in Brazil. Unlike the US, Brazil has made a policy commitment to privatize the operation of its highways. This means major roadways are being auctioned on a regular basis. The return on investment has been stellar – as high 50%.

As Brazil’s largest toll road operator, CCR Rodovias, is a proxy for the growth of Brazil’s middle class. I expect the number of automobiles in Brazil to continue growing as incomes rise and the middle class becomes more vibrant.

This is already happening as witnessed by CCR’s net revenue, which increased by 15.7% in the first quarter of this year alone.

And that’s just part of the story. You see, CCR is allowed to raise its toll rates alongside inflation. This has had the effect of allowing CCR to have high profit margins. Margins before interest and taxes totaled 50.7%. That means for every $100 that comes in, $50.70 is all profit. Most companies in America would be envious.

There are still fewer than 200 passenger cars for every 1,000 people in Brazil; unlike in the US, where the car market is saturated, Brazil’s car market has a lot of “open road” in front of it.

The result is that traffic has gone up 16.3% since the fourth quarter of 2008.

Brazilians tend to prefer to live in gated communities as they reach higher levels of prosperity. This implies a surge in growth in commuter communities – and more traffic on the toll roads to fill the coffers of CCR Rodovia.

3. Make $20,000 a Year from Brazilian Bonds

One of the best plays on Brazil is to buy Brazilian government bonds, if you can afford to trade in the large denominations normally required.

I first recommended these bonds in January and we have already realized a gain of almost 29% in just five months.

You have accrued interest in Brazilian real at 12.9%. It won’t be paid until July; but your accrued interest of 53.9 real also includes a currency gain of 11.46%. This adds another $29.14 in value and brings your total gain on the Brazilian we government bonds we recommended to 28.8%. For every $1,000 you invested, you now have $1,288.67.

You can see why there has been a big appetite for Brazilian bonds lately… and why aggressive investors have been borrowing in dollars and buying Brazilian government bonds yielding 10% to 11%.

I still think these bonds are a great bargain.

In the special report Turning Chaos into Cash: Three Slam-Dunk Investments for 2009 I give the details of how to use leverage to buy these bonds and net upwards of $20,000 (maybe much more) per year.

I've chosen to focus on Brazil in this report because Brazil has thrived as a deleveraged economy.

Punishingly high real interest rates in the recent past have kept credit out of Brazil.

As of June 30 2002, Brazilian government loans yielded 17.7%. Business loans yielded an average of 38.28%. And the average annual yield to banks on consumer loans was 60.57%.

That’s why Brazil will continue to boom and make some investors very rich.

This Economic Collapse Happened
Right On Cue

At Strategic Investment, our track record pretty much proves we “get it.”

Or secret is the theory of “megapolitics.”

Megapolitics is a concept I developed with Lord Rees-Mogg in Blood in the Streets and The Great Reckoning: Protecting Yourself in the Coming Depression.

You don’t have to read the books to understand the main idea: The world is shaped by big, powerful forces or trends that nobody can control.

Unfortunately, the current period is fraught with grave danger. That’ s because big governments and empires are much more prone to collapse than to grow and prosper

Very few people are even aware of them, but there are historical cycles that repeat themselves over and over.

For instance, there have been nine depressions, spaced about 60 years apart, since the mid-16th century.

One explanation for this is human psychology. After a depression, the generation that suffered through it is very careful and conservative. Lenders make only totally-safe, no-risk loans. Investors will only invest in sure things.

It was 1954 before the Dow reached the level it had been in the boom of the 1920s.

Then, about 30 or 40 years after a depression, a new generation begins to take over.

Its members have little memory of the crash. They think their elders are over-cautious old fuddy-duddies who are missing profit opportunities.

And, in a way, they’re right. It’s time to get more aggressive. Think of the 1950s and 1960s.

As this new generation takes control of banks, corporations, government and other institutions, these people eventually throw caution to the wind.

By about 60 years after the last crash, there’s almost no one around who remembers what it was like. Stocks and real estate have gone up for as long as these people can remember.

The stage is set for another depression, caused by cheap money, bad loans and the foolish investments of the boom generation.

That’s where we are now. The “credit cycle” began to unwind in August 2007, with the collapse of subprime mortgage securities, but it still has a long way to go. The worst is yet to come.

The 500-Year Cycle

There is also a long 500-year cycle. No one knows precisely why this is.

What we do know is that this cycle is unusually precise.

Between 50 B.C. and 50 A.D. the Christian religion began and the Roman Republic was replaced by an empire. Around 500 A.D. the Roman Empire collapsed.

At about 1,000 A.D. the Dark Ages gave way to the Middle Ages. And around 1500 A.D. the Modern Age – our age – began.

All turns in the 60-year cycle follow a period of excessive debt. All involve a credit crisis, all lead to a collapse of property values, all ruin independent businessmen, all have serious political consequences  and all cause high unemployment and social distress.

This isn’t idle chitchat. There are opportunities to make enormous amounts of money.

For example, from those Brazilian bonds I told you about earlier we're making an almost 70% annualized return! On bonds!

In four months one special type of gold company that I recommended has spiked up over 60%.

Yet another recommendation – a financial services play – made 38% in four days.

These are just some of the real fortune building returns racked up so far this year...

And I'm seeing many more of these high-profit anomalies on the horizon... many more than there were a few years ago...

That's because we're in the middle of a cyclical collapse. And that's when asset mispricing and great opportunities abound.

Each of the great 60-year turning points creates a whole new class of millionaires and wipes out the accumulated wealth of the old class.

There’s really no escaping it. Society has to write off debts that were piled up too high when times were good.

Government can shuffle the pain around… but government cannot escape the pain.

The Market Is More Powerful
Than Any Government

The biggest mistake of our time is the belief that government can avoid the costs of bad debts and failed investments.

Just as the Russians found out that you can’t create a society in which no one can make a profit, we’re going to find out you can’t have a society in which no one takes a loss.

President Obama has set off on a policy of rescuing failed companies and big unions. It’s not going to work.

Anyone with a sense of history knows it…“old timers” who’ve seen crashes like this one before.

Take Richard Russell.

Russell is 84. He’s been writing his investment newsletter, Dow Theory Letters, for 50 years. It’s one of the most respected financial publications going. The People’s Bank of China is a subscriber. So are many Wall Street traders.

“People in this country don’t realize how bad things can be,” Russell told a close group of insiders recently.

“I lived through the Great Depression. I remember people standing in bread lines. It was hard to get a job, any job, back then.

“But now, you see the restaurants are still full. People are still spending money. They may be worried and they may be beginning to save, but there’s no sense of urgency.

“And there’s a rally on Wall Street. You know, every bear market produces a rally. You can expect the market to retrace its steps by one- to two-thirds.”

There are a lot of people with opinions on the economy and the stock market. You can hardly turn on your computer without getting dozens of them.

But there are not many opinions with the depth of experience and knowledge behind them as those of Richard Russell.

He’s been studying “the language of the markets” for more than half a century.

“The primary trend is down,” Russell told the same select group of friends and investment professionals recently.

In the end, Russell believes that no matter what Obama and Bernanke do, the primary trend will have its way. The bear market will continue until it “has fully expressed itself.”

“What would you do if you were suddenly in a position of power in the United States?” asked one of the guests at the recent gathering.

“Nothing,” replied Russell.

“I’d do nothing. I’d let it happen. I’d let the bear market do its work.”

But that’s not what President Obama – who’s just over half Russell’s age – is doing.

Obama wants the government to act. And this means tax, print, spend and legislate.

Prop up failed automakers. Stuff money into zombie banks. ‘Stimulate’ with pork-laden spending bills.

This year’s first ‘stimulus’ plan has conspicuously failed to create the millions of jobs the president promised. Reports indicate that the White House is now working on yet another stimulus’ to spend even more money out of an empty pocket.

Of course, Obama plans to print trillions of fresh new dollar bills to pay for it all.

Obama doesn’t remember the Great Depression. Richard Russell does.

The Most Important World Trend

Under the cover the economic crisis President Obama and his allies in the Federal Reserve are radically altering the U.S. economy.

We now have a projected budget deficit of 13% of GDP. That’s more than twice the size of the next largest deficit since the end of World War II.

The federal government now has massive stakes in the banking, mortgage, auto, health care and insurance industries.

Unfunded liabilities – Social Security, civil service and military pensions, the Pension Benefit, Guarantee Corporation, Medicare and Medicaid – are over the $100 trillion mark.

An entire year’s worth of US economic output stands at just under $14 trillion. Total federal tax receipts are just $2.4 trillion.

Something’s got to give. This much is obvious.

Well, behind the scenes something already is:  a 100% increase in the money available to the economy.

It’s the biggest increase in what economists call monetary base – made up of currency in circulation, bank reserves at the Fed and vault cash – in 50 years... by a factor of 10.

Think of this as a huge build up of potential cash, rather like a build-up of water behind the walls of a giant hydro dam.

Once the flood gates open, the water will gush out and drown everything in its path. Money will flood the economy and lead to higher inflation and interest rates.

So why is the Fed expanding the money supply so recklessly, if results are so disastrous?

That’s easy. The expansion of money can also result in higher stock prices, higher house prices and a weaker currency in the short term.

And these are three things Washington desperately wants right now.

Higher stock prices mean that banks and big corporations can raise money by issuing shares, rather than by relying purely on government hand outs.

Higher house prices would make it easier for families to pay the banks back for mortgages they took out on their houses.

And a weaker dollar makes the government’s debt pile cheaper to pay back.

How can you make a profit in the coming inflation?

Your best option is a simple, low-risk investment that we describe in our FREE report “The Single Best Investment in the US Right Now.”

It allows you to make $10 in profit for every $1 you put up. And it’s as simple as calling your broker.

The secret is timing. And we’ll give you that in the pages of Strategic Investment.

The point is this: You can be among the few people that foresee and profit from major developments in this crisis.

It doesn’t take a crystal ball. All it requires is the right information and an understanding of the economic and political link between events.

And that has been the hallmark of Strategic Investment from the very beginning. In fact, Strategic Investment is living proof that you can know... you can understand... and you can profit from the seemingly disordered market events going on around you.

How Will Obama Try To
Salvage the Economy?

Barack Obama is facing an economic Dunkirk. There is no better analogy.

He will be bombarded on all sides by a crushing national debt, falling output, rising unemployment and social unrest. He won’t just sit there. He’s going to try to do something.

I can tell you what he’s going to do.

At the rate the $11.5 trillion national debt is expanding, the interest payment alone will consume 42% of income tax payments in just 10 years.

The government’s whole operating budget, besides interest, will have to be borrowed.

Obviously, Obama can’t let that happen. So what will he do? Will he stand tall or blink?

Here’s the worst case scenario:

• The Fed’s reckless expansion of money will trigger a 1970s-style stagflation when banks start lending again. (Money supply will outstrip money demand. And the excess money will cause prices to be bid up.)
• The dead-weight loss to the economy of a 34% increase in federal spending will kill-off what made America great – it’s dynamic and most free markets. (Federal spending has grown from 21% to 28.1% of gross domestic product in only one year. Only during the last three years of World War II has federal spending been a larger share of the economy.)
• President Obama eventually will be forced to increases business and individual taxes. (Right now, federal taxes barely pay for half of federal spending. This means the taxes paid by the taxpaying public would have to double to pay for the current level of spending.)

That’s the worst case scenario. For the best case, reread the last three points.

Bond Traders Veto Presidents

Bond traders aren’t elected, and they answer to nobody. But they possess knowledge about market prices around the world.

They move trillions of dollars a day. And that makes them very powerful.

When bond traders see that Obama and the Federal Reserve are really serious about bringing about inflation, they will dump hundreds of billions of dollars in US bonds.

This will deal a deathblow to the dollar. The price of US Treasuries will plummet. Who in their right mind wants to be left holding a currency that’s plunging in value?

The only way to lure lenders back will be to raise yields on US government bonds.

Rising yields means higher mortgage rates... and higher borrowing costs at the consumer level... This will lead to the complete collapse of the highly leveraged U.S. economy.

It’s a nightmare scenario for the already seriously wounded US economy. But the government will have little choice. It will have saddled itself – and you – with an unbearably high burden of debt.

So what will Obama try to do to bail himself out of this seemingly impossible situation?

The Plan to Take Half of Your Money

Obama will have to raise taxes eventually.

And with the help of a super majority in the Democratic Congress, there’s nothing to stop him!

Larry Summers and other top advisors will be there with the academic mumbo-jumbo to justify it all.

In 2009 or the year after, Obama will go on nationwide TV. He’ll look us right in the eyes. And he’ll tell us that his program to raise the tax brackets to 39.6% for people earning over $250,000 has been so successful that he’s raising the rate to 42.9% and lowering the income level to $95,000!

 But That’s Not All!

Besides raising the tax brackets, Obama will raise a host of other new taxes, great and small.

• After 2010, the death tax will be resurrected – with a chip on its shoulder. And it will hit estates that haven’t been taxed since 2001.
• Medical benefits from your employer will be taxed.
• Capital gains rates will jump to suck what little life remains from the economy.
  

(These are just a few of the tax hikes that have been publicly acknowledged.  You should never doubt the creative new ways the government can come up with to steal your hard earned money.)

Remember, Obama will be slashing Social Security, Medicare and every other type of government spending. The victims of these cuts are going to be in a rage. They’re going to be baying for blood.

And Obama’s going to give them somebody’s blood: yours.

Ladies and gentlemen, this is not news. We’ve already seen Clinton’s strategy was to blame the rich.

When cornered, Obama will attack with the easiest tax target – estate taxes. You can count on it. Why should anyone inherit wealth? Obama is going to ask.

Maybe the parents have earned it, but the kids didn’t. Tax it away! Fairness!

In 2010, there is no estate tax. But like Jesus calling Lazarus forth from his grave, Obama “the Chosen One,” will say “Rise up!” And in 2011 the estate tax will hit anything over a million dollars with a top rate of 55%.

A million bucks… Sounds like a lot of money, right? But it’s not. Throw together your house, your car and a small stock portfolio and you get there pretty darn quick.

Anything over that, the feds are going to be taking over half! And they are closing a noose around your ability to give gifts while you’re still alive.

If you’re worth $1.5 million – once again, something that’s quite easy when you look at all your worldly possessions – your heirs will be paying $275,000 in new taxes. Just to the feds.

Throw in probate costs, state taxes, lawyers’ fees… and easily you could see a third of your wealth vanish into thin air.

Disinherit the IRS

Is there any salvation from these outrageous new taxes?

You bet! There are specific steps you can take right now to disinherit Mr. Obama’s IRS. But if you procrastinate a few months, you could lose big.

The newspapers will tell you that there’s not much you can do to hold onto your money. They are wrong.

You can rearrange your assets to avoid the new confiscatory income and estate taxes. Using trusts and other devices over the next two years can keep your money where it belongs – with your family and loved ones.

Put simply, it's time to bury your wealth.

This will see you through the coming bad years. It will also be the foundation of our country to rebuild after Barack Obama is gone in 2012.

It’s now clear that most assets are going to go down in value. Our whole reason for publishing Strategic Investment is to tell you what’s going up – and what to avoid!

Every month, Strategic Investment will be your pilot, navigating you through the treacherous seas of soaring taxes and plunging stocks, bonds and real estate.

In a second special report “How to Disinherit the IRS” we outline the specific, 100% legal tax and investment moves you can make right now to keep more of our wealth in your family. The next two years are critical for estate planning. And you need to know the basics.

I want to send you this special report, along with “Turning Chaos into Cash: 3 Slam-Dunk Investments for 2009” – FREE – when you agree to your risk-free 3-month trial of Strategic Investment.

Crisis Investments for A
World Turned Upside Down

The global economic crisis that broke with the subprime mortgage meltdown has changed the rules of investing for generations to come.

And investors still playing by the old rule book will be wiped out before this economic storm passes.

Each monthly issue of Strategic Investment gives you specific recommendations on how to best protect and grow your wealth under crisis conditions. It is one of the only private investment research services in the world to deal directly with the economic crisis and its consequences.

Month after month, each issue of Strategic Investment is packed with information on the economic crisis (and ways to profit from it) not found anywhere else.  Not in your newspaper. Not on the internet. Not on television.

Not anywhere.

The fact is most influential financial advisors know nothing about this information. They advise you to buy coins, for example, because they sell coins! Or they urge you to buy stocks because a line of a graph seems to be heading up. Or they get scared by Wall Street gossip and tell you to sell you stocks,

But Strategic Investment has no products to push or bones to pick. We are interested in only two things: Getting to the best knowledge on the crisis before anyone else... and turning it to our profit – and yours.

It’s true that many people do read Strategic Investment just to know what’s going on in the world. But it is designed for serious investors. And it’s designed to make money.

For Serious Investors

Strategic Investment is a monthly electronic newsletter that is chock full of money-making knowledge specifically geared to the current economic collapse. Not just a rehash of what you read in the Wall Street Journal, but new knowledge from an experienced analytical team of crisis investors.

 Strategic Investmentis clear and understandable. It’s just like having a conversation with a good friend (a very well informed good friend).

It also doesn’t take too much time. The information you will be presented with will contain all the information you need to execute money making trades.

You certainly won’t have to watch the markets every waking hour to benefit.

Here’s My Full Offer

I’d like to give your direct access to the three special reports I’ve discussed with you: “Turning Chaos into Cash: 3 Slam-Dunk Investments for 2009,” “The Single Best Investment in the US Right Now” and “How to Disinherit the IRS.”

Inside, you’ll find all the details you need on how to protect your wealth and profit in this crisis.

What’s more, you will also get a full 12-month  membership to Strategic Investment for just $99.

Of course, this offer is fully guaranteed. If you decide to cancel before your fourth monthly issue, let us know and we’ll return the entire amount of your introductory membership, promptly.  No need to return the reports… they’re yours to keep even if you decide to cancel.

But I urge you: don’t delay. The economic situation is extremely dangerous right now. Certainly more dangerous than at any other point in your lifetime.

I hope I’m wrong. I hope that the deficits President Obama is running up are as harmless as some people claim… that the terrible tax increases won’t materialize. But I wouldn’t bet on it – and neither should you.

Remember, if the special reports and your first issue of Strategic Investment don’t give you’re a taste for more… just cancel. It won’t cost you a cent.

But if you fail to take a look at this information and guess wrong about the market as a result, you could lose a lot.

Sincerely,

James Dale Davidson

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