Deflation Strikes Hard

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Martin D. Weiss, Ph. D. takes a closer look at the recent report released by the Fed revealing a sweeping destruction of wealth in America. In this issue of Money and Markets, Dr. Weiss explains the further evidence of deflation in America.

Martin D. Weiss, Ph. D. takes a closer look at the recent report released by the Fed revealing a sweeping destruction of wealth in America. Dr. Weiss explains the further evidence of deflation in America.

In the third quarter alone, U.S. households lost $647 billion in real estate; $922 billion in stocks; $523 billion in mutual funds; $653 billion in life insurance and pension fund reserves; plus $128 billion in private business interests. Plus, total destruction of household wealth in the third quarter was $2.8 trillion, the worst in recorded history.

And there is more evidence of deflation:

  • U.S. consumer prices are falling at an annual rate of 12%.
  • U.S. producer prices are falling at an annual rate of 26.4%.
  • Commodity prices were slammed by as much as 70% from their peak.

As 2008 comes to a close, no one can possibly deny that the U.S. economy is in deep trouble. Anyone can see the sharpest declines in the economy since the 1970s, the worst debt crisis in a lifetime, the largest financial failures and bailouts in history. Everyone can also agree on the likely causes, the economic blunders of Washington, the financial greed of Wall Street, the big debts and bets by almost everyone. And no one could dispute the probable consequences, surging unemployment and potentially years of hardship for millions of Americans.

Yet despite this widespread agreement, nearly every authority still tries to persuade investors to keep their money in the stock market.

Financial experts on NBC Nightly News tell millions of viewers that, as long as they've got plenty of years to live and recoup losses, they should continue investing most of their 401k or IRA in stocks.

Suze Orman advises millions more to continue socking away their retirement money in stocks regardless of any market decline. In Time Magazine, the New York Times, the Wall Street Journal and virtually every newspaper in the country, similar advice is liberally dispensed.

It's not a symptom of conspiracy and, in most instances, it's not a sign of intellectual dishonesty. The majority of pundits sincerely believe in what they are advising, and many follow the same strategy with their own money. But that does not make it good advice. No one knows how far stocks will fall, how long they will stay down, or how soon they will recover. No one knows how many banks, insurance companies, brokerage firms, or manufacturing corporations will go bankrupt. No one can say if the government bailouts will make things better, keep things from getting worse, or cause even more serious troubles.

"All that is known with relative certainty is that as long as there is a financial crisis, recession or depression, the risk of loss is greater than the opportunity for profit, especially in the stock market," Dr. Weiss states.

To read this issue online, please visit:


Martin D. Weiss, Ph.D., founder and president of Weiss Research, Inc. and a leading advocate for investor safety, is a nationally recognized expert on domestic and international financial markets. With more than 35 years of experience, including many years in Latin America and Asia, Dr. Weiss has helped empower millions of investors to make better financial decisions through his monthly Safe Money Report and daily Money and Markets.

Dr. Weiss' keen understanding of foreign markets and the global economy has earned him a reputation for thoughtful, in-depth analysis that investors can rely upon to make informed financial decisions. Regularly called upon by the media for his independent investing guidance, he has been featured in publications nationwide, including The Wall Street Journal, The New York Times, Chicago Tribune, Investor's Business Daily, and Forbes and has also appeared on CNN and CNBC.

Throughout his career, Dr. Weiss has been an advocate for consumers and investors in the insurance, banking and brokerage industries, dedicating his time and resources providing analysis and data for Congressional testimony, constructive proposals for reforms in the securities industry and legislation for full financial disclosure as well sound accounting and fiscal policy. In November 2004, he launched the Sound Dollar Committee, a nonprofit organization dedicated to building a network of investors seeking to protect the nation's future by demanding honesty in government accounting, a balanced budget and sound economic policy.

Dr. Weiss is author of The New York Times best-seller, The Ultimate Safe Money Guide, which gave baby boomers a road map to grow their wealth safely. It was listed on the New York Times Business, Wall Street Journal, and BusinessWeek best-seller lists, as well as the Barron's Roundup for 2002.

Dr. Weiss holds a bachelor's degree from New York University, a Ph.D. from Columbia University and is fluent in eight European and Asian languages.

Money and Markets ( is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit


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