- How virtual reality has real-world political and economic implications
- Consumer credit increases in February, adding more fuel to two combustible markets
- A “win-win” way to own gold that’s far off the radar screens of most investors
- Tax Freedom Day… when does it come for you? (We hope you’re not in Connecticut)
- A government frame job… can the federal government legally tax you?… the tax implications of leap year… and more!
Virtual reality promises far more than neat games and boatloads of fun.
It could take one giant step further to eliminating the “tyranny of distance.” Why travel thousands of miles for a meeting or conference when you can go there in virtual reality?
Jeremy Bailenson, head of the Virtual Human Interaction Lab at Stanford University, describes a “transformed social interaction,” in which virtual meetings will be just as good as the real McCoy.
“Dr. Bailenson’s work… promises a future in which our avatars always show up to (virtual) work perfectly attired, even when we’re stuck at home in our jammies. To increase engagement, everyone in our meetings will feel like the speaker is making direct eye contact with him or her. Our avatars will also automatically mimic one another, to increase accord, and any accidental or inappropriate gestures will be automatically filtered out,” says Chris Mims at The Wall Street Journal.
And as writer Reihan Salam explains, virtual reality can even change the way we think about immigration.
“In the years to come, [virtual reality] may well transform our immigration debate,” he writes in a Slate article.
Virtual reality could allow skilled immigrant workers to perform work for Americans without the U.S. having to import that labor. And that would remove a burden from the public sector.
“What if VR allows consumers in affluent countries to enjoy all of the benefits associated with a low-wage immigrant workforce while freeing them from bearing the costs associated with providing immigrant workers and their families with Medicaid, SNAP [food subsidies] and the earned-income tax credit?” Salam asks.
Meanwhile, it would benefit foreign workers who could earn higher wages working through VR while living in low-cost countries.
“What if it were possible to earn in a rich country, where the costs of housing and medical care and other necessities tend to be quite high, while spending in a poor one, where these costs tend to be far lower?… VR technology could greatly increase opportunities for people, including those who live in the world’s poorest countries, to engage in this kind of geographical arbitrage.”
What if, indeed…
“This is the year VR will become commonplace everywhere,” says CEO Nicolas Burtey of VR firm VideoStitch. The industry could also be looking at 81,000% growth over the next several years.
To learn more about the virtual reality revolution and how to get in on its mind-blowing profit potential, click here.
Off to the markets…
Stocks are rebounding a bit after yesterday’s swoon. No doubt because Janet Yellen assured the world that stocks aren’t in a bubble. Or perhaps it’s because oil is trading higher again.
Oil’s up 6.5% today, ticking in just a shade under $40. And the Dow’s up about 60 points. The S&P’s up 8, and the Nasdaq’s a few points in the green. That’s in keeping with the overall pattern we’ve seen so far this year. Oil and stocks have generally moved in sympathy.
Meanwhile, gold’s up five bucks, to $1,242. And the mighty dollar has picked up ground against the yen, which has been surging for the past five days.
Consumer credit in the U.S. increased more than expected in the month of February, according to data released yesterday by the Federal Reserve.
Consumer credit increased 5.8%, or $17.2 billion, across the fruited plain in February. A survey of economists had forecast only a $14 billion increase.
So-called nonrevolving credit, which includes student and automobile loans, was responsible for $14.3 billion of the increase.
Together, car and education loans have contributed a whopping 90% of the growth in consumer debt since the end of 2012.
MarketWatch says pent-up demand for new automobiles and the need to increase educational credentials are the reasons.
Yeah. Would it be impolitic to point out that auto and student loans follow the same script that resulted in the mortgage crisis of 2008?
The federal government massively subsidizes college education, just like it subsidizes housing.
Not surprisingly, as with everything else the government subsidizes, tuition costs have exploded. And many students who’ve taken on vast amounts of student debt face difficulty paying it off, much like questionable “homeowners” faced trouble making their subprime adjustable-rate mortgage payments leading up to 2008.
Outstanding student debt has nearly to tripled, to $1.3 trillion, over the past decade. And The Wall Street Journal reported Wednesday that 43% of borrowers aren’t even making loan payments. (Starbucks only pays so much, ya know.)
As economist Carlo Salerno explains, per the WSJ, “The government imposes virtually no credit checks on borrowers, requires no cosigners and doesn’t screen people for their preparedness for college-level course work.”
It’s a toxic brew with toxic consequences. Tuition payments are rising, and many college graduates can’t find remunerative work to pay down the loans, which in turn increases the rate of student loan defaults. When enough loans default, you’ve got another crisis.
Some things never change.
Then there’s the auto loan bubble.
With the Federal Reserve’s absurdly low interest rates, financial institutions have sought returns wherever they can be found. And bundling car loans was the answer. Bundling loans… sound familiar?
You know how bundling mortgage-backed securities (MBS) resulted in the housing crisis of 2008. Well, auto asset-backed securities (ABS) are securitized bundles of car loans, much like the aforesaid MBS. And they’ve fueled the auto debt boom.
Financial institutions have been maximizing returns by bundling an increasing percentage of subprime loans with the safer, but less lucrative prime loans, a la pre-2008.
The auto loan boom reached $1.04 trillion by the end of last year. And auto loans are now defaulting at rates not seen since the 2008 crisis. Delinquencies are at their highest rate since February 2010.
“What is happening in this space today reminds me of what happened in mortgage-backed securities in the run-up to the crisis,” U.S. Comptroller of the Currency Thomas Curry said a few months ago about the growing auto loan bubble.
Will an auto loan crisis approach the scale of the housing crisis? Nah. But it would sure as sugar knock the pins out beneath the car industry, one of the few supposed bright spots in this rickety economy. Not to mention its effect on the stock market.
And if you combine a bursting auto loan bubble with a busting student loan bubble, well…
Jim Rickards has made the convincing case that this is the ideal time to own gold. But there might be an even better way to do it.
Tres Knippa is the newest member of Jim’s crackerjack Strategic Intelligence team. And Tres has pinpointed an alternative strategy to buy gold that could really pay off. You might not want to buy gold in dollars, says he. Buy it in yen instead...
Japan is printing money at such a gait it’s probably raising eyebrows in Zimbabwe. And it’ll likely increase as the Japanese economy flirts with another recession. The yen has increased against the dollar recently. But if Japan continues printing yen, the value of the yen should sink, and probably by a lot. And as the yen becomes less and less valuable, the price of gold — in yen — will go higher and higher.
“You might have bought gold with dollars because you’re worried about the future of the dollar. There’s a case for that. But Japan is much further down the road to ruining the yen than the U.S. is to ruining the U.S. dollar. It stands to reason that it’s going to be much more profitable for you to own gold denominated in yen,” says Tres.
Buying gold with yen puts you in the strongest position to profit. “If gold goes up, you profit. If yen goes down, you profit. And both outcomes are very likely” Tres adds.
What’s that, you don’t have any yen lying around with which to buy your gold?
Worry not. Tres has the solution.
You can learn all about it when you order Jim Rickards’ latest book, The New Case for Gold. It hit bookstores earlier this week. But if you order through us at a special discount, you also receive a free 30-day trial subscription to Jim’s hard-hitting newsletter Strategic Intelligence. That’s where you’ll find Tres’ unique gold play that could dramatically juice your gains.
Click here now to order Jim’s book and receive your free 30-day trial to Strategic Intelligence.
When do you get to celebrate Tax Freedom Day?
Yesterday, we announced that Tax Freedom Day was only 17 days away for the average American. That’s when the nation as a whole has earned enough money to pay its total tax bill for the year, according to the Tax Foundation.
In grim reminder, local, state and federal taxes exceed what the average American will pay this year for food, clothing and shelter.
But there’s an above-average chance you’re not the average American. And your personal Tax Freedom Day varies, depending on the state in which you swear off your taxes.
National Tax Freedom Day is April 24. But if you live in any of 11 states and D.C., you’re going to have to wait…
Tough darts if you live in Connecticut. You’ve got to wait until May 21, almost an extra month. On the flip slide, Mississippi was liberated this Tuesday.
Suddenly, the tune “Dixie” sounds a lot more melodious to our tax-ridden ears.
We know governments everywhere are desperate for money, but this is getting ridiculous.
An English bloke parked his car in front of his South London home last week, as he’d done countless times before.
But when he stepped out to go to work the next day, he was in for quite the surprise…
There was a 110-pound ticket plastered to his windshield, which works out to $155. But that was only the half of it. Get this: The local authorities had painted lines around his car the night before, marking it off as a handicapped space.
Now there’s some constabulary enterprise! If someone parks in a legal spot, just make it illegal.
The gentleman’s wife called the town council to complain, but was “pushed from pillar to post.” No apology or admission of wrongdoing. It consoles us to reflect that British bureaucrats can be every bit as arctic as the American species (though in all honesty, we’d prefer to be ignored in an English accent).
The spot was likely for a neighbor who’d requested a handicapped space for her disabled husband over two years ago. Well, better late than never, one might say.
Except the man died months ago.
“Jurisdiction is based on domicile. Where is your domicile? If you are domiciled within one of the several states of the union, that is the jurisdiction you fit into,” as one reader argues why federal income taxes are illegal.
“In order for the federal government to have jurisdiction over a person, they must either live in an area owned by the federal government, such as Washington, D.C., in one of the territories, or on land owned for the purposes of establishing forts. Or you must be an employee, agent or public officer of or involved in a trade or business subject to the federal government.
“If you are not in one of those categories — and 99% of Americans would not be in one of those categories if they hadn’t been lied to and swindled — you are not subject to federal jurisdiction.
“So what does that mean,” our reader asks? “That means you are not subject to statutory federal law. Very simple. No income tax, no SSA, no federal enforcement of statutory law.”
The 5: You make your point with compelling concision. You may in fact be correct on legal grounds, and we are in hearty sympathy with you. We can only say, “Good luck.” We invite any brave soul to tear up his tax bill based upon this argument. Just know that kindred spirits have ended up in the hoosegow for doing so. Proceed accordingly.
“I don’t suppose that Tax Freedom Day comes a day early because 2016 is a leap year, so we have an extra day for the government to gorge itself?” asks another reader.
The 5: Good question. Shows you’re thinking. And in turn, we pose this rhetorical question, with all due respect: Does it really matter?
for The 5 Min. Forecast
P.S. It was a pleasure filling in for Dave today. But be assured he’ll be back in the saddle on Monday to bring you another riveting issue.
In the meantime, you should know that our sister franchise Laissez Faire’s Living Well is planning a live event titled America’s Growing Brain Health Epidemic.
According to them, as many as 121 million Americans could fall victim to a brain health threat that’s getting very little media attention. Even worse, it has the blessing of the government, and certain agencies within the medical establishment are working to make sure anyone 40 or older is exposed.
During this event, Living Well’s chief health officer, Brad Lemley, and researcher Jasmine LeMaster will reveal exactly what this brain health threat is and how to avoid it.
The good news is they’re putting on this event just a few days from now, free of charge. You can watch from the comfort of your favorite recliner at home. Click here for the details.