MONEY: Where are we going to be in 20 years?

Monday, March 16, 2009

http://insidecatholic.com/Joomla/index.php?option=com_content&task=view&id=5565&Itemid=48

The Money Meltdown: A Conversation with Thomas Woods Jr. by Brian Saint-Paul 3/11/09

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Q: We’ve had bailouts and stimulus packages, and possibly more of both in the near future. If you were to look into a crystal ball, where are we going to be in 20 years? Where is all of this heading? Will we reach a point of total economic collapse? Or will we wind up as the newest Euro-style state?

It seems to me that the best-case scenario is a kind of European third-way stagnation: high unemployment, anemic growth (if any), and a whole bunch of people scratching their heads and wondering why this is happening. That could be our fate.

Of course, it could be worse. It may turn into something like what Japan endured in the 1990s and beyond — though at least Japan had some domestic savings as a cushion. Or there could well be a complete collapse of the system, with the dollar destroyed. This is all conditional, because it depends in large part on what the government does. Its cure is almost sure to be worse than the disease.

I’d love to think that if a collapse came, people would say, “Obviously, intervention doesn’t work, so let’s try what the Austrians have been suggesting.” But I think instead a demagogue would rise up to say — as usual — that the problem is not enough government involvement, and that he’s going to rescue us.

That’s the most likely outcome.

*** and ***

Thomas E. Woods Jr. is senior fellow in American history at the Ludwig von Mises Institute. He is the author of nine books, including two New York Times bestsellers: The Politically Incorrect Guide to American History and the just-released Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, as well as the award-winning The Church and the Market: A Catholic Defense of the Free Economy. Visit his new Web site.

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MONEY: Zero debt is best

Saturday, March 14, 2009

http://www.lewrockwell.com/schiff/schiff7.html  

March 14, 2009
Credit Card Cancer
by Peter Schiff
Peter Schiff is president of Euro Pacific Capital and author

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Lastly, savings can always be relied upon whereas credit is ephemeral. Remarks this week from the Chinese premier Wen Jiabao should serve notice to all Americans that the day will soon come when the Chinese stop lending us their umbrellas. When that happens, the average American will be soaked to the bone.

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One does NOT have to have a crystal ball to see the future.

The Chinese will stop buying Treasury debt. Interest rates to will go thru the roof. And, the economy will slow further.

The only defense is to have ZERO bad debt. That is nothing but a fixed rate mortgage that is well below 15% of your annual income.

Maybe Dave Ramsey is right. ZERO debt is best?

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MONEY: FDIC is not really insuring banks

Thursday, March 5, 2009

http://www.lewrockwell.com/blog/lewrw/archives/025671.html

March 04, 2009
Re: Bair (or Is That Bare?) Says FDIC Going Broke
Posted by Kathryn Muratore at March 4, 2009 05:11 PM

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Lew, the counter-intuitive response of government-sponsored bureaucracies like the FDIC make me laugh. So we already know that the FDIC is not really insuring banks in any meaningful sense, although they keep that “Insurance” word in the title. But, imagine what an actual above-board insurance company would do in an emergency – say a hurricane hitting a populated area. In the days before and after the hurricane, can you imagine State Farm sending a bill to all of its customers in the Southeast for an emergency premium hike to cover the payouts that it knows are imminent?

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Yeah, like Social Security Insurance, which isn’t “insurance” either.

When this musical chairs game stops, who will be left standing?

Taxpayers, the old, those on fixed income.

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MONEY: Inflation on the horizon!

Thursday, March 5, 2009

http://www.lewrockwell.com/buchanan/buchanan105.html

Pitchfork Time by Patrick J. Buchanan

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Where the U.S. government usually consumes 21 percent of gross domestic product, this Obama budget spends 28 percent in 2009 and runs a deficit of $1.75 trillion, or 12.7 percent of GDP. That is four times the largest deficit of George W. Bush and twice as large a share of the economy as any deficit run since World War II.

Add that 28 percent of GDP spent by the U.S. government to the 12 percent spent by states, counties and cities, and government will consume 40 percent of the economy in 2009.

We are not “headed down the road to socialism.” We are there.

Since the budget was released, word has come that the U.S. economy did not shrink by 3.8 percent in the fourth quarter, but 6.2 percent. All the assumptions in Obama’s budget about growth in 2009 and 2010 need to be revised downward, and the deficits revised upward.

Look for the deficit for 2009 to cross $2 trillion.

*** end quote ***

I don’t know about anyone else, but I can’t afford the Obama budget!

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MONEY: Fiat versus commodity; we’re not free to choose!

Tuesday, February 24, 2009

http://www.amconmag.com/article/2009/feb/09/00016/

Fed Up
The popular uprising against central banking
By Thomas E. Woods Jr.

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Under a commodity standard, people could save for the future by accumulating gold and silver coins. The coins’ value appreciated over time because of their natural increase in purchasing power, as the relatively slow increase in the production of precious metals was outpaced by the much faster increase in the production of other goods and services. Today, only a fool would try to save for the future by piling up dollar bills. Everyone is forced to enter the financial markets, which are risky even for knowledgeable investors, in order to prevent the value of his retirement savings from vanishing before his eyes.

*** end quote ***

A timeless indictment of the Fed and its fiat money!

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MONEY: TLOCM “the land of critical mass” is 10M$!

Sunday, February 15, 2009

Bob Brinker talks about “the land of critical mass”. This is the place in your life where money is no longer a concern and you are able to live the lifestyle of your desire.

5 year @ 12 month ladder = 60 units

100k per year = 5% of 2,000,000

5 year CDs @ 5% is 10 M$ = 60 monthly 5 year CDs @ 166, 666$ for each CD

So the “land of critical mass” is about 10M$.

Wow.

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MONEY: How does burdening future generations help us?

Friday, February 13, 2009

http://www.americanthinker.com/blog/2009/01/republicans_won.html

In the House Republicans’ meeting with Obama on January 27th, Maryland’s sole Republican Congressman, Roscoe Bartlett, said it best:

“Mr. President, I probably come at this from a slightly different perspective. I remember when FDR beat Hoover in 1932. So I remember the Great Depression very well. I don’t remember any of the many government programs affecting the course of the Depression. Government programs didn’t work then; I don’t know why we think they would work now. Mr. President, I think our obsessive borrowing has fully mortgaged my kids and my grandkids. Now we’re working on mortgaging my two great-grandkids. Mr. President, I think it’s more than a little bit selfish to try to solve our economic problems which we created by burdening future generations yet to be born.”

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Sounds like this fellow should be Treasury Secretary!

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MONEY: Insurance and employment considering the meltdown

Monday, February 9, 2009

Unfortunately, most people get their health and life insurance via their employer.

That presents a problem when you get nuked (i.e., fired, laid off, or quit).

Health insurance is expensive. Hospital bills are catastrophic.

If you have the opportunity, it may be worthwhile to pick up a catastrophic health insurance policy on your own or through a group. Fraternal organizations have such; as do groups such as Independent Consulting organizations.

Money well spent.

Also life insurance. But that is much cheaper and easier.

Now, with respect to life insurance, it’s always better to have one policy than two. The setup fee is wasted. But, I’m going to suggest that you rethink that strategy. ESPECIALLY if life insurance is very important to your family. (Two earner family with children or One earner family with children.)

You may wish to have TWO life insurance policies with DIFFERENT insurers, despite the added cost.

We haven’t seen the current subprime creditmeltdown financial mess hit the Insurance Companies. … … Yet?

By having two policies, you’ll have two ticket in that sweepstakes.

Life insurance is cheap. (Minimal gooferment regulation!)

Health insurance isn’t. (Lot’s of gooferment “help” there!) But, going “naked” is potentially disastrous.

Suggest an insurance review NOW!

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Remember the news reports that 9 out of 10 financial professionals at Cantor Fitzgerald had no life insurance? And, 9/11 happened. I remember my grandparents saying: “A family man, who dies without life insurance, doesn’t die, he absconds.” Big word for them “absconds”. But they were surprising folks. It’s a true then as it is now.

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MONEY: What is a dollar?

Tuesday, February 3, 2009

http://www.lewrockwell.com/rajiva/rajiva12.html

Fiat Law and Fiat Currencies – the Relic of Barbarians
by Lila Rajiva

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The free market arose wherever there were laws and systems like that – whether in Europe or Africa or Asia. One way to think about this difference would be to see it as the difference between a fiat money, like paper, and a real store of value, like gold. You can print all the money you want, but if there’s nothing to back it up, then you’re in a bit of trouble. Your creditors are unlikely to put much store in you as a credit risk, just as the world’s wringing its hands today over the dollar. Pretty soon, they come calling for their loans with cudgels and pitchforks.

Gold does not have the same problem, because there’s a limited supply of it. It has to occur in nature. It has to be found somewhere underground and then mined and refined. It’s an expensive business – that takes risk, time, and money. There are costs attached to it that someone has to pay. Paper money, on the other hand, can be printed any time you want. Just ask Ben Bernanke. He’s dropping it by the helicopter load from the clouds.

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They are “counterfeiting value” by printing more money electronically. It’s slight of hand. To understand, you have to understand the answer to the question: “What is a dollar?” and proceed from there.

The answer is it’s NOW an imaginary unit, backed by the belief that you can exchange a green peice of paper for something. A Keynesian (http://en.wikipedia.org/wiki/Keynesian) will never talk about what the definition of money is. An Austrian (http://en.wikipedia.org/wiki/Austrian_School) will insist that the pricing mechanism in the economy have commodity money. It USED to be tied to gold.

Sadly, as an Austrian, I think you are in for hard times. O is going to “finance” 2T$ in current spending. By monetizing it. A fancy word for counterfeiting. And, the value of the dollar is going down even further.

To understand, you have to go to Robinson Crusoe’s island, that economist’s use to simplify ideas. A fisherman, egg gatherer, and a fruit gatherer are on the island. (Magic; don’t ask questions yet!) They barter between themselves. After a while, 1 fish = 2 eggs = 4 coconuts. Due to the relative difficulty of effort. But the fisherman and fruit gatherer don’t deal directly. The egg gather is the middle man. Then a banker arrives. He creates money so that the Fisherman can deal directly with the Egg guy. He uses seashells. Then the value equation is 1 fish = 2 eggs = 4 coconuts = 8 seashells. The evil banker after a while introduces more seashells into circulation by spending them. So he get more stuff. Similarly through out the ages, the King (Government) seeks to enrich itself that way. When the currency is gold coins, it’s much harder. (I first learned this when I saw an exhibit at the Smithsonian of French Francs over time. The French Franc of Louis I was a gold hockey puck; Louis XIV’s was a very thin button. Inflation!) When the currency is pretty green pieces of paper, it’s much easier.

So there you have how O44 is goign to spend 2T$ that we don’t have.

Basically, it’s a “tax” on anyone who has a dollar or dollar denominated assets. By adding a “seashell”, the value of all the other seashells is adulterated. Watered down.

So who get’s screwed?

The Chinese have 5T$. There’s a lot of dollars out there. The poor and people on fixed incomes (i.e., the purchasing power of their few dollars goes down) get less for their money.

Who makes out?

The US Government mostly. People who have “valuable stuff”. Commodities, commodity producers, land owners, people who produce stuff that others want.

So that’s how O will spend what he ain’t got.

He’s betting that before the inflation comes, the economy will “restart” and we won’t notice. (Think LBJ and Carter!) It worked for Kennedy because he lowered taxes on the productive class and everyone was motivated to get to work. His quote was: “A rising tide raise all boats!”

Sadly, I don’t see O or his staff being that smart.

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MONEY: Economy needs Austrian solution!

Thursday, January 29, 2009

http://www.centraljersey.com/articles/2009/01/27/opinions/doc497f83d8ae815184216560.txt

DISPATCHES: Economy needs Keynesian solution
Tuesday, January 27, 2009 5:06 PM EST
By Hank Kalet, Online Editor

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   The mood of the nation may be changing.

   A nation that for nearly three decades bought into a conservative ideology that painted government as the enemy is embracing the return of federal intervention in the economy as necessary to repair the damage caused by years of neglect.

   Polling over the last month shows that about two thirds of Americans support an economic stimulus package weighted toward government spending while a majority of Americans now favor increased regulation of the financial industry.

*** end quote ***

Yeah, they want more gooferment regulation to fix the problem that the gooferment regulation created in the first place. Argh! Theres an incestuaous relationship between the congresscritters, the regulatory agencies, and the companie being regulated. Argh! Follow the moeny and campaign contributions! And, you expect it to change?

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   The credit crunch has resulted in “trillions missing from the economy,” he said. “Money is not moving, and the government is in a position to make money move.”

   Direct investment — in the form of road and bridge repairs, construction of a 21st-century electrical grid and expanded broadband access — will not only get people working again, but also leave the nation better off down the road.

   A little more than a third of the $825 billion stimulus package on the table in Washington is slated to go toward what some are calling “make-work” projects, which also include building schools and providing funding to help local and state governments, as well as homeowners, make their buildings more energy efficient.

   The package also includes significant aid to the states, an expansion of unemployment benefits and assistance with health care — all of which not only puts money back in the economy, but alleviates some of the economic pain being felt by average Americans.

*** end quote ***

YEAH, every social program that can be thrown in has been. Please don’t make me laugh. The socialists of the R’s and D’s are using this crisis — as politicians have throughout the ages — to justify more and bigger intrusions on our lives, our pocketbooks, and our essential liberties. Argh!

*** begin quote ***  

   Without the federal aid, it is likely states will need to slash their budgets, drastically in some cases, to meet constitutional requirements. New Jersey, for instance, requires that its state budget be in balance, meaning falling revenue must be addressed either by cutting taxes or spending cuts — neither of which makes sense at a time of severe recession.

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NJ finances are a joke. The crooks in Trenton spend like there is no tomorrow. And, the taxpayers get stuck.

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   While many tie the New Deal — Franklin Delano Roosevelt’s package of programs meant to battle the Great Depression — as Keynesian, Dr. Reich reminds us it was “not until the U.S. entered World War II” that the nation implemented “Keynes’ idea on a scale necessary to pull the nation out of the doldrums.”

*** end quote ***

FDR had to lure, cajole, and almost force the Japanese into the attack on Perl Harbor. To end the Great Depression. And, we’re left with the illusion that FDR was a “good guy”.

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   These results — and the long economic expansion that followed — are evidence we need bold action; we must inject public money into the economy regardless of its impact on the deficit. Once the economy is rescued, we can start thinking about reining in the deficit.

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No we need to have a revolution!

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