Today I finished Rich Dad’s Advisors’ Guide to Investing In Gold and Silver
It sounds crazy, but the author’s argument is very simple and backed up by historical example. He says that every time a government creates its own currency, the currency eventually collapses. And, often times it leads to the end of the government.
The new record breaking budget deficit of $1.8 trillion could have massive repercussions for the economies of this country and for the entire world. The future deficits are expected to rise. This deficit might be the straw that breaks the dollar’s back.
Image courtesy of The Heritage Foundation
There have been many factors that have been putting pressure on the dollar, going back nearly 100 years when the government started running a deficit. It’s been a free ride for the last century because the dollar was the default currency for the world. America was the most powerful economic superpower, and the only country that was a military threat was the USSR. It was like having an infinite line of credit; we could print as much money as we wanted.
What has changed?
The last 12 months has been filled with economic uncertainty. We have had government spending and bailouts at unheard of levels. People have even said the government is taking over the banking industry. Unemployment is at a multi-decade high. Real estate prices have fallen 50% or more in many areas. Not long ago, some people were even predicting a great global depression.
Now that those fears have been alleviated and the economy appears to be on the road to recovery, the pressure to shop is at an all time high. The internet is an outstanding source of information, and sales and shopping information is no exception. Sites like DealNews have been a boon to shoppers everywhere. As Black Friday approaches, the scent of good deals has already thrown many into a buying frenzy.
Daniel Leininger @ Flickr
There doesn’t even appear to be a debate.
If one group of people–somehow–attains a certain amount of wealth and another group appears cut out, you just take a chunk of wealth from the first group and pass it onto the latter. Voila. Everyone is equal again.
Except, that history proves that wealth distribution doesn’t survive its initial pay checks and can actually make things worse. In the early days of the 20th century, Russia tried to redistribute wealth. The Czars became premiers. The boyars became commissars. But the poor people remained poor. Maybe poorer.
Still, wealth and power remained in the hands of a few.
In the Western world, trillions upon trillions of dollars, Euros, yens, pounds, francs, and Deutsche marks, have been redistributed. Somehow, that money continues to find its way back to the same groups.
Wealth distribution will not work, but there is something that will be far more effective.
Business Strategy, Investing, Money, Online Investing AI, US Economy
The current administration has made it very clear that it is committed to helping the economy as much as possible. The trillion dollar bailouts have had a measurable effect, and most people think that the recession is over. Although the short term effects of the stimulus have been realized, many people are wondering about what happens after the effects have worn off.
More Failed Banks
This article from Reuters describes nine bank failures that occurred in just one day. The government has successfully increased spending and prevented a depression in the short term, but what about the real health of the economy? As bank failures reach record highs, do we need to be concerned about whether the entire system will collapse?
quinn_anya@Flickr
According to the Wall Street Journal, the government is considering a tax on financial transactions that could raise $100 billion for the government coffers.
This week, the left-leaning Economic Policy Institute floated the idea of a national transaction tax that would raise $100 billion to $150 billion a year. The tax, at a rate of 0.1% to 0.25% of the value of the trade, would be levied on all financial transactions such as stock trades, but not on consumer transactions such as with credit cards.
This will include a tax on your stock purchases. And your stock sales. (In addition to capital gains tax.)
Using a little math, that would mean that there’s $100 trillion in transactions each year. It sounds like another cash cow for the bureaucratic milking. Who will miss a couple hundred billion here or there?
But, as with most things, the law of unintended consequences rules and the question remains, what effect will this have on investors?
Business Strategy, Investing, Money, Online Investing AI, US Economy
America is the best country in the world. For the last 200 years, everyone wanted to come to America. In America, we have freedom and opportunity available on an unlimited basis. Unfortunately, I fear the end is near.
What could bring down such a great country?
Fiscal Mismanagement
Over the last 50 years America has racked up an incredible amount of debt. And, it is predicted to double in the next 10 years. Since those are government statistics, they are probably not very accurate. Let’s say 5 – 10 years. Don’t believe me? Check this.
Black swans really didn’t swim into global consciousness until the late summer of 2008 when the frazzled pieces of the global economy completely frayed, like the rope holding a piano dangling above a busy city street in an old silent film.
But, Nassim Taleb had spotted the creature in 2007, writing about how sudden, outlying events affect the financial markets in Black Swan, the Impact of the Highly Improbable. He mentions September 11 and stock market crashes as Black Swan-type events.
Whether any of the events were truly unpredictable–or just extremely complex, isn’t the point of this piece. What intrigues me now is, if we accept the premise that a Black Swan is unpredictable, can a reverse Black Swan be created?
In other worlds, if a series of seemingly random and unconnected events are behind a stock market crash, it would be foolhardy to believe that a group of government officials could somehow engineer a stock market rally.
This seems to be the goals of a flurry of government initiatives, taxes, bills, and programs–from cap and trade policies to internet affiliate taxes.
Business Strategy, Great Books, Investing, Online Investing AI, US Economy
The head talkers of Washington D.C. and talking heads of Wall Street are in a frenzy about job creation numbers.
What is the meaning of job creation?
How is a job created?
Is a job saved the same as a job created?
With the unemployment rate soaring into double digits, the so-called experts offer a range of theories and programs that are designed to create jobs and/or save jobs.They believe the twist of a pen could create a million jobs–or save a million jobs, whatever.
Still another rash of programs, taxes, and penalties are promising to help build the “green economy.”
Bunk.
After yesterday’s post on California’s budget difficulties and some recent reading in Outliers, a book by Malcolm Gladwell, I’d like to continue the discussion on government spending and America’s budget crisis.
When Dutch psychologist Geert Hofstefe set out to collect information on how cultures solve problems he found that Americans were rated highest on the individualism side on the individualism-collectivism scale.
In other words, Americans like doing things their own way.
Lately, this has been seen as a negative judgment on Americans. It’s cited as reasons for everything from why there’s no national health care to why there’s more gun crime.
The answer, these critics charge, is for America to embrace a more collective mentality and more selfless approach to the economy.
But is social spending really inspired by a desire for the higher aspirations of the common good?
The Singularity is Near by Ray Kurzweil is the book that started it all. If you want to know about the future, it is the best book I've found. Absolutely fascinating.
Rich Dad Poor Dad by Robert Kiyosaki. This is one of the most popular personal finance books of all time. A must read for anyone who wants to become financially successful.
The Millionaire's Secrets
is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
The One Minute Millionaire is a great book about how to become a millionaire. Written by Mark Victor Hansen and Robert G. Allen, this book combines an inspirational story with practical everyday skills.
The Art of Learning is the fascinating story of Josh Waitzkin, the world champion in both chess and Pushing Hands. His style is mesmerizing, and the strategies for learning are priceless.
The Alchemist is one of the best-selling and most inspirational books of all time. Anyone who has ever had a dream in life needs to read it. Perhaps my favorite book of all time.
Love is the Killer App is a powerful, step-by-step book about how to have a wonderful experience and spread love in any working environment. Think the office has to be a source of bad energy? Think again.
The 4-Hour Workweek is a powerful book full of strategies about how to get more done in less time. For anyone who is looking for leverage or wants to achieve success quickly, this book is absolutely invaluable.
