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The Great American Renaissance


i, I’m Dan Frishberg and I’m warning you, right now… The contents of this report uncover hidden truths that financial industry insiders don’t want you to know. How do I know? Simple…

I have been one of those insiders for over fifty years! For over half-a-century, I have bought, sold and traded tens of millions of dollars worth of just about every financial instrument imaginable. I’ve seen all of the cycles and the trends, from the good to the bad to the ugly and all points in between. Today, however, I find myself in a strange position as an investor and since there’s so much to tell…I will jump right into it. The bottom line is this: America not only has a bright economic future ahead of it but is actually entering an era of unparalleled prosperity, economic progress and, until recently, unfathomable growth. Over the next decade, millions of Americans could see their financial dreams come true, but there’s a problem… It seems that very few people actually get this all-but undeniable fact. In fact, so many Americans have become gloom-and-doom worshipping, gold and silver coin-collecting, freeze-dried food-hoarding zealots that it is clear that something’s amiss… The reality is simple.


The Great American Renaissance

Information equals power and keeping the individual investor uninformed and in a constant state of fear is how the financial industry makes its money. This is not a fact that anyone in the industry can deny. At best, they can attempt to side step the issue. But rest assured that behind closed doors every last one of them is fully aware of both the causes and the consequences of their actions. Over the past three years, I have sat by idly and watched the financial media continue to disseminate lies and senseless fear about topics like: zz America’s downfall zz The $USD losing reserve currency status zz Housing never recovering zz Manufacturing disappearing from domestic shores zz China swallowing us whole zz Gold rising to $10,000/oz. …and other ridiculous fantasies. That’s right. The popular positions of so many ‘respected’ financial analysts, reporters, publishers and advisors are absolute bunk! I don’t blame them. They’ve sold fear successfully for years, why should they stop? The reality of the situation, however, is far different from what has been presented by them. The truth is that America is coming up on a ten-year growth period unlike any in its rich economic history. Over the next decade, every single American citizen will have the opportunity to become a millionaire and quite a few of you can become billionaires, as well.


The Great American Renaissance

This is not due to any sort of miracle invention or super-duper, ultra-secret investment strategy. Nope! It’s simply because there are so many tides turning in America’s favor economically, that the only real question has become:

Where do you want to make your money?
In the report that follows, I will introduce you to the world of finance and investment as it actually functions…not the way it has been misrepresented to you through various self serving financial media channels. But before we start, I’ll warn you once more… What you’re about to read goes against many financial and economic falsehoods you have been trained to believe. I don’t use the word ‘trained’ lightly. There is a phenomenon that has been duplicated repeatedly in psychology labs at every major university, called The Availability Cascade. When human beings hear something repeated over and over, advanced by gurus, media personalities and other publicly recognized “experts,” that something becomes REALITY, for all intents and purposes. Not an opinion or theory. Reality. This report is for people who want to look past the smokescreens, make more money investing, take their future into their own hands and secure a better life for themselves and their loved ones. Please read on if you are ready to take a big step into a larger world…


The Great American Renaissance

The Sea of Misinformation
Before we can understand what is really happening in the economy, we have to first look at who is providing us with information, why they are doing so and how we are interpreting it. The first thing to own up to and accept is that you have evolved and been bred to believe gurus on television, government reports, ‘reputable’ analysts and so forth. Receiving and processing this sort of information is a lot closer to religion than it is to science. We humans are herd animals. We spend a good part of our time in a semi-hypnotic state, running on the endorphins that make us feel so wonderful, when we become a part of the herd. But now, sitting alone and reading this report, you are the thinking, insightful individual that makes up the other part of all of our natures. We have all inherited the HERD INSTINCT BIAS—also constantly duplicated in college labs across America—which leads us to blindly believe what some authority figure tells us. But if they are telling the same thing to millions of us at the same time, how can any one of us possibly believe he has an edge? On Wall Street, if you know what everyone else knows, YOU KNOW NOTHING. Think about this… In a recent survey, more than 70% of male college students rated themselves as more handsome than average. Similarly, almost everyone thinks they’re a good driver or that they have a good sense of humor. Yet, you meet far more people who bore you to death than make you smile and you fear for your safety because of reckless drivers far more than they make you feel at ease behind the wheel.


The Great American Renaissance

The happy result—happy for the purveyors, at least—is that we all think we will be THE ONE who is able to make the money while everyone else misses the boat. Here’s an example of the kind of disinformation that costs you and your fellow investors money every business day. You see, the financial ‘experts’ out there, especially the economists love to come to conclusions by averaging numbers out. You see it all the time. It doesn’t matter if it’s the GDP, unemployment numbers or what have you. A data set gets released and everyone acts like it’s a big deal, when in reality this ‘crucial’ information is a little more than window dressing. Just think about it practically… When you take dissimilar things and average them you will get inaccurate information. For example, if you live in North and South Dakota and you’re seeing booming growth from energy exploration and an unemployment rate below 2% you do not live in the same environment as someone in Illinois or Michigan who is facing rotting infrastructure and real unemployment closer to 20% or even as high as 30%. So when the unemployment numbers come out and you see 7, 8 or 9% unemployment, that data is really telling you absolutely nothing about your situation or the investment opportunities that are available you. Think of it another way, let’s say you’re a doctor and you have a 400-pound patient and a 100-pound anorexic patient. Imagine treating them both as if they were a 225-pound guy. So, same doses of prescriptions, same dietary plan, same everything. What do you think would happen? Well, you would probably kill both patients, because you tried to generalize and make something complex easier. In reality, you just created a disaster.
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And that brings us to the real big ‘secret’ that is really obvious but manages to stay hidden in plain sight: Successful investing does not lend it self to averaging. Averages make human beings feel comfortable, but what they really do is make us misinformed. Nowhere is this truer than in financial markets. That is the big secret that they don’t want you to know about. In the example above, one patient needs a radical diet and surgery, while the other one needs appetite stimulation and deep therapy. They cannot be treated as an average. And so when you get the unemployment numbers and you see 8%, it’s not reflective of the economy as a whole. For example, the unemployment rate among MBAs is under 2%. Among college graduates, that number is below 4%. Companies report their inability to fill such high-skill modern jobs, such as help-desk operators and automation technicians. In fact, in the new shale oil and gas producing regions, truck delivery drivers are earning salaries in excess of $100,000 a year! In fact, large chunks of the United States are growing at a faster rate annually than so-called ‘emerging markets’ or ‘developing economies.’ This by the way is why you’re absolutely right to be skeptical of government reported data. It’s not false, it’s just wildly misleading. This is why the GDP is probably the most useless number, yet government and business policies are set by it, investment decisions are made according to it, and you hear it mentioned by just about every so-called expert. Let’s be clear, it’s not that these guys and gals are dumb. It’s that the analysts in the know aren’t about to give up the secret sauce for free.


The Great American Renaissance

The cold hard truth is that you are either a player or a fan. If you have skin in the game, you will learn what it takes to score. If you are relegated to watching the game from the sidelines, then faulty logic won’t hurt you… If you’re ready to be a player and do some serious scoring, let’s get to squashing some huge misconceptions about hot-button financial and economic issues in the United States today:

Every morning I wake up and sit on the beach in Miami. The view really is beautiful, but as usual, I see something different. Yes, the ocean is gorgeous, the climate is perfect, the place is a tourist magnet and all the beautiful people are here, but there’s something else happening. Right now, one of the big things happening with regards to American industry is the widening of the Panama Canal. Widening the Panama Canal is a big project, but the impact will be enormous, as it allows much bigger ships to come easily to the eastern shore of the United States. These ships will have no other alternative than to come in through the Port of Miami. As a result, Miami is going to double in population, size and wealth over the coming decade. This growth and expansion is going to be very rapid and its beginnings are going on completely ignored. The enlarged canal will attract much larger ships, much more products, and we’ll be able to distribute them much faster. So, now we’ll be building new freeways and warehouses to move and store various goods more efficiently. There’s already an impressive new tunnel being built under the bay, so that stuff can come in, be unloaded, reloaded on trucks or stored without disturbing the beauty of our metropolitan area.
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Prodigious amounts of new merchandise will be easily transported to the outskirts of town to the warehouses and the massive new infrastructure that supports all that commerce. All of this means one thing...PROFIT that we’ve never had before and that no one is yet counting on. That’s just one example of what’s happening in manufacturing, distribution and storage in just one American city!!! Think about the effect this will have on the issuance, popularity and reliability of Miami’s municipal bonds in coming years. They will be an amazingly worthwhile and safe investment. You’ll be getting junk bond yields with a risk level comparable to TIPS. That’s almost unheard of. Obviously, this is a huge, huge story…so why have most people heard absolutely nothing about it? The funny thing is, there are dozens of such examples all over the country and they are being largely and actively ignored. The best part is that we don’t even have to worry about how to pay for it. Investors are already lining up to get their piece of the action, not to mention the fact that China (which according to the gloom-and-doom crowd is going to own America pretty soon) will be footing the bill or the majority of it, at least. Newsflash fantasy fans: China can’t collect on U.S. Treasuries if they were to default, which they literally cannot, as I will explain in a bit… This is a valuable point to understand and I will get deeper into this issue and how to profit from it in future reports. But for the moment, let’s stick with manufacturing. Much of the aforementioned Panama Canal project is being funded by China vis-à-vis their hunger for an important place in the commerce of the Western Hemisphere combined with their insatiable appetite for U.S. government debt.


The Great American Renaissance

The increased trade and its impact on the Atlantic coast is only the beginning of this crucial story. Now, let’s move our attention to the middle of the country, where business is booming. The economics have shifted dramatically so that we’re now the best place in the world to locate a factory. And since we are the world’s leading manufacturer, supplier and user of robotics, these factories will all be built using state of the art technology allowing said factories to be located near sources of the world’s most inexpensive electricity, generated by the world’s most inexpensive and plentiful supply of natural gas. Please re-read this paragraph again. Think about the interplay…best location, best prices, best resources, best technology. There’s not even the potential for a losing situation. It’s win-win-win, all around. With the factory’s work being done mostly by twenty-first century robotics and automation it now takes only a few people to keep it running—they’re a little bit more sophisticated people in terms of training. But the work is done by robots who don’t have unions, don’t need health insurance, don’t get tired or fatigued, work 24 hours a day, and never make the same mistake twice as soon as you re-program them. Since the U.S. continues to be the planet’s most lucrative market, these new factories eliminate the need for expensive containerized shipping, which has added weeks to the supply chain, and at the same time eliminating the need to bring merchandise in through the solidly unionized Port of Long Beach California.


The Great American Renaissance

With all these new advantages, no alternative even comes close to matching the U.S. as the new most economical place to locate just about any kind of factory, which brings us to a key point. This may be the most important thing you’ll learn in this report, so read on carefully and trust facts, not the puppet-master prose you’re force-fed by the financial media. The disappearing of certain jobs is not a sign of stagnation or failure, but actually a sign of progress, in this case. Yes, I just said it and I’ll repeat it once more: In this particular case, the loss of manufacturing jobs is a sign of economic progress and is extremely beneficial to the economy as a whole. Sewing machines replaced the tailor, just like mobile telephony is slowly doing to the home personal computer. Rapid technological progress always hurts those who are slow to adapt and though this is hard for some folks to swallow, it’s an undeniable fact of life and it is manipulated daily by those who control the flow of information. You are not guaranteed your father’s or your mother’s job, but I can say confidently that none of our parents ever confronted the massive global opportunity before us right now. So, when we take into account the expansion of advanced robotics, the fact that Chinese Yuan are actually funding a lot of this growth and the fact that many American companies are now relocating many of their factories back to the U.S. You see an entirely different picture from the tired, old, defeatist attitude of “American jobs are going overseas and are lost forever.” The reality is that American manufacturing is light years ahead of the competition and entering a new generation of economic growth and dominance which will lead to massive prosperity for all those involved, whether by working or investing in this industry.
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Energy Explosion
I don’t like to include politics in investment discussions, for the most part. It is worth it to mention, however, that the current administration’s obsession with ‘clean’ energy has a lot to do with the current state of ignorance regarding energy. Let me clear the air… If you didn’t know already, you should be aware that by the year 2020, the United States will have become the world’s top exporter of hydrocarbons—in other words, oil and gas. This will put as ahead of Russia and even Saudi Arabia. The impact this will have on global politics, economics and overall living standards will be enormous—immeasurable, in fact. And mind you, these are extremely conservative estimates. Many experts believe that this power shift will occur as early as 2016. Just the Bakken fields of North Dakota have gone from producing next-to-nothing to nearly 600,000 barrels per day between 2005 and 2012. If the long-debated ANWAR region of Alaska were to be drilled, the U.S. would reach potential extraction capacities that beat Saudi Arabia’s (currently, the biggest in the world) reserves. This, of course, is possible thanks to rapid advancements in hydraulic fracking, which now allows us to access oil and gas in places we couldn’t before and extract it much more cheaply, cleanly and efficiently. Since natural gas can be easily transported in its liquefied form (a.k.a. LNG), the costs of export and ease of shipment will only more quickly cement American dominance of this market. There is, in fact, so much to write and talk about on the subject of energy that I really have to be careful or else this report will turn into a textbook! For the purposes of this report, however, I’m more interested in helping you see how all of the good news ties together.
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For instance, energy and manufacturing are not the same thing, per se. They do connect on a great many levels, though. More energy exploration begets better drilling equipment, storage facilities and transport routes, which are all in turn tied to robotics and greater efficiency, but also create more ancillary employment in fields such as engineering, drilling, erection, railroads, pipeline construction, plain old trucking and even manual labor. This new prosperity in different parts of the country is also leading to construction of new homes, apartments and strip malls in new places we never guessed would attract the growth we are already seeing today. Now, even though a trucker (most of them make well over $100,000/year) or a guy working on an oil rig (entry level jobs in the Bakken area are fetching high-five to low-six figure salaries) are not what most would consider ‘manufacturing employees’ their employment and strong compensation have a lot to do with the sector. What about investments? Well, there have never been more opportunities. From the technology experts like National Oilwell Varco (NYSE: NOV), to the companies creating what the newly redeemed consumer wants, like Ford (NYSE: F), you can be in the first wave of beneficiaries of this new prosperity and you can start profiting right away. The minute you put your fear on the back burner and start looking at the forest instead of focusing on the trees. Do you see how it works when you look at it properly? U.S. infrastructure is built out, paid for by in large part by bonds bought by those same Chinese who were actually eating our lunch just a few short years ago. Now we’re attracting new investors, not only Americans but investors from all over the world. In fact, the Chinese government is now putting reforms in place that actually allow the Chinese private citizens who became so wealthy during their infrastructure build-out boom, to invest in U.S. Treasuries, as well as corporate and bonds based on municipal revenues. These Chinese investors were previously so restricted that they had no choice but to hide their wealth in gold and silver.


The Great American Renaissance

Much of the cratering in the prices of gold and silver can be traced back directly to the fact that these investors can now invest in the U.S. The results are becoming more evident and undeniable everyday. We are also seeing expanding commerce in both urban and rural settings, while this surprising, but welcome activity is boosting a whole host of complimentary industries. It all fits like a perfect jigsaw puzzle, yet you are still hearing the same scare tactics from financial television, radio, internet and print outlets... This is exactly why you’re seeing the gold and silver coin crowd going nuts and pumping their ‘death of the dollar’ delusion. That’s fine, let them bang the fear drums and try to get you to pay for their ignorance of buying gold and silver as they hit record highs. If you’re starting to get the feeling you’ve are being lied to…trust your feelings!

Real Estate/Housing
The only thing you really need to understand about housing and real estate is that old saying, “once bitten, twice shy.” There are very few Americans who were not negatively impacted (either directly or indirectly) by the bursting of the housing bubble and so for that reason, most of us are hesitant to be bullish on this sector.


The Great American Renaissance

But once again, facts quell fear. The only real question is whether you’ll begin to accept facts or imitate an ostrich, stick your head in the sand and ignore what you don’t see. First of all, here are today’s numbers, clear as day. Then we’ll get into some deeper analysis: Now, that we have the facts, let’s get a little deeper understanding. It’s all about supply and demand, right? Someone has something that someone else wants, they agree on a price and there you have it: commerce. But what about situations where demand is not simply a matter of ‘want’, but really a matter of ‘need’? You see, since the end of World War 2, American new home starts have averaged approximately 1.5 million units per year. That’s where the numbers have stayed, more or less, for the past seventy years. During America’s only other serious post-World War 2 economic struggle (the stagflationary late-70’s) that number dropped to around 1.2 million for a while, but quickly bounced back in the robust economic era of Ronald Reagan. After the 2008 real estate bubble popped, however, that number plummeted down to a surreal 500,000 new starts per year! That kind of shortage would have been impossible to imagine only a couple of years before, but easy financing had led us to build more homes and offices and strip malls than we needed. Then for a while, it appeared we’d never use up the excess inventory, but that is because we aren’t always conscious of the growth. The new families of a new generation, the immigrants coming from all over the world and becoming established here, and the mobility of our people, moving around from one region to another seeking better lives. Here’s another interesting tidbit to support the previous paragraph.
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Back in 1989, America’s population numbered around 245 million people, today, not even a quarter-century later, we’re approaching the 320 million person mark. I choose to use 1989 as my starting point because that’s when the Berlin Wall fell. Between countries like the USSR, Poland, the former Czechoslovakia, the former Yugoslavia, Romania, Bulgaria, Lithuania and the Ukraine, among others, hundreds of millions of people were now free to emigrate to the U.S. and many of the best and the brightest, actually did. These are the people washing your windows, driving your cabs and fixing your pipes over the past few decades. And guess what? While many of us we’re overleveraging ourselves to buy speculative property, they were pinching every penny. This is all without mentioning Chinese and Indian immigrants who also escaped oppressive collectivist regimes to build a better life in America and transform themselves into the burgeoning upper-middle clas. The majority of that population growth came as a result of these smart, capable, hard working people moving to the United States, working hard, saving money, just like prior generations of Irish, Italians, Jews, Dutch, English and Germans had before them. So, when we actually stop to think about what is happening behind the sensationalist headlines the truth starts to come to light and it contradicts just about everything they want you to believe. As a result, and not the least bit surprisingly, the number of new home starts bounced back to about 750,000 last year and we’re clearly back on the path to normalcy. This is not due to some bullish sentiment of mine, but simple mandatory demand. More people are taking advantage of the American dream than ever before and because they were patient, diligent and thoughtful they are now snapping up bargains for themselves, while simultaneously boosting the economy.


The Great American Renaissance

Over the next decade, the U.S. will have to average 1.6 million new home starts a year just to keep up with the mandatory demand. When I say ‘mandatory’ I mean that if this number is not met we will literally have people living in the streets. There’s also a huge market factor and if you live in a large U.S. city or close to one you’ll know what it is before I mention it… Rental rates! Rental occupancy and new housing starts have an inverse relationship. As one goes up, the other goes down. It makes perfect sense. So while everyone’s been squawking about the housing bubble and how much wealth was lost, what about the landlords? There has NEVER been a better time to be a landlord than the past five years. The savers who bought all those bank owned foreclosures and turned them into functional rental dwellings got to charge more for them than ever before. Rents in large urban environments where jobs are available, have skyrocketed. Regardless of whether you think owning your home is risky or not, if you live near a large city and you have the choice of paying $3,000/month rent for a two-bedroom apartment versus paying $1,800/month mortgage a half-hour’s drive outside of the city…the choice is pretty much making itself for you. You will be buying a house. Again, this is all without considering the mandatory demand of 1.6 million new home starts per year over the next decade. And here is where all the politicians, pundits, talking heads and inept gurus all stumble and here is what they fail to realize… There really is no such thing as poverty in this country. Feel free to roll your eyes and make fun, but it’s true.


The Great American Renaissance

Start with the fact that, contrary to what you are hearing from the inflammatory, agenda based, news media family, wealth has never been greater, while inflation has

seldom been lower, as you can see from the graphic below. Beyond the simple truth that families have more money now than ever before, it is also true that what we have in America, does not exist anywhere else in the world. We have a constant growth and advancement cycle. It doesn’t always move at a rapid rate, and sometimes it occurs in fits and starts, but it is always moving because we have always had the capacity to adjust to changing conditions. What’s essentially happening now is that we’re starting all over again from the 60s with a whole new generation of people going through the process. Let’s say that you were a poor immigrant in 1960… You were at the bottom of the ladder, but you worked hard and climbed slowly rung-by-rung… By the 1980’s you became middle-class and today, you own three houses, five cars and a boat. This is why the fall of the Berlin Wall is so important, along with Tiananmen Square and other events that brought a new generation of immigrants to America over the last two decades.


The Great American Renaissance

The problem is that this all happens over time, so we get fooled into this sort of logic: “Well, the new changes are unfairly benefitting the rich, and the poor are not getting better, but the rich are getting better, and the rich—everything’s for the rich.” A look at the recent stock prices above is probably more useful than thousands of words of argument. Here we compare the performance of three companies: Ford (NYSE:F), Restoration Hardware (NYSE:RH), a company that successfully sells home improvement accessories all over the U.S., and Tiffany’s (NYSE:TIF). Notice the stocks of Ford and Restoration Hardware are showing the boom they are experiencing, but compared to their success Tiffany’s, the jeweler to the rich, is just standing still. No one could think that ‘The Rockefellers’ are shopping at Restoration Hardware or driving Fords—not even the newly prosperous Clintons or Obamas. The action is clearly going on within the middle class. But there is so much more to this story, as well…


The Great American Renaissance

The mistakes these irate-but-mistaken observers are making is that they count it as though there was one guy who was poor and one guy who was rich. Actually, 10 or 20 years ago, the people who were poor are now the rich that they’re counting. You see, the people who came in and got their jobs 10 or 15 years ago are not the same people who are the people who are the lower class now. Those people have moved up. They were cutting the grass. Now they own the landscaping company, and they’re hiring the nephew of their brother-in-law who’s coming in from abroad. They’re the businessmen who are now buying the $450,000 house, because we have upward social mobility that the statisticians ignore. It’s not the rich getting richer and the poor getting poorer. That is political pandering and not the truth. The real truth is that over time it is the poor getting rich and new beginners coming in to replace them. 10 years from now, they’re going to be in the middle class, and the middle class is going to be the upper class, and their kids will be going to Harvard. The alarmists have conveniently forgotten about social mobility. When they report on this issue, they’re reporting on it as though it’s one guy who’s poor and one guy who’s rich, but it’s just not that way at all. I was born in the Projects of New York City in 1945 and now I’m sitting on the beach in Miami living my dreams. And having traveled the world, I can tell you beyond a shadow of a doubt this story could not have taken place in most (if not all) other places on earth. That’s why the human element is so crucial to all of this. As a nation, America is in sort of a Mike Tyson moment. Mike Tyson if you’ll recall, was the most dominant young heavyweight boxer in history. He literally mopped the floor with all competition.


The Great American Renaissance

As a twenty-year old machine, he’d walk in the ring, stare down his frozen pray of an opponent and dispatch of him with thunderous right and left hooks within a minute or two of the opening bell. Then one day, he fought a journeyman named James “Buster” Douglas and got knocked out. Mike Tyson was never the same as a boxer or a person. He went from terrorizing opponents in the ring, to a conviction for rape, years of drug and self-abuse, not to mention the infamous Evander Holyfield incident and numerous bizarre comments and activities. Nobody was afraid of him like they once were and most importantly…his confidence was shattered. You see, Mike Tyson never got hit hard before that fight and he never regained his confidence in the boxing ring after it. Most of you know the rest of the story… See, as Americans were not really used to taking a beating. Actually, just like Mike Tyson before Buster Douglas, most of us have never taken a really hard punch. We are used to winning. We are not used to losing. We always get the girl, kill the bad guys and save the world. But this time…we didn’t. The real estate bubble popping was a lot like Buster Douglas knocking out Mike Tyson and THAT is the real reason people don’t see the truth about real estate and housing today. In fact, we can apply this logic and concept to all the unwarranted bearish financial perspectives out there today. People were used to the lie that stocks were risk-free, people were used to the lie that real estate would always go up in value, people were used to the lie that Mike Tyson couldn’t be beat. Remember, the majority of Americans alive today did not live through The Great Depression and they didn’t fight in World War 2, Korea or Vietnam.


The Great American Renaissance

In other words, very few of us were ready to experience things on our skin, that we were only used to seeing in the movies. We got fat while the rest of the world starved and now many of us are fearful and hesitant about where our next meal will come from. It’s not that anyone really believes that “China will swallow us whole.” It’s that we all subconsciously realize that our Chinese (insert any recently/currently poor country here) counterparts are hungrier and willing to work harder than we are. That makes us nervous. It all comes from not being used to taking a beating and knowing that our economic competitors can handle more suffering than we can. Well, the good news is…we’ve taken a beating and we’re still here. From this point forward, the only thing that can hold us back is irrational fear and cowardice. One of the most profitable investments of the past year was the SPDR S&P Homebuilders ETF (NYSEARCA: XHB) and now while that great performer is resting up a bit, Restoration Hardware has taken over the lead. Even though this report is not about stock picks, I figured mentioning that one will give you a chance to test whether you agree with me or not in practice, rather than theory.

The United States Dollar
A thousand years from now, when some economic historian looks back on things, chances are that he or she will view a (by then ancient) $1 bill as more impressive and majestic than a 24-karat diamond… The reason for this is that no unit of currency in history has ever brought so much prosperity or symbolized it better than the $USD. It’s just that, well…we’re still in Mike Tyson mode. We’re reeling from a severe blow and looking for fear-based excuses as to why our allbut-invincible currency is not all its cracked up to be.


The Great American Renaissance

Let’s get a couple of misconceptions out of the way about currencies first: I like the Austrian School of Economics. Hayek is a wonderful read and explains economics beautifully. But fiat currency is not a bad thing. In fact, it is absolutely mandatory to maintain the health and functionality of any growing economic system. I know that many of you guys have been coached to believe otherwise and yes, I too would like to see a lot more fiscal responsibility out of Washington, but that does not mean that fiat currencies are somehow inferior to precious metals. It’s quite the opposite, in fact. Gold and silver have proven to be both, extremely bad investments and extremely bad currency substitutes over the vast majority of financial market history. In fact, if you were to cross-reference all those people who are bearish on the U.S. economy with all those holding mass amounts of gold and silver contracts and/or bullion you’d probably get a perfect match. All those gold bugs are now in the middle of a really, really rude awakening that’s coming full-speed and if you’ve been around as long as I have, it’s really no surprise. Precious metals have always alternated between boom and bust periods, first rising in value dramatically in response to a loss of confidence in a given economy and then declining in value just as dramatically, if not more, when confidence returns. In between, they stay dormant for decades at a time. It appears we are just now re-entering a period when American society is beginning to fall in love with producing value rather than hiding value in assets. The reason we absolutely have to print money is because without the dollar the global economic engine shuts down. It’s that simple, whether you like it or not.


The Great American Renaissance

The reality that so many herd investors ignore is that we actually need MORE dollars in print, not less, and the simple evidence is that the value of the dollar is stable and rising and that the value of gold and other hard assets is in steep decline. This is the reality of volume and we’ll get into that in just a bit… But the key thing to realize is that in reality it’s the opposite of what all the gloom and doom bears are telling you. China doesn’t own us. We own China! OPEC doesn’t own us. We own OPEC! Just look at the indisputable evidence… Obviously, the game changers are energy and good old American innovation! We had all of this money that was being sent outside of the United States, as we had to buy oil from people who hated us and wanted to charge as much as they could for it. We also saw production moving offshore in search of cheaper labor. For a little while, control of the story passed to a bunch of people who were Luddites. That is, people who didn’t want to allow any progress because they thought all progress was their enemy. Now, these same people are realizing that’s not the case, but they’re still apprehensive and reluctant to believe technological progress can actually improve our living conditions and our wealth. In other words, they are ignoring a concept that has been proven to be true throughout human economic history. Technology makes our lives easier, not harder and for intelligent investors, better technology always leads to more money. So, now we’re producing energy at home; we’re the biggest producer of natural gas, and we’re on the way to becoming the biggest producer and exporter of oil, as well.


The Great American Renaissance

At the same time, our advances in automation and robotics are combining with our unparalleled legal system, economic and political stability, and one of the most comfortable lifestyles on the planet, to make us the preferred place to locate a new production facility. The difference is that instead of money leaving the country, we don’t have to buy anything from anybody anymore and that makes both our currency and economic position near impermeable. But once you remove that, what you are left with is the fact that everybody in the world needs dollars to conduct business and really, without the dollar all global commerce would halt and the planet would fall into an abysmal economic depression. Just use common sense… If you are looking to invest somewhere, if you are going to do business and you want to have a storehouse of value, there is only one country in the world that can defend its borders and that’s America. Why does that matter? Because if you put your money into a bank you could easily experience what the Russians did when put their money into Cyprus. Well, what about if the Russians got mad at the Poles again? What happens if the Iranians overrun Saudi Arabia? What happens if the Chinese decide to take back Taiwan? Rest assured that anyone who has lots of money in banks across the globe, has much of it, if not most of it, in American banks. I guarantee you that the richest people on earth have gigantic bank accounts in the United States and they’re not only counting on Swiss neutrality because when things actually do get chaotic, not every rogue nation cares about neutrality. That’s the biggest competitive advantage of the dollar. America is an island in the middle of two oceans and the single most dominant military force in human history.


The Great American Renaissance

If you think that doesn’t matter to billionaires everywhere in the world, you’re crazy. And if you really believe in the tired old “rich-richer, poor-poorer” theory, why wouldn’t you be copying the billionaires and doing what they are doing? This is why, even throughout all the turmoil, buying U.S. Treasuries is known as ‘flight to quality.’ It is really more like ‘flight to food, safety and shelter.’ I know that you can’t just go into a bank anymore and buy a CD yielding 8%, that doesn’t mean that the dollar is weak or in danger of disappearing. Which brings me back to gold because there just isn’t enough of it to work as the world’s reserve currency, and it is grossly difficult to handle. In order for financial markets and banking systems to be based on gold and function in today’s day and age would require King Midas to hop out of a book and touch every corner of the globe. All jokes aside, maybe if the world goes to hell you can use gold coins to buy a can of soup. But gold will never be an institutional financial instrument and anyone selling you stories about $5,000/oz. or $10,000/oz. gold also probably has plenty of waterfront real estate to sell you at the bottom of the Grand Canyon. The funniest thing about the misconceptions surrounding gold is that gold isn’t a hedge for inflation, but the original reason for it. Whether you want to go all the way back to pharaohs shaving gold coins or just the fact that a gold standard would cause immediate and profound deflation because there wouldn’t be enough currency to allow the proper flow of commerce…gold is simply not the safety net that people trumpet it to be. The dollar is the real safety net and American-style free market commerce and inventiveness are the lifeblood of the global economic engine. So, in spite of suffering its own ‘gut-shot’ the dollar has been rejuvenated as the true coin of the realm.


The Great American Renaissance

What amazes me is just how easy all this is to verify, and yet, how easy people are to fool when false prophets get to plying their trade. See the chart below and you will immediately be able to see how gold, here represented by one of the world’s most successful and profitable gold mines, Newmont Mining (NYSE:NEM), simply moves up and down over time. On a round trip to nowhere, while truly productive American (now global) companies continue to make the people around them rich. I could have chosen any one of thousands of companies to demonstrate this idea, but I picked a couple of the simple ones that we all take for granted. Namely, I’m talking about MacDonald’s (NYSE: MCD) and household consumer products maker Colgate Palmolive (NYSE: CL). They don’t get the ink, they just keep on producing WEALTH! I never cease to be amused when I think of my friends writing best-selling Investment Books X, Y, and Z for Dummies. My last book was published by Wylie and I don’t at all blame the publisher or the very smart authors for it not becoming a best-seller, but I do wonder about people sometimes… I constantly think about how well investing intelligently pays off—on a scale with brain surgery and pro sports.


The Great American Renaissance

I wonder whether people would want to fly over the Atlantic Ocean on a plane made by people who got their training from the AIRPLANE CONSTRUCTION FOR DUMMIES book, or who want an operation done by the guy who read GALLBLADDER REMOVAL FOR DUMMIES. I wonder if it might actually be worthwhile for such people to think sometimes. I’ve tried it and I actually like it! Not to mention it pays off very handsomely…

Conclusion: The Way Forward
Sex sells and so does fear. That’s just the way it is. Public opinion has always been shaped by salespeople. That’s never going to change. Politicians, pundits, celebrities, they are all salespeople pitching their products. When it comes to the economy, a great many people have made a great deal of money selling fear. The entire financial industry has gotten from overleveraged topsy-turvy to ultra-risk averse and just hoping not to lose. I can understand that and if you can’t get over your fears and face how bright the future is, I sympathize with you. At the same time, I can’t ignore the fact that, not only are things looking up, they are better than they have been in a very long time. I was born on VJ Day, August 15th, 1945. I began my life in finance as one of the only two boys who were allowed on the floor of The New York Stock Exchange in the late 1950’s. In over sixty years, I have NEVER seen such a bright investment perspective for a developed nation.
27 The Great American Renaissance

Yes, you can probably make more money investing in emerging markets over the next decade, IF you are ridiculously well-connected, obscenely intelligent and in many cases, willing to grease the wheels of progress with dollar bills. That, however, is not the point… The point is that as Americans we are entering an era in which billions of people around the world are joining the global middle class and we are the only nation of people perfectly position to benefit from intelligent investing. You should not be afraid about what’s to come, you should be excited instead. My goal in writing this report was not to convince anyone of anything. The truth is obvious. Whether you want to face it is completely up to you. In the case that you do want to embrace the light over the dark and focus on profits instead of dime store prophecies, I am happy to help you along the way. The Great American Renaissance has arrived, it’s up to you whether you want to join the beauty and prosperity or stick it out in The Dark Ages…

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The Great American Renaissance


The Great American Renaissance