Dear Clients and Partners,
As we stand on the brink of a new decade, we are entering a period of high uncertainty and considerable challenges – economically, politically, technologically, and socially.
In view of the current economic crisis and under the assumed power to force an economic recovery with more “cheap money”, central banks and governments around the world have loosened their fiscal and monetary reins most spectacularly. The common consensus appears to be that this can continue indefinitely. We agree in so far as we do indeed expect big government spending and quantitative easing to be anything but a temporary measure. They will be with us for the foreseeable future. However, these policies are NOT sustainable indefinitely.
We consider the immense and continuously growing level of public debt as the number one enemy to your freedom, wealth and prosperity. The aftermath of it all will serve to crystallize one thing: it is dangerous to tinker excessively with a complex system such as the economy and financial markets. The increasing interventionism of governments and central banks in a free-market system creates all kinds of moral hazards and imbalances. Well-intentioned policies “in the interest of all” are generally not in the long-term interest of anyone. At most, they may serve the temporary interests of some.
With this report, we want to alert you to the fact that we are coming to the end of a secular business cycle with impressive global economic growth and even more impressive advances in asset prices, all largely fueled by a mix of globalization, continually declining interest rates, unprecedented central bank induced liquidity and credit, and with consumer price inflation nowhere in sight. We are convinced that this economic model is running its course and we need to buckle up for a very different cycle ahead. Most of all, we recognize two risk factors that deserve particular attention: debt and financial repression, combined with inflation that will ultimately be the main measure to reduce the formidable mountain of debt that the world faces today.
Moreover, the crisis appears to have accelerated the rise of increasingly radical ideology and the decay of traditional values and strengths of Western culture. The implications are manifold, and the uncertainties resulting from all of this need to be considered thoroughly.
We are very optimistic that in the longer-term, things will rebalance and return to a more positive trajectory overall. Humankind has proven, again and again, that we eventually succeed at improving our lives and we keep progressing over time. However, history also tells us that this progress will not be achieved without periods of pain and suffering. All facets of nature and life are subject to cycles, to ups and downs.
Throughout BFI’s history, we have focused our activities on solutions and strategies that afford our clients solid wealth preservation and asset protection. The overall landscape ahead looks somewhat confusing at best and treacherous at worst. In light of this, asset protection and wealth preservation should be at the very top of your investment and wealth planning priorities.
It is in this context that we are sharing our thoughts and recommendations, hopeful that it may provide some clarity and guidance, and that you may be able to better formulate and implement your wealth planning and investment strategy as a result.
Frank R. Suess
Founding Partner and Executive Chairman