Weekly Mailbag: Where Is The Money Flowing?

Welcome to our Friday mailbag edition!

Every week, I receive great questions and comments from your fellow readers on my Inside Wall Street essays. (Thank you so much for that!)

And every Friday, I answer as many as I can.

Before I get to your questions, I want to tell you about an urgent briefing that I launched earlier this week.

It’s all about the greatest wealth transfer in the history of America. It’s a $150 trillion shift I call “The Great Distortion.”

Now, as you know, up to now, only the rich and powerful have benefitted from the distortion between Wall Street and the real economy I’ve been telling you about.

Most ordinary folks are tired of seeing the life they want slip away from them.

But I firmly believe that this time, if you see what’s coming, you could multiply your retirement nest egg ten-fold with a few key investments I have identified.

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It will take you straight to my special briefing. And you can get started closing the gap between the life you lead and the life you want to lead.

Now, let’s dive into our mailbag…

First up, my recent essay about the shift from oil and gas to renewable energy sources touched a nerve with some readers.

Nomi, I enjoy your work. But please be real. Our country is blessed with abundant fossil fuels. We were energy independent and a net exporter of oil and gas under the previous administration.

Why can you not say what is clearly true in your article addressing this important topic?

– Gordon O.

I believe Joe Biden is clueless and following a dangerous path regarding oil. We have it. We should drill on government land and private land. But he doesn’t want to drill and he wants to shut us off from U.S. oil.

I believe that to pull oil from our reserves is stupid and asking for trouble. I understand that he has done this twice while we are watching the horrendous war by Russia against Ukraine.

We need more oil to be produced in America.

– William V.

The immediate solution is to return the U.S. to being oil independent and an exporter as we recently were. The industrial world exists on dependable fossil fuel. It will for years to come.

Renewable is an evolving add-on. It takes energy to manufacture windmills, electric vehicles (EVs), batteries, solar panels, and plastics. Think NOW!

– Robert C.

Thank you, Gordon, William, and Robert for writing in. You bring up some important points regarding oil independence. I’m going to respond to you all together, if that’s ok.

I want you to know I hear you. My goal is to always weigh near-term and future trends and provide you with the best investment opportunities.

Now, let me clarify that I believe the U.S. should be energy independent and a net exporter of oil and gas. That should be a goal of any administration. I completely agree with you, Gordon and Robert, on that.

In fact, economic strength requires solid energy policy, with independence as the goal. Recent geopolitical events have proven just how important this is.

And clearly, we need fossil fuels.

However, I also believe we should forge ahead on extracting oil and gas in a cleaner manner.

Yes, drilling is a practical necessity. But we need to do it as safely and cleanly as possible.

And we need to continue to develop ways to make the use of oil and gas more environmentally friendly for today’s energy needs.

But alongside finding ways to better extract and use traditional fuels, we should be producing alternative forms of energy for tomorrow’s energy needs.

Now, I acknowledge that it takes traditional energy to create new forms of energy. That’s why, in my five-theme investment view, I refer to the category of energy as New Energy.

My reasoning for that is that this classification is about where money is flowing. I analyze where money is flowing from and to. This helps me pinpoint the best investment ideas to protect and grow your wealth.

For the next decade, at least, money will be literally flooding into sustainable, clean, and transitional energy.

Transitional energy covers traditional fossil fuels. But it involves finding better ways of sourcing and using them. Ways that are as clean, safe, and sustainable as possible.

I’ve been showing readers how this administration’s plans include a significant focus on this whole area.

It promises to invest $65 billion in clean energy transmission and upgrading the existing power grids. It also plans to deploy cutting-edge energy technology to achieve a zero-emissions future.

And it will build 500,000 electric vehicle (EV) charging stations, at a cost of $7.5 billion.

And in these pages, I’ve been showing my readers ways to profit from these investments in our future energy needs (catch up here, here, and here).

I firmly believe the best thing to do in the field of energy is to push forward on all those fronts. For now… and for tomorrow.

And I’ll continue to publish my best investment ideas, so you can position your portfolio to profit.

Now, switching gears… Steven responds to my email update about President Biden’s executive order on cryptos, which the President signed last month…

Hi Nomi. History can tell us much. I have this feeling that the U.S. reign monetarily is declining and will soon end i.e., a new monetary system. And the dollar isn’t it.

There are many factors, but empires decline. And I see many actions in the U.S. as proof. What say you?

– Steven S.

And Barbara shares Steven’s concerns about the future of the U.S. dollar as the world’s reserve currency… but believes the threat is from more external sources…

My question is not specifically on Bitcoin, but how it might relate to the future of the dollar. The future of the dollar as the world reserve currency seems to be increasingly in the news.

One example recently is the end of the petrodollar and the possibility of a petro-yuan created by Saudi Arabia. In addition, Fed Chair Jerome Powell has stated that there can be more than one reserve currency.

How do you think this will specifically impact the value of the U.S. dollar, the price of Bitcoin, and the stock market in general?

Thanks for your many insights and background information.

– Barbara L.

Thank you, Steven and Barbara, for your thoughtful comments and questions. Again, I’ll respond to you both together, if I may…

Well, first off, there’s no quick or easy way to answer any question about the future of the U.S. dollar as the world’s reserve currency.

The Bretton Woods System, established in 1944, pegged all currencies to the U.S. dollar. That propelled the dollar’s supremacy. And although the Bretton Woods System collapsed in the 1970s, the U.S. dollar reigns as the primary reserve currency to this day.

Now, as I’ve written many times in these pages, the entire U.S. budget, including the military budget, is a product of too much debt and too little real overall economic growth.

That should spell a national decline of the economy and currency.

That’s what happened with the United Kingdom, after all. Remember, its currency, the pound sterling, was the world’s primary reserve currency in the 19th century and the first half of the 20th century.

But the U.K. almost bankrupted itself trying to pay for World War I and World War II. And the U.S. dollar took over the reserve currency mantle.

Other superpowers (notably China) and trading blocs (notably the European Union) have recently risen in global and currency prominence.

And since the financial crisis of 2008 especially, Russia and China have worked to establish a closer trading and financial relationship outside of the dollar-centric system.

That’s one of the reasons the BRICS bank (now called the New Development bank) was started in 2014. The idea was that it would be an alternative source for development funding for the BRICS (Brazil, Russia, India, China, and South Africa) countries and their allies. It’s similar to how the International Monetary Fund (IMF) and World Bank were established to fund allies of the U.S. and Europe.

Also, China’s ongoing drive to conduct trade and commerce outside of the U.S. dollar was behind its successful push to have the yuan become a part of the IMF’s Special Drawing Rights (SDR) currency basket. It took its place there alongside the U.S. dollar, the euro, sterling, and the yen in 2016.

China needs oil and is an economic superpower. Based on this trend, it’s no surprise that China wants to buy oil in yuan. Or that Saudi Arabia is considering it, as you mention above.

This was one of the questions I tried to crack in my book Collusion.

I looked at the emergence of the BRICS bank as another potential powerplay relative to the U.S. I’ll ask my editor to consider sharing a related excerpt or quote sometime.

But many of these nations have their own problems. So, I don’t see them taking over from the U.S. any time soon.

As I see it, the entire world is hurting right now. So the U.S. will continue to hold onto its spot as the strongest of the pack by sheer comparison.

With regards to Fed chair Jerome Powell talking about the possibility of more than one reserve currency, that’s not really saying much.

Central banks around the world hold assets in multiple currencies. However, the U.S. dollar still represents the bulk of their foreign reserves.

As I mentioned in one of my recent pieces, I believe that the dollar, especially in times of geopolitical turmoil, will retain its strength relative to other currencies.

This is not because it should. If we consider how much debt the U.S. has, it definitely shouldn’t.

It’s because it has a seismic advantage because it is the main reserve currency of the world. And other central banks need it, especially in times of turmoil.

I believe gold will also continue to strengthen. And next week, I’ll show you a key reason behind that involving central banks. So keep an eye out for that.

Regarding the stock market, as I’ve mentioned many times and will keep stressing – the Fed’s third and unofficial mandate is to support the stock market.

The Fed and other central banks have fabricated trillions of dollars’ worth of money to do just that.

And most of that money has gone to the financial markets, rather than to the real economy. Hence the distortion I talk about. And that cozy relationship between the Fed and the markets will continue.

As for Bitcoin, of all the cryptos, it has the most momentum. Its use and acceptance are growing globally. I believe that in the longer-term, it is on a path to be a competitor to fiat currencies.

This provides Bitcoin with long-term upside. Albeit with a lot of volatility along the way. And I’ve already shown you several simple ways to invest to capture those long-term gains.

Well, that’s it for this week’s mailbag. Thanks again to everyone who wrote in.

If I didn’t get to your question this week, look out for my response in a future Friday mailbag edition. I do my best to respond to as many of your questions and comments as I can.

And if there are any other topics you’d like me to write about, I’d love to hear from you. You can write me at [email protected].

Thank You

Before I go, I want to just say a huge “thank you” to everyone who came to the Legacy Investment Summit in Washington, D.C. last week. And to those who tuned in online.

During the two-day event, I got to present on the Main Stage, join in panel discussions, and hold workshops.

And I had so much fun meeting lots of subscribers and readers!

We had some really engaging discussions about Federal Reserve policies, the fate of the U.S. dollar, the future of inflation… and lots more.

I’m already excited for next year’s event! I really hope that any of you who weren’t able to attend this year will consider coming next year.

I’m not sure yet where it will take place. But I’d love to hear your suggestions for a venue. Write me at [email protected].

I can’t promise anything, since that choice isn’t up to me, but I’ll certainly pass them on to the event organizers.

In the meantime, happy investing… and have a fantastic weekend!

Regards,

Nomi Prins
Editor, Inside Wall Street with Nomi Prins

P.S. Don’t forget, my urgent briefing all about the $150 trillion wealth transfer is now live. This transfer will bring about a complete transformation of America. And a profound change to the financial system.

And it could transform your wealth, too, if you know where that money is flowing to. To watch my briefing, just go here.

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