MONEY: What is the value of a fiat currency?

Wednesday, August 15, 2012

http://www.silverdoctors.com/cnbc-are-fiat-currencies-headed-for-a-collapse/

Are Fiat Currencies Headed for a Collapse?
Published: Friday, 27 Jul 2012 | 5:27 AM ET
By: Lisa Oake
Anchor, CNBC Asia-Pacific

*** begin quote ***

Shockingly, CNBC even points out in the article that “Every single fiat currency in history has collapsed, this time will be no different.”

*** and ***

A fiat currency derives its worth from the issuing government – it is not fixed in value to any objective standard. That means central banks can print as much money as they want. If an economy is struggling, injecting more notes into the system juices activity but lowers the value of the currency in question.

Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, says investors will soon start to demand fiat currencies be backed by gold or other hard assets.

“It’s already happening, you’re beginning to see that trend with central banks stocking up on gold. The estimate is that at least half of the buying is central bank buying. They are looking to the day when they can say okay, our currency is backed by gold and therefore we’re a strong country,” Mobius told CNBC Asia.

*** end quote ***

Argh!

All one has to do is study a little history and you have to be afraid.

Weimar Republic, Zimbabwe, Iraq — come immediately to mind.

We’ve been the guinea pigs in a hundred year experiment in a fiat currency. Now the free ride is coming to an end.

The fun question is how does it unwind?

With a thud!

Does the Carter-style inflation return? Or does it just start to accellerate, continue, and never stops until the value is zero?

When the wild ride starts, it’s too late to covert to hard assets.

Argh!

# – # – # – # – #   

Leave a Comment » | MONEY | Tagged: , , , | Permalink
Posted by reinkefj

MONEY: Ahhhhh, the ignorance of yute; what DO they learn in Gooferment Skrules

Tuesday, July 31, 2012

On Fri, Jul 20, 2012 at 7:27 AM, CLUELESS_RELATIVE WROTE wrote:

Do I need an emergency fund?

# – # – # – # – #   

On Fri, Jul 20, 2012 at 7:37 AM, UNCLE_GRUMPY WROTE wrote:

MONEY: Changing my position on “emergency funds”

Uncle Grumpy

# – # – # – # – #   

On Fri, Jul 26, 2012 at 7:27 AM, CLUELESS_RELATIVE WROTE wrote:

Oh I have navy federal credit union, usaa and state department federal cu. Any one in particular u think is better?

# – # – # – # – #   

On Jul 27, 2012 12:31 AM, UNCLE_GRUMPY wrote:

Do a spreadsheet comparison of the factors that matter to you:

cu1 cu2 cu3

* Easy to do biz (atm location, fees)

* Share interest rate

* Can I have sub accounts

* Auto loan rates

* Home loan rates

Then pick one and stick to it. I’d keep a minimum deposit in the others to preserve your eligibility. That a mistake I’ve made.

Then you need (imho):

(1) Emergency Fund (Roach motel — money goes in but never comes out). Priority One uber alles. You’re a hard case to figure out the right amount. But at the minimum, I call it one year at your Minimum Burn Rate (see blog).

(2) Car amortization fund (See blog post on 6 year car payment so that you have the money to buy a new one when your current ride dies.)

(3) If you’re a “monthly” paycheck to paycheck (which is what it sounds like to me), then annual and quarterly bills need a “monthly” “bill”. For example if car insurance is $1200 per year, then you must “pay” the subaccount $100 / per month.

If you’re a “weekly” gal, subsitute as needed. If you’re a bi-weekly, the math is slighly more complex. In the example, $1200 / 26 = $38.50.
And, “monthly” bills are multiplied by 12 then divide by 26. (Hint: It’s 46%) You must get to the point, where you’re ahead to annualize.

Getting off the paycheck to paycheck is essential.

(3) You like to travel, you need a subaccount to “tax” yourself for you next trip. Take your last trip, if you know what it actually cost I’d be surprised. Guesstimate divide by the number of paychecks and that’s your “tax” for that. You may not be able to afford that, so either scale back the trip or stretch the duration until the next one.

(4) “Sinking funds” for any expenses that can’t be accurately estimated (very few of those) and who’s frequency can’t be predicted (very few of those).

Hope that helps,
Uncle Grumpy

# – # – # – # – #   

 

 

—
—-
Ferdinand John Reinke
Kendall Park, NJ 08824
(732) 798-0508
http://www.reinke.cc (Personal page)
http://www.reinkefj.com (Professional page)
https://reinkefj.wordpress.com (Personal blog)

On Fri, Jul 20, 2012 at 7:27 AM, CLUELESS_RELATIVE WROTE wrote:

Leave a Comment » | MONEY | Tagged: , , , , , , , , , , , | Permalink
Posted by reinkefj

MONEY: French tax grab on holiday homes

Monday, July 9, 2012

http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/9377307/Francois-Hollande-announces-French-tax-grab-on-holiday-homes.html

Home»Finance»Personal Finance»Offshore Finance
Francois Hollande announces French tax grab on holiday homes
British owners of holiday homes in France are to be hit with punitive tax rises under plans announced by the new Socialist government.
By Henry Samuel, Paris
9:49PM BST 04 Jul 2012

*** begin quote ***

Approximately 200,000 Britons own second homes in areas such as the Dordogne and other parts of France, particularly those serviced by budget airlines.

Now, however, holiday home owners find themselves in the sights of President François Hollande as he seeks to tax the better-off to reduce France’s large budget deficit.

On Wednesday (July 4th), the French government announced it was to increase taxes on foreign-owned second homes. Tax on rental income would rise from 20 per cent to 35.5 per cent, and capital gains tax on property sales would rise from 19 per cent to 34.5 per cent. The extra in each case is being labelled a “social charge”.

A Treasury source said on Wednesday night: “We will need to study the details. But we will of course challenge any proposal which breaches European single market laws and anti-discrimination rules.”

*** end quote ***

I can’t imagine a dumber attack on property rights.

Why should “We, The Sheeple” care?

Because one Gooferment’s bad idea quickly migrates around the world. Gooferment, like vampires for blood, have an insatiable desire for wealth to spend on this program or that. Without concern for morality, effectiveness, or efficiency. 

Every unit of wealth extracted from the serfs has a “broken glass” effect. It can’t be used by the serf how they’d like to use it. It can’t sate a personal need, saved, or invested. 

We, here in Pepuls Republik of Nu Jerzee, are a classic example of Gooferment creep. Property taxes drive old people from their homes. Income taxes were imposed to provide “property tax relief”. What joke! All the taxes are higher. 

No, the only answer is to resist any and all taxes. No matter how reasonable the excuse, the answer must always be the same: “No!”

And one should insert some salty language to assure that everyone understand just how serious you are.

Then, the follow up should be: “And, while we are on the subject, how can we lower all taxes 10%?” If they politicians and bureaucrats begin to sputter and turn red or blue, then raise the ante. “OK, if you can’t do 10, how bout 20%?” When they turn white, then you’ve got them. They’re dead!

# – # – # – # – #   

Leave a Comment » | MONEY | Tagged: , , | Permalink
Posted by reinkefj

MONEY: Plan to work until your 90?

Monday, June 11, 2012

Bloomberg news: AIG Chief Sees Retirement Age as High as 80 After Crisis

Jun 4 (3 days ago)

American International Group Inc.
Chief Executive Officer Robert Benmosche said Europe’s debt
crisis shows governments worldwide must accept that people will
have to work more years as life expectancies increase.

http://bloom.bg/LdwGLe

# – # – #  

Anyone surprised?

Reality has to set in sometime!

# – # – # – # – #   

Leave a Comment » | MONEY | Tagged: | Permalink
Posted by reinkefj

MONEY: Recovery or Collapse?

Tuesday, June 5, 2012

http://globalresearch.ca/index.php?context=va&aid=30960

Recovery or Economic Collapse? Bet on Collapse
The Financial Crisis could Destroy Western Civilization
by Dr. Paul Craig Roberts
Global Research, May 21, 2012

*** begin quote ***

With an eye on the approaching dollar crisis, which will wreck the international financial system, the presidents of China, Russia, Brazil, South Africa, and the prime minister of India met last month to discuss forming a new bank that would shield their economies and commerce from mistakes made by Washington and the European Union. The five countries, known as the BRICS, intend to settle their trade with one another in their own currencies and cease relying on the dollar. The fact that Russia, the two Asian giants, and the largest economies in Africa and South America are leaving the dollar’s orbit sends a powerful message of lack of confidence in Washington’s handling of financial matters.

It is ironic that the outcome of financial deregulation in the US is the opposite of what its free market advocates promised. In place of highly competitive financial firms that live or die by their wits alone without government intervention, we have unprecedented financial concentration. Massive banks, “too big to fail,” now send their multi-trillion dollar losses to Washington to be paid by heavily indebted US taxpayers whose real incomes have not risen in 20 years. The banksters take home fortunes in annual bonuses for their success in socializing the “free market” banks’ losses and privatizing profits to the point of not even paying income taxes.

In the US free market economists unleashed avarice and permitted it to run amuck. Will the disastrous consequences discredit capitalism to the extent that the Soviet collapse discredited socialism?

Will Western civilization itself survive the financial tsunami that deregulated Wall Street has produced?

Ironic, isn’t it, that the United States, the home of the “indispensable people,” stands before us as the likely candidate whose government will be responsible for the collapse of the West.

*** end quote ***

Leave a Comment » | MONEY | Tagged: | Permalink
Posted by reinkefj

MONEY: FED screws retirees

Thursday, March 29, 2012

http://finance.yahoo.com/news/how-the-fed-hurts-retirees.html

How the Fed Hurts Retirees
CNNMoney.com
By Annalyn Censky | CNNMoney.com
Fri, Mar 23, 2012 1:08 PM EDT

*** begin quote ***

The Federal Reserve has kept interest rates near zero since 2008, but the economic boost comes at the expense of these savers.

*** end quote ***

This is basically saying that the time preference for delaying consumption is ZERO!

When folks were planning their retirement decades ago, who would have guessed a zero interest rate scenario? Any financial advisor, who did, would looking for a job. There was always talk of the after tax interest rate minus the rate of inflation. That was figured at anywhere from 5 to 8%.

Yeah, right.

Now the after tax rate is ZERO and the inflation rate is guesstimate at 5%. (Pay no attention to the smoke and mirrors being blown up your <synonym for donkey> by the “news anchors”, the FED, politicians, and bureaucrats. You’ve seen the price of gas, the national debt, the amount of “dollars” being held by the various bailed out banks.)

The reason that the FED is holding the interest rate down is to allow the Gooferment to carry the national debt with ease.

The retirees are only one group that is being hurt.

There’s a long list; not the least of which is anyone considering making a capital investment. What is the true cost of capital? (I know some businesses that are making a 12% assumption. Based on historical averages in previous business plans.)

# – # – # – # – #

Leave a Comment » | MONEY | Tagged: , , , , , , , , | Permalink
Posted by reinkefj

MONEY: Cashless society

Tuesday, March 27, 2012

http://www.cbsnews.com/8301-202_162-57399610/sweden-moving-towards-cashless-economy/

March 18, 2012 5:09 PM
Sweden moving towards cashless economy

*** begin quote ***

But there are pockets of resistance. Hanna Celik, whose family owns a newspaper kiosk in a Stockholm shopping mall, says the digital economy is all about banks seeking bigger earnings.

Celik says he gets charged about 5 Swedish kronor ($0.80) for every credit card transaction, and a law passed by the Swedish Parliament prevents him from passing on that charge to consumers.

“That stinks,” he says. “For them (the banks), this is a very good way to earn a lot of money, that’s what it’s all about. They make huge profits.”

*** end quote ***

Big Brother?

Imagine that “the authorities” can see everything you do and, if not that, then every cent you spend.

There’s a value in anonymous transactions.

Not the least of which is the energy for storing all that data.

Gooferment must LOVE this.

# – # – # – # – #

Leave a Comment » | MONEY | Tagged: , , | Permalink
Posted by reinkefj

MONEY: Never retire … unless you play golf!

Friday, March 23, 2012

http://finance.yahoo.com/news/6-reasons-why-never-retire-164549581.html

6 Reasons Why You Should Never Retire
U.S.News & World Report LP
By Philip Moeller | U.S.News & World Report LP – Wed, Mar 14, 2012 12:45 PM EDT

*** begin quote ***

Threats to retirement security are everywhere. The list is topped by the recession-fueled impact on retirement confidence: People haven’t set aside nearly enough money to fund their retirements. Next on the list is the regular drumbeat from critics that the Social Security system is running out of money and won’t be able to honor its current promises to people nearing retirement. Perhaps the third stake in the heart of retirement is that people are living longer and longer, raising legitimate fears they will outlive their money.
All well and good, perhaps. But these concerns have obscured the compelling arguments against ever retiring, except for physical reasons. The short list of reasons never to retire include:

1. There is no physical reason to retire.

*** end quote ***

Yeah, sarcastically get a job and retire there. Have you ever seen <Insert favorite Gooferment agency here>?

Seriously, why retire? To sit around and rust out.

# – # – # – # – #

Leave a Comment » | MONEY | Tagged: , , , , | Permalink
Posted by reinkefj

MONEY: When does the inflation come?

Monday, March 12, 2012

http://dumpdc.wordpress.com/2012/03/10/flash-editorials-march-3-2012-2/

Flash Editorials March 10, 2012
By Russell D. Longcore

*** begin quote ***

The Nation III: The Federal Reserve now owns more United States Treasury bonds (debt) than China. Think about what a mega-Ponzi scheme this is. The very entity that prints greenback dollars…creating money from paper and ink…prints up a few hundred billion and hands them to the US Treasury to buy debt, thereby propping up the government. It’s the highest form of counterfeiting ever witnessed in human history. The tragic part of this story is that the Fed cannot stop printing and buying. If other nations around the planet want to dump DC debt, the Fed will be forced to buy it so that the bond market does not crash. Get ready for hyperinflation, ladies and gentlemen. It’s coming to a wallet near you.

*** end quote ***

Paper money always fails eventually.

Who gets hurt? The poor, those on fixed incomes, the very young, and the very old.

Who makes out? The elite, the mobile, those with real skills / real capital, and those who “saved” in metals.

So, when?

That’s the 64k$ question!

We have to think it comes with a “tipping point” event (i.e., trouble in the Middle East; OPEC shifts to sell oil for gold; China further “diversifies” out of US debt).

We’re like the old sailors approaching the edge of the earth. Who knows what lies over the horizon?

# – # – # – # – #

Leave a Comment » | MONEY | Tagged: , , , , , | Permalink
Posted by reinkefj

MONEY: Roth IRA Conversions are problematic?

Wednesday, February 22, 2012

http://mortonlaw.typepad.com/my_weblog/2012/02/roth-may-become-more-compelling-planning-option.html

February 13, 2012
Roth may become more compelling planning option

*** begin quote ***

If the current proposal before congress to eliminate the stretch IRA provisions from the tax code go into effect, it presents an even more compelling reason to convert traditional IRA’s into Roth IRA’s.  While most people are reluctant to pay taxes now on a tax deferred account, the ability to pay taxes now under current rates, rather than under future rates which are likely to be higher.  Now with the potential loss of the ability of beneficiaries to stretch withdrawals when they inherit, thereby paying the taxes on the account within 5 years of their inheritance, the case for the Roth becomes more compelling.

*** and ***

Their growth and distributions would be tax free – unless, of course, congress eliminated the tax free character of the Roth IRA.  But they would never break a promise like that (unless, of course, you count their original promise not to tax social security benefits).

*** end quote ***

Wow, even more cynical people.

Converting to Roth now ENSURES that a tax is to be paid. Waiting MAY cause a higher tax to be paid.

What’s the time value of money in a zero interest rate environment?

That argues BOTH ways.

* Since money today has ZERO value, why not pay the tax (i.e., there is no better use of the funds; the NPV of the tax loss in the future is huge; confiscation of IRA / 401Ks for the “enhanced socsec benefit)?

* Since money today has zero value, why not try to convert it into something that will become valuable (i.e., real estate; gold; dividend paying growth stock)?

Pretty good argue with myself and lose twice.

# – # – # – # – #

 

Leave a Comment » | MONEY | Tagged: , , , , , , , , | Permalink
Posted by reinkefj

« Previous Entries
Next Entries »