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So, I stumbled upon this a couple of days ago. I've shown it to several friends. I have no idea what he is advising we do about it, I haven't paid him any money, and he doesn't pay me.

What I really want to understand is, is this something that is likely to happen? And if so, what can be done about it?

So much of it makes sense, it worries me.

http://www.stansberryresearch.com/pro/1011PSISBBVD/PPSIM821/PR

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Was thinking about deleting the question, then decided not to. When I searched this site for his name, I couldn't find it. I am going to leave this link that calls Stansberry a con-man though. I'm not sure who to believe though. dailykos.com/story/2011/02/24/949199/… –  Mark0978 Aug 16 '11 at 16:45
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Can you please edit your question to include what, exactly, "this Stansberry character" is saying? Just a suggestion, you're more likely to get answers if people don't have to click through to what is potentially a dodgy site. Also, referring to someone as "smoking wacky weed" isn't really the typical tone for StackExchange questions.... –  jprete Aug 16 '11 at 17:22
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Also, that video is 77 minutes long, so please mention that in the OP, because most of us will not listen to 77 minutes of that when the dailykos article provides a solid overview. –  BlackJack Aug 16 '11 at 17:24
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@Chuck: I downvoted because the question is incomplete and cannot stand on its own; it is "unclear or not useful". I'd much rather clean it up and switch to an upvote, but I was kind of hoping the OP would do the edit. –  jprete Aug 16 '11 at 23:29
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I agree with @jprete: the question could be improved with mention of some claims from the video. What issues, specifically, cause you concern? i.e. When you say "is this something that is likely to happen", what entails the "this"? (aside from "the end of America") –  Chris W. Rea Aug 17 '11 at 13:44
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7 Answers

up vote 11 down vote accepted

I listened to about 15 minutes of the video, but then I read your other link, which gives a much better summary. This guy is an idiot. Just consider this statement:

"If everyone was taxed at 100%, it wouldn't be enough to balance the federal budget."

This is true to some extent. It wouldn't be enough to balance the federal budget in one year. Experts often cite things like debt to GDP to show that a country's debt is ballooning, but they don't mention this obvious fact: We don't have to pay off our debts in a single year. Nobody does. Debt to GDP is a ratio and not the end all be all. Reinhart & Rogoff wrote a paper about how countries with high debt to GDP tend to have slower economic growth, but they don't mention that this occurs at every stage of debt growth.

See Debt & Delusion by Dr. Robert Shiller for a great article on this subject.

The daily kos article goes over most of the points I would make, but let me generalize a little:

Always be wary of doomsday-predictors and free advice. This guy talks about correctly calling Fannie and Freddie. Even if he's right, why is he mentioning it? If he's such a good accountant and financial expert, surely he could've seen the tech bubble before the housing bubble right? It took a lot of analysis to figure out that CDO's were junk - anybody with the ability to read a balance sheet could see that many tech companies were overvalued.

Every now and then, you get one hit wonders. They might never be right again, but they have the "credentials." If these people were really that good, they wouldn't be selling investment newsletters. They'd be applying their strategies and getting rich. Buffett has been getting rich for over 50 years, and he's not publishing newsletters with "secret, genius" strategies. He's made it pretty clear what his philosophy is, and anyone who follows it patiently will make money.

Stransberry's argument only makes sense if you agree with the assumptions. The US will implode if nobody accepts our money. Nobody will accept our money if we're no longer the reserve currency or hyperinflation occurs or something like that. People have been predicting doom after every bubble, but that doesn't make it true. Some of his points (like the fact that we have too much debt) are valid, and I predict that the world will go into a period of deleveraging now. Nonetheless, the whole "we will implode" story is a scary picture, but it's just that - a picture.

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Both this answer and the video, are confusing the concept of a 'balanced budget' with 'debt free'. A balanced budget happens when income equals expenditure. That can be true even if a country has huge debt. –  DJClayworth Jan 12 '12 at 20:46
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If we postulate that there is at least some element of truth to the phrase 'A leopard does not change his spots' and then consider this tidbit

He conveniently forgets to mention his 1.5 million dollar fraud fine from the SEC over investment “advice” he sold through a news letter. The SEC claimed and the judge agreed that the report was “replete with lies”.

I think that gives you just about all you might need to know regarding the man behind the video, and the nature of it's content. Oh, and it's purpose? To SELL YOU the same said newsletter.

I guess it's natural for Stansberry to feel as he does. After all if the US gov had just busted me for conning and lying to folks, and fined ME 1.5Mill, I'd be having some pretty intense lurid fantasies about it going down in flames, and trying to hide any money I had left offshore also.

A huge amount of his argument hinges on the US no longer being the world's reserve currency.

Firstly, while I'll admit I'm none too happy with the way the national debt has been managed for oh, around 30 years how, (which includes I will note going from a pretty much balanced budget, to around an 80% increase in the debt from 2001 through 2008, when 'times were good' and there was little need to spend money we didn't have), when compared to a lot of other countries, we still don't look that bad. You have to ask yourself this first, if not the US, then WHO? are the governments of the world going to trust China? could the Yen handle the load? Is the Euro any better off especially considering problems in Greece, Ireland, etc. Do countries like Switzerland have enough liquidity and available ways to invest there? In order for the US to STOP being the world's reserve currency, you must have something to replace it with, and really, can we realistically think of one country/currency with the capability to become a new 'world reserve currency'???

Secondly, even then should such a shift actually happen, it doesn't mean people will ALL just magically stop buying US debt. Yes the demand would go down, but it would not go to zero. There are after all a worldfull of other countries who's money is right now NOT the world reserve currency, and yet they are able to sell bonds and people and even other countries invest there. (China for example does not invest exclusively in the US), so yeah we might have to start paying more interest to get people to buy US debt, but it's not like the demand will go away.

Save your money, save your time, don't buy into this dung.

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No. I glanced through the article you linked to. It's quite lengthy, but not compelling. I'd not lose any sleep over this.

Others with far better credentials are making the opposite claim, that life is good and the Dow on its way to 20,000.

Back to this guy - StansberryResearch.com Reviews – Legit or Scam? offers a look at this company. Stansberry calls his company "one of the largest and most recognized investment research companies in the world" but references to his firm call it a clearinghouse for other authors newsletters.

Why would you give any more credence to his ranting than any other extreme prognostications?

I suppose if I told you I never heard of him it would be pretty meaningless. I certainly haven't heard of every financial writer. But if he's one of the most recognized, you'd think I might have. Note, I've edited since seeing I was downvoted. But to the question author, you might want to summarize your questions in the future instead of linking to a video or 13,000 word rant. (when you click to shut the video, the text is available.)

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I know nothing about the guy, but I think the "premium" products (Penny stock recommendations, a newsletter devoted to earning 12% per year, every year, etc) sold by his firm speak for themselves.

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Others have covered this pretty well, but as someone who once worked for the company that allows Stansberry to publish, let me confirm that their business is about getting you to buy into the financial worldview they promote so that they can sell you more and more "newsletters" and "services". Nothing else. It's a marketing company, and Stansberry is nothing more than a copywriter.

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Predictions, especially doomsday predictions, can go wrong quickly. I would be careful of anyone calling an "end" to a country like the U.S., especially, if they have something to gain and a history of being wrong. On the other hand, someone warning of something with a past of financial credibility can be quite useful. For instance, compare Frank Stansberry to Jesse Colombo (@TheBubbleBubble on Twitter). Jesse was one of the few who predicted the financial crisis in 2004 and is currently warning of new bubbles (ie: the higher education bubble) - even admitting to profiting off of some of them and encouraging others to do the same. However, his assertions can be investigated to verify accuracy, but they are hardly the end of the end (in fact, Jesse likes to boast that he's an optimist and thinks eventually we'll usher in a Golden Age). Frank Stansberry, on the other hand, doesn't seem to carry the credibility; a brief internet search generated some issues he's had with the SEC about misleading investors.

(Completely forgot to add, Mike Shedlock - Mish - also has made some predictions that have come true and clashed with some other financial advisers over inflation vs. deflation. While people were screaming "HYPER-INFLATION" back in 2008-2009, Mish constantly attacked them for being wrong, and has continued to be right. Some of his political views, of course, aren't popular, but some of his financial predictions have been stellar.)

Anyone who warns of anything should always be checked out for both what they've said, what they are currently saying, and what their agenda is. As one of my mentors warned me, everyone has an agenda and that's not always bad - their agenda may align with yours, just make sure it does.

  1. What have they said in the past (and how often has it been true)?
  2. What are they currently predicting? The closer it is to an all or nothing scenario ("it's all over"), the more evidence they need to provide.
  3. What's in it for them, and do they admit this (integrity check)?

[On a humorous side note, my father has predicted the end of the world every six months since 1994.]

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+1 for [On a humorous side note, my father has predicted the end of the world every six months since 1994.] I'm assuming he's a card carrying member of the Tea Party or a Baptist or possibly both. –  Mark0978 Jan 4 '13 at 15:55
    
@Mark0978 - Right on ;) –  YaReally Jan 4 '13 at 18:09
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First of all, if you take anyone's word as gospel you will be disappointed.

We are repeating history, so some of his details of predictions are not as accurate as all of us would like, but all of us should know this simple truth. If you live beyond your means (like our country does, most of the citizens do, and it is what we are teaching our children as they rack up hundreds of thousands of dollars of debt) you will eventually RUN OUT OF MONEY. That is FACT.

The US is spending money like a teenager with a no limit credit card. They are passing on that spending to the taxpayer that has little to no say in how the money is spent AT ALL.

As a country we are in trouble, eventually the house of cards and printed money will collapse, we will go from top of the world to third world in moments and that will be it for most people that live in the major metro areas.

You may not want to use this man's investment advise, that's fine, but to discredit the information provided is foolish and very much like sticking your head in the sand hoping it will all pass.

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What is it called when you use bold, unsubstantiated statements to claim that other bold, unsubstantiated statements are false? Anyway, I think that is what we have here. –  MrChrister Jan 25 '13 at 21:35
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