Having good health, especially as you get older, is a form of enrichment. And if you’ve been to a doctor/specialist/hospital recently, you’ll know maintaining your health is not cheap.
If you’re interested in improving your health, or if you’re feeling sick, depressed or just lethargic, read on – this might be the most important essay you read all year.
But first:
Since the October lows, many global stock indexes are up about 20%. This really is some rally. But it’s still a bear market rally. Meaning the longer it goes on, the bigger the correction when it happens.
Stocks are not going up because the global economy is getting healthier. Businesses are paying off debt instead of expanding. Companies are laying people off instead of hiring. Banks are deleveraging instead of lending.
What you’re seeing in the markets right now – pure and simple – is central-bank-engineered asset inflation. It’s unsustainable.
So here’s the million-dollar question for Aussie investors: how do you successfully invest in a market with deflation as the over-riding influence, but punctuated by bouts of inflationary euphoria? Can you even make returns in such a market?
Over the Christmas break we did some serious thinking on this issue. We took some time on the beach (when it wasn’t raining) to relax…to step back from the rescue plans and bailouts… and focus on what’s REALLY going to matter for Australian investors this year.
The result is a report you can receive – here.
What we’ve come up with aren’t direct recommendations. They’re warnings. Or rather they’re three big mistakes we think many Australian investors will make this year that will lose them money.
We think you’ll find it good reading – and hopefully it will help you make some good investing decisions this year.
And now, from the health of the economy to the health of your colon…
We bring up the topic of health after recently watching a cracker of a show called ‘Fat, Sick and Nearly Dead’. It’s been around for a year or so. But this was the first time we’d seen it on TV.
It’s a documentary about a Sydney bloke named Joe Cross. Joe is an entrepreneur. He spent most of his early years focussing on building wealth. He worked hard and, judging from his physique, ate pretty hard too. By the age of 40, Joe was nearly 140 kilo’s and battling a rare autoimmune disease called chronic urticaria.
As a result he was necking the powerful steroid, prednisone, daily. If you’ve heard of this drug, you’ll know it has some nasty long-term side effects.
Joe realised he was in trouble. He needed to do something about it. So he went to America and put himself on a (medically supervised) diet of nothing but vegetable and fruit juice for 60 days.
The results were amazing. He dropped about 45 kg. More importantly he dropped the chronic urticaria and got off the prednisone. While that sounds impressive, there’s another character in the documentary whose story will blow you away.
By cutting out processed foods, which are full of sugar and fat, Joe (and the other bloke) restored their health. It required a lifestyle change. But they were on their way to an early grave and had no other choice. They don’t live on juice now of course. But they needed a circuit breaker and it worked.
Fancy that. By eating food provided by nature, we become healthy. By eating food processed to within an inch of its life, we slowly kill ourselves. Most of the food sitting on supermarket shelves has minimal nutritional value. In order to extend the shelf life, most of the nutrients are killed in the process.
Our diets are full of sugar, fat and sodium. These things are long-term, silent killers. And the unhealthier society becomes, the more national healthcare systems buckle under the, err…weight of the cost of looking after a sick nation.
Demand for drugs goes through the roof. Western nations are over medicated. The pharmaceutical companies make a bundle from treating the symptoms, not the cause. We waste billions of dollars going around in circles.
We’ve got a theory about how things have got to this point. It involves central banks, excess credit and stealth inflation.
But first, there’s a personal element to this. So we’ll slip into the first person…
A few years ago I suffered from a major bout of eczema. I had it pretty bad as a kid, but it went away…forgotten about.
Then, a number of highly stressful events brought it back. Face, head, eyelids, ears…I was an itching, weeping mess…and very miserable.
Several trips to the doctor yielded numerous prescription ointments. I got a referral to a highly paid skin specialist who gave me samples of branded moisturiser creams and told me to keep up with the prescription ointments. Cheers for that.
Thinking I might be allergic to certain foods, I arranged a blood test through the health system. Because my skin reacted to dust mites, the genius doctor advised me to thoroughly air out my room. Apparently it wasn’t eczema, I was allergic to dust mites. Thank you taxpayer.
Things got worse and my doctor prescribed prednisone. This stuff cleared up the eczema within hours. But you had to keep taking it. And as I said earlier, this is a nasty drug.
At a decent cost, the health care system attacked the symptom, not the cause. I was throwing hundreds of dollars at the problem for no result.
Feeling increasingly miserable, I decided to see a naturopath. I was put on a strict diet for 6 weeks. No booze, no coffee, no bread or wheat, no meat…just lots of water, fresh fruit and vegetables. After a month my eczema had gone. Completely disappeared.
The moral of the story? Modern living can make you sick. Nature, not prescription drugs, can make you better.
So why is the food we eat slowly killing us? Why is the ‘market’ providing consumers with a choice that is actually harmful to them? That’s not how capitalism is supposed to work, right?
No it’s not.
Here’s our theory as to why things have gone wrong.
For the past few decades, central banks have held the price of credit artificially low. This has created excess credit, which translates into increased demand or purchasing power.
But the benefits of this credit boom, in general, have not accrued to the middle and working classes. Yes they have become wealthier. But they have had to increase their debt considerably to display that wealth.
The abundance of credit and resultant financialisation and globalisation of economies around the world put the focus on cutting costs. It became about achieving ‘economies of scale’ – a fancy term for bigger is better and cheaper. Nowhere was that more prevalent than in the production and distribution of food.
This reorganisation of resources and the economic structure of food production didn’t lead to lower prices AND a better product. That’s the hallmark of real technological improvement and genuine capitalism in action.
Instead, it led to lower prices and a reduction in food quality. The government agencies that compile inflation data just looked at the price, not the deteriorating quality. As a result, CPI inflation remained low. This kept interest rates low and allowed the credit boom to continue.
In industries where there were real technological improvements like computing, the statistician made a ‘hedonic adjustment’ to account for the improvement. The result? Very low inflation all around.
This made central bankers look like geniuses. And the middle class thought they were becoming wealthier because debt was cheap and allowed them to have ‘stuff’ they couldn’t previously afford by taking on more and more debt.
Low inflation – known as the great moderation – is a fraud. We’ve had doctored low consumer inflation numbers at the expense of our food quality.
In the meantime, Australia and the US have been vying for the gold medal for the fattest nation on earth.
Maybe it’s just a coincidence that obesity has become a major societal issue at the same time as the global credit bubble expanded. Maybe, but we doubt it. The West has many economic problems associated with debt. It also has many health-related issues.
You might think the link is a tenuous one. But if you think about it hard enough, it’s there.
Greg Canavan
Editor, Sound Money. Sound Investments.
Publisher’s Note: This is an edited version of an article that first appeared in The Daily Reckoning Australia.
Greg Canavan will be appearing at After America: the Port Phillip Publishing Investment Symposium, March 14th-16th at Sydney’s Intercontinental Hotel. Greg has also identified three ways careless investors could lose money this year… and how you can avoid falling into this trap. To see Greg’s special report and take out a no obligation trial subscription, click here…
{ 8 comments }
Hey Greg,
Here I thought that salt covered, crunchy fat coated, sweetened hunk of protein was provided because the market demanded convenience; quick and easy, zap it and eat it, all 200-300grams of it. And isn’t the taste just so addictive…uhh!
I didn’t reckon the stuff was all that cheap , run around the other side of the store, and get 100g of lean protein and some greens..pick in season stuff and always it’s cheaper. Shame about having to prepare it though.
You didn’t mention anything about alcohol and cigarettes, but their prices keep going up., but they still love them
With that nice new diet, I hope you did your five km runs every day.. I will just check that picture of you again .
A bit over simplified there Buddy, …and some people do get ill even if they do all the right things.
Anyway,
This is by far the most ridiculous thing I have read on this website. Medicine is based on countless clinical trials, whereas economics is based on numerous and often unveriable models. By all means, go on believing that naturopathy saved you and that all doctors and the food industry are part of some grand conspiracy to rob and kill you, but I think you’ll find that what you are talking about is known as anecdotal evidence. I had a cold once, and I found that by drinking water and abstaining from cheese, I got better. Ergo, cheese gives you a cold and water cures you.
The only parallel between economics and health that I can draw is that for most people, all you need to know is that if you have a weight problem, eat less and exercise more. Likewise with money; if you don’t have much of it, spend less and save more.
“The moral of the story? Modern living can make you sick. Nature, not prescription drugs, can make you better”. So opium is fine, but aspirin will make you sick?
Your assertion that somehow removing processed food from our diet would cure the world of disease is an insult to anyone who has ever engaged in the scientific method. Bubonic plague, anyone?
I have read some ignorant comments on this site before but CS, yours is the MOST ignorant of them all.
If you think the pharmaceutical and medical industries (businesses) are here to help you, I have a bridge in Sydney I’d like to sell – it’s going for a great price but you need to give me cash today!!!
Dig up your garden, plant a few veges and eat them – you’ll save some money, get some excersise and taste real food.
Your half right. Read a book called “the diet dellusion” by Gary Taubes’; from Amazon. 460 pages later of scientific investigative journalism or just read the 10 salient conclusions. you will realise that refined carbs and sugar are the main culprits for obesity and type 2 diabites; not fat. remember that we inherited the hunter gatherer digestive system where they ate meat with saturated fat. 10,000 years ago we invented agriculture and 100 years ago we corrupted our food chain by processing carbs.
No, I don’t think that pharmaceutical companies are here because they care about my health, in the same way that I don’t think that Apple or Samsung is here because they genuinely want to make my life easier. They want to make a profit, I get that….it doesn’t mean their products are useless though. I believe that’s what most commentators on this site would hail as being “free market enterprise”. Despite the obesity epidemic, people live a lot longer nowadays than in previous generations. You can thank scientific medicine for that, not naturopathy. Oh, and I guessing that because naturopathists deal only in natural products, they’re not into making a profit? Such an altruistic industry. I do have a vege garden, and I don’t dispute that home grown food is far superior to some of the crap that’s wrapped in plastic. What I dispute is the argument that this creates a significant portion of the demand for medical services and medicine. What about all the previously fatal diseases that are now being treated? Or perhaps the ageing western population requiring medicine? Or perhaps the advent of the internet and two car families, negating the need for people to get off their arses and walk to the shops?
Again, it seems there is no middle ground admitted. The greatest danger is misdiagnosis and incorrect treatment, technology has helped hugely but artificial intelligence is still trumped by human stupidity.
To my mind the scientific method approach is simply controlled testing of natural remedies identified from anecdotal evidence, opium is fine if not abused and asprin is plant derived as are a great many of our medicines. I am distrustful of both extremes of the health debate, make my own decisions rather than take any remedy offered on blind faith and carefully monitor for effectiveness. Leeches, Thalidomide, electric shock therapy, yada, yada, the medical establishment has a history of withdrawing therapies they once thought were helpful. And one day I will die despite the intervention of physicians of any type. I don’t believe I am more entitled to life than any other creature on the planet.
As for diet, casually examine the mammals on earth and draw some simple dietary conclusions as to which are fat and which are lean. (clue: carnivore skinny fast, herbivore fat slow.)
It really is all about sugar and portion size. I fear natural selection stalks those with weak wills and strong denial in the face of this evidence, they will live in discomfort and die young.
Far from being the most ridiculous thing I have read on this website! Medicine is based on countless clinical trials, where your drugs get approval depending on how much money you have, regardless of how damning the results of your clinical trials. When a member of your family is handed a death sentence and chemotherapy is offered as “Palliative Care”, seeking an alternative treatment that offers dignity and a true extension of life beats “engaging in the scientific method” hands down. Insult or not.
Bad health is caused by the drive for profits. Go to any business course and they will tell you how important it is to keep your customers – because it will cost you several extra bucket loads of money to find new customers. In the “old days”, doctors and nurses were told that their job was to “do themselves out of a job” – their aim was to cure all their patients forever. (Maybe that can’t be done, but that was what to aim for.) Then somewhere in the eighties, suddenly hospitals were told to refer to their patients, not as “patients”, but as “clients”…
Once you cure a patient, you lose a customer. Treating the symptoms is more profitable than eliminating the cause.
You want good health? Find yourself a good doctor / nutritionist who is also a bad businessman.
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