Sunday, January 01, 2017
Saturday, December 31, 2016
Wealth Creation / Maintinance In the Coming Times (Saving and keeping the value of your savings)
DEFINING THE PROBLEM:
The world is awash in debt, and I am talking about public as well as private debt.....the old saying is:
"we owe, we owe, so off to work we go...."
Well.....IMHO, the problem is that given the low interest rate environment we have had for the last 8 years or so, we might have "piled-up"more debt than we can actually service (pay for) in more normal times. Normal times...what do I mean by that.....I mean in times when interest rates are more normal!
What do I say this....because debtors need to at the very least pay the interest on their loans......if they could pay off the principle, they would not be in debt after all.
We are currently just coming out of our ZERO interest rate environment......the Federal Reserved has not raised their interbank lending rate to about 0.5%....still crazy low....and the market rates say for 30 year fixed mortgages ave risen from a low of about 3.65% up to around say 4.1%....still not a high rate, but moving closer to what might be more "normal"....say perhaps say 7%. (IMHO)
I am quoting mortgage rates, but the rate that the government pays for its finance is the thing I most fear......because the government needs to pay that debt, and they do so by extracting it from taxpayers. (or from everyone by debasing the currency via inflation....which is a sort of TAX on everyone)
So why does this bother me.....well, because I am a saver.....and as the old saying goes: "You can't extract blood from a stone"....when it comes to paying the debt, the government can't take money from those who don't have it. (As the bank robber once said: "Why do I rob banks, because that is where the money is!"....ditto for government tax collectors)
SO WHAT CAN I DO:
This is something that is difficult to fully appreciate because we are NOT really sure of how the government will "extract" their pound of flesh on savers.....they can do it directly by raising existing taxes......and one would be wise to find the various "incentives" government creates to get around that. (think along the lines of the tax-free growth of a ROTH IRA) But then the government might just throw us all a curve ball and create a NEW tax like a VAT or SALES tax that scrapes money from you whenever you spend or move it!
Worst than that, they might just crank up inflation and strip it from us by just making the value of ALL money less. (so that the dollars they pay back are worth less...easier for them to gather)
CREATE A PRODUCTIVE CAPACITY (Adding Value to the world):
One thing that is for sure.....no one wants to see progress grind to a halt.....we need things, and we want to see progress like cancer cures and higher efficiency cars and homes. No matter how things go regarding government tax collections, they would dare NOT kill the goose that is laying the golden egg....the goose that is producing!
So....as over simplified as this sounds, I suggest we all consider transforming our savings into something with a productive capacity.....think in terms of a marketable business. or skill.....think in terms of income property. Think in terms of production / service capability in the form of a business.
LIQUIDITY.....THE TRICKY BALANCING ACT:
Now if you think my statement above is far too vague, then you will really get turned off by this next point.....given that we don't know how the wealth "scraping" will come to us, nor at what pace, it will be difficult to know exactly where, how and how fast to invest in one thing or another. Investment has a certain "stickiness" to it....it often takes time to grow and generate profit.....and especially if you need to be side-stepping the various taxation schemes that will be creating what might be a less than fully stable investment climate.....and there is ONE thing for sure....business needs to make payroll....to have the cash flow to exist tomorrow......you need to have some level of "margin" or liquidity as things change.....so putting all one's eggs in one basket in one trip might not be the wisest move......being agile....
How this all comes to roost...no one knows. But I believe just sitting on vast sums of savings is NOT a safe place to me....you are an EASY target for a society hell bent on "redistribution of wealth" ....but even those people see the value of their landscaper, their grocer or their snow plowing company. Adding value to the lives of people will always be popular and in need.
Friday, January 15, 2016
"I will pay you tomorrow for a hamburger today".....or how the stock market was juiced up by the central banks!
Tuesday, January 12, 2016
(and I should get back to posting here...things are getting interesting / scary once again)
Check out this interview with Jim Rogers.
Tuesday, January 15, 2013
Decision Time Once Again
So what was the big issue in the last bubble.....well, how about a debt that could not be sustained. That debt was in the hands of home buyers and that was then semi-transfered to banks and the government when homes went into the toilet.
But did we mop up that debt and get everything back in balance.....well, not really. In fact, I would say that you can not fix a problem of debt by adding even more debt. So I would say that we have essentially papered it all over for how.
Now what? Well....I think we have been blowing up another bubble....the bubble is now in our currency.....we have printed money like drunken sailors.....and if we are nor on our toes, it will fall on us like a lead balloon!
So now what? What do we savers invest in? Our money gets nothing in the bank, and I fear the money printing will cause inflation! What do we do to escape that?
Well....how about creating some sort of productive capacity....how about owning a business?\
That is what I think the best protection against the loss of savings, the development of a productive capacity....a skill or kind of useful work that people would pay for. We will see money printing taking a toll on the evaluation of our money.....that is, we will see inflation.
With our county is looking for is productive capacity....a skill or job that is in needed and people would barter for. Having a skill will be a good trade for the goods and services of all
Saturday, February 18, 2012
At that point I can see why people resisted getting excited about it all....but we have just survived a problem decade, are living with an imploding Europe as I type and have our debt problems staring us square in the kisser.....the TIME IS NOW for action!
Now what? I suggest we deal with out problems and not bury our heads in the sand.
As for what we personally do besides vote for people addressing things.....I suggest diversification of assets and around the world!
Saturday, October 29, 2011
Another interesting video and some of my thoughts on investing.....
Watch the video and then continue down to some thoughts I have on this, and how I am thinking about the future and my own savings capital.
Well, I also believe the USA will continue our slide and continue to lose our importance in the world. This will result in higher prices because of our slipping dollar and our slipping value to the world.
So what to do.....first, it depends on how we pull ourselves out of what I think of as the 'Occupy X Inequality". I think the Occupy Wall Street simply want to strip the wealth from anyone who has it and give it to anyone who does not. If this is the way the country decides to go, then the obvious answer is to get out of dodge.....not so much flee the country, but make investments elsewhere where things might be sheltered or hidden from the grabbing claws of those doing the "redistribution"....I hate to think like this, but I also think I have done the right thing over my life in saving, and my gains are in no way "ill-gotten".....so like you would expect anyone to do, I want to keep them.
Having said that, I hope the government tries to try another tack....let's try to "grow" our way out of things.....let's make jobs by giving incentives to business in areas we so badly need.....areas we might be able to lead the world in.
So I am thinking I need to convert my savings to some sort of business....what that is, I am not sure.
Energy is something I think we will all see changes to in the future....I am thinking about some sort of wood pellet business. Perhaps dove-tail that will a recycling gig....but I don't want to get too deep into something I have not fully grocked out.
But the concept is the same.....to make money, one needs to take risk, and to add value. The value I see for the future is to create something....and create a business around that which adds value. (here and abroad...)