MONEY: Penny candy and other economic lessons

https://schiffgold.com/interviews/peter-schiff-with-tucker-carlson-inflation-is-a-painful-tax/

Peter Schiff With Tucker Carlson: Inflation Is a Painful Tax
APRIL 6, 2021  BY SCHIFFGOLD 

*** begin quote ***

We’re told inflation isn’t a problem. But a quick trip out to the grocery store or to fill up your car with gas tells you otherwise. Prices are going up. Peter Schiff recently appeared on Tucker Carlson’s show to talk about inflation. He said the price of everything is going up and the value of everything is going down.

It’s clear that prices are rising.

*** end quote ***

I’m tired of ranting about inflation. 

Just do a search on the blog for “three silver dimes” and you’ll see some of my best examples (i.e., the Roman’s cloak, penny candy, 1968 gas prices).

It all comes down to the politicians and bureaucrats having an incentive for silent taxes.  If some Gooferment goon came in every year and seized 2% of your wealth (i.e., 2/100ths of your house), then you’d understand.

I don’t know what I can write that will make the point of inflation is due to the FED. (The Federal Reserve Bank is a misnomer. IT ain’t “federal”. It reserves nothing. And, it ain’t a “bank”. It is a private cartel of the elite banks run for their benefit and that of the entrenched politicians.)

Sure the rich, the elite, politicians, and bureaucrats love inflation.

It’s a racket.

“It’s a big club, and you ain’t in it! You, and I, are not in the big club.” — George Carlin
https://www.youtube.com/watch?v=i5dBZDSSky0

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MONEY: A Gold Bull Market?

https://www.lewrockwell.com/2016/07/no_author/day-reckoning/

Peter Schiff: We’ve Entered a New Leg of a Gold Bull Market
By Samuel Bryan 
SchiffGold.com
July 16, 2016

*** begin quote ***

We still have a tremendous price that needs to be paid for the mistakes of the past. Even if we correct those mistakes in the future, we still are going to have a day of reckoning. And that day of reckoning is going to evolve a much lower US dollar and a much higher gold price.”

*** end quote ***

I think the WORST part of fiat currency is that we have lost is the objective standard of value!

“Money is a matter of functions four, a medium, a measure, a standard, a store.” He repeated that four times like poetry. “Six Characters in Money: Portable – Durable – Divisible – Uniformity – Limited Supply – Acceptability.” — CHURCH 10●19●62 (Vol 1) 978-0-557-08387-9 page 110

The paper produced by the FED ——

 The Federal Reserve Bank is a misnomer. IT ain’t “federal”. It reserves nothing. And, it ain’t a “bank”. It is a private cartel of the elite banks run for their benefit and that of the entrenched politicians.

— — fails three of the four functions — a measure, a standard, a store. 

So when we hear numbers kicked around they lose all sense of reality.

I’ve griped about the three silver dimes for a gallon of gas many times on this blog before. But it still states an essential truth. Silver hasn’t really changes and the gas is actually “better” gas. So what accounts for the delta (i.e., a gallon of lesser quality gas in the Sixties versus two plus gallons of today’s better gas)?

It’s the value of the money stupid.

The dollar 1960 value has been “inflated” away by the politicians and bureaucrats who put the difference in their pockets.

In the old days, it’d just be called what it is — theft.

Can’t you see it?

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GOLDBUG: Gooferment prevents us from making wise economic decisions

http://news.goldseek.com/GoldSeek/1450365360.php

A Free Market in Interest Rates

*** begin quote ***

Under gold, the saver always has a choice. If he likes the rate of interest, he can deposit his gold coin. If not, he can withdraw it. By withdrawing, he forces the bank to sell an asset. That in turn ticks down the price of the bond, which is the same as ticking up the rate of interest. His preference has real teeth, and that’s an essential corrective mechanism.

Unfortunately, the government removed gold from the monetary system. Now you can own it, but your choices have no effect on interest. If you buy gold, then you get out of the banking system. However, the seller takes your place, getting rid of his gold and thereby taking your place in the banking system. The dollars and gold merely swap owners, with no effect on interest rates.

The Fed has kicked savers to the curb, along with gold. Now the dollar is considered to be money. And what is it, exactly? The dollar is the Fed’s IOU. If you have dollars, then you are funding the Fed. You—along with billions of others around the globe—are empowering the Fed. It can lend at any rate it wishes, because it has a seemingly unlimited credit line. The Fed is lending your wealth to profligate borrowers who use it for nonproductive purposes—and that’s putting it mildly.

*** end quote ***

One of the essential truths that I’ve learned from the Austrian School of Economics is the concept of “malinvestment”. As I understand it, because there is no free market interest rate to evaluate the value of future purchases with, people make decisions that they would not have if they knew the actual correct market set rate of interest. This brings on the boom and bust cycle that we are all too familiar with.

Essentially the interest rate is set politically. 

By the way, I am sure by complete accident, the very low interest rate makes it easy for the Gooferment to carry a large debt. Last estimate, I read was the current 18T+ national debt and the guesstimated 200T+ in unfunded liabilities is what our posterity will have to deal with!

Of course, this is unpayable.

So, the Gooferment will “default” on this debt by further inflating the money supply and rob all the holders of dollars of their purchasing power. Look at any of the charts of a dollar’s purchasing power and see it go to near zero. I’ve ranted about this before citing anecdotally my sainted Father-In-Law’s fifty dollar bill that he kept in his wallet (i.e., when he put it in it work house and feed his family for a month and when he died his daughters didn’t realize what had been lost), the three silver dimes for a gallon of gas in 1963 that could buy two gallons today (i.e., loss of purchasing power), and — my personal favorite — the Smithsonian exhibit of the French gold Franc over the time of the French Kings (i.e., from hockey puck to shirt button).

With a gold standard, there is a finite limit to the amount of credit available. And, like any scarce resource in a truly free market system, the invisible hand of that market will establish the time value of money. That will allocate credit to those people who will pay the most for it. Some people will have their projects funded; others not. 

What we fail to understand is that these resource usage decisions are “the Great Calculator” that takes all our wants, needs, and desires as input and “rations stuff” to maximize satisfaction.

Too hard to understand?

Try it this way. If the cost of interest is more than you can afford, then you’ll change your wants.

Argh!

The Gooferment, by the mechanism of the The Federal Reserve Bank, — a misnomer. IT ain’t “federal”. It reserves nothing. And, it ain’t a “bank”. It is a private cartel of the elite banks run for their benefit and that of the entrenched politicians. — is robbing us of our wealth and the dikw (i.e., data, information, knowledge, wisdom) to make wise economic decisions.

Argh!

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GOLDBUG: The allure of gold in a fiat currency world

http://www.zerohedge.com/news/2015-05-09/russell-napier-explains-whats-store-gold-if-cash-outlawed

Russell Napier Explains What’s In Store For Gold If Cash Is Outlawed
Submitted by Tyler Durden on 05/09/2015 19:45 -0400

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However, in such a world, zero-yielding gold would be a high-yielding instrument. If the authorities ever sought to restrict access to banknotes, then gold would suddenly find itself enfranchised as money for the first time in many decades. So, given the scale of these competing forces, it is just too early to say what might happen to the gold price, but the allure of gold will grow the more it becomes clear that central bank fiat has failed and the age of government fiat is dawning.

The time is ever nearer when the price of gold will rise in an era of deflation. In due course, though no time soon, the full force of government fiat will engineer a reflation, albeit one replete with the misallocations of savings and capital so beloved by the bureaucrat. Then the PhD standard, in which the value of money is linked only to the words of the over-educated, will have ended. The gold price will rise even further, ‘And the words that are used for to get the ship confused will not be understood as they’re spoken, for the chains of the sea will have busted in the night’. And that’s ‘The hour when the ship comes in.’

*** end quote ***

Interesting change of the interest rate perception.

“Gold doesn’t earn interest.”

That was the common complaint. It just sits there. And, there is a negative opportunity cost.

Now for gold bugs like me, it’s insurance. 

The Gooferment can’t tax it when I die because it doesn’t exist.

The FED, the banking cartel’s, “man in the Gooferment”, can’t inflate it.

And, no one can track it.

With the FED’s zero interest rate policy — screw you senior citizens living on a pension and some savings —, there doesn’t seem to be quite the argument about not paying interest. Compare zero to, as Ric Edelman puts it, zero point nothing, doesn’t seem so bad now does it?

Also, when you think about Cyprus and their “bail in” solution that turns depositors into creditors of the bank, or worse shareholders with non-tradeable shares — think non-traded REITs, another of Ric Edelman’s “favorites” — gold doesn’t compare badly.

I go back to my two favorite … … examples.

  • In Roman times, two ounces of gold got a custom man’s outfit with cloak and sandals; today, those same two ounces translates to about 3,400 FRB “dollars”. Pretty equivalent.
     
  • And, in my yute, gas at the old Hess station was 30¢ a gallon with trading stamps, a glass, and the attendant pumped it — also cleaned the windshield; today those same three SILVER dimes could be sold for about 6 FRB “dollars”, which would buy more than TWO gallons of “better gas”, but no glass, stamps, or attendant (except in the Pepuls Republik of Nu Jerzee). Pretty equivalent. 

SO WHAT’S DIFFERENT?

The value of the currency!

Argh!

I’ll keep my nonexistent gold, silver, and nickels. Thank you very much.

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MONEY: Thinking about employer 401Ks and IRAs versus retirement savings

http://www.foxbusiness.com/personal-finance/2012/11/26/401k-with-no-match-should-contribute/

An interesting article. My gripe with 401ks has always been the investment options and fees are “unacceptable”. Especially when you consider the real inflation rate.

I know I am a gold bug. But with the FED printing money and the subterfuge of them buying their own bonds, I think we are at risk of an even higher inflation. I remember the Cater inflation. And, I am not buying that the interest rate is zero.

I think an interesting facet is that the price of gas, which goes into every product indirectly, has actually decline in price since 1968. (Ron Paul said it best: “Three silver dimes bought a gallon of gas in the Sixties; today, those same three silver dimes equate to a gallon and half.”)

As a poor retiree, inflation is my concern. (If it evokes more sympathy, I’m also an orphan.) I realize that I probably personally have a lot to worry about. It’s really just me. But for posterity, this stinks. Hence my obsession on commodity bullion.

And, it is a way of avoiding the estate taxes.

–30–

MONEY: The falling dollar hurts real people; an ebb tide lowers all boats

http://www.mybudget360.com/us-standard-of-living-falling-us-dollar-impact-us-dollar-benefits/

Standard of living, meet falling US dollar – how a falling US dollar benefits banks at the expense of working Americans.

*** begin quote ***

There is certainly a cost to a falling US dollar. Many Americans are living the consequences of this multi-decade long trend. The Federal Reserve has only added fuel to this trend but many families are now realizing that there does come a cost to unrelenting debt based solutions to fiscal problems. Shopping at the local grocery store I’ve noticed that some items have doubled in the last few years. Fueling up is also more expensive. The issue with living on a low dollar policy is that eventually, you end up in a low wage capitalist system. The easy money slowly inflates away especially on global items. We are seeing this in the US in various arenas especially with higher education. The end result is that the standard of living for the vast majority of Americans has fallen dramatically in the last few decades.

*** end quote ***

The seems to be a basic stupidity in human beings as to the devastating impacts of “inflation” (i.e., counterfeiting by a central bank).

As an injineer, we can’t have a “standard” that varies. 

As a football fan, imagine if a yard was redefined each football season as 2% less. 35.28 inches. Easier to make a first down. Records would be meaningless. And, eventually, in 30 years, they’d play on a one inch field.

Absurd.

So why is it different for money?

In my lifetime, the “dollar”, whatever that is, has lost 99% of it’s value. Gasoline that was 30¢ per gallon was $3.75 last night. Has gasoline become more expensive? Those evil oil companies. No!!! Based on the price of silver, gas is actually ~30% cheaper. 

<<Those three silver dimes in 1960 bought a gallon of gas. Today those three dimes are worth about $6 (conservatively) to $10.50 (speculation). So either 28% cheaper or 65% depending upon your value of those dimes.>>

Why can’t “We, The Sheeple” see it?

And, in the general inflation (i.e., loss of value of the money), wages don’t go up. Those on fixed income are so screwed. And, the poor get poorer. Savings are a joke.

Also even the stock market gets “hurt”. Sure the stock prices go up, but never as much as the inflation rate. We’ve seen this in the Carter disaster. Then, stocks went up in the single digit %s, but the inflation was 25 or 30%. Hence the real value went down.

How does a tin foil hat view the world? Always price things in silver or gold. Makes it obvious.

A new men’s outfit in Rome was two ounces of gold. Today, you can buy a nice outfit for 3500$! Clothing has gotten “cheaper”.

A new car in the 60’s was 6 ounces of gold. (I know a bought a Chevy Nova brand new for 1200$). Today, 10,500$ won’t get you a new car. Cars have become more “expensive”. Gas we’ve already said has gotten “cheaper”.

What do you buy that’s changed?

Gooferment!!!

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MONEY: Commodities tell us that the politicians are lying. (What’s news there?)

http://www4.thedailybell.com/28133/Peter-Schiff-Riding-Into-the-Sunset-or-a-Brick-Wall

Riding Into the Sunset or a Brick Wall?
Tuesday, October 09, 2012 – by Peter Schiff

*** begin quote ***

If everyone starts to carry rolls of cash everywhere, it’s not a big leap to carry coins. A silver coin the size of a dime is currently worth about $3.50. Two could buy you lunch.

*** end quote ***

As someone, who remembers 29 cent per gallon gas — with a glass, trading stamps, and a guy to wipe the window, it’s not a far stretch to imagine a country using gold and silver coins as money.

Paper should be bank warehouse receipts. No fractional reserve banking should be permitted.

We shouldn’t let the elite effete political class define money. Money should be a weight of something. The free market will assign it a value.

In the debate Ron Paul gave a classic line about “in the Sixties, three silver dimes would buy a gallon of gas and those same three silver dimes would buy more gas now”. Still true. Even in California.

Now if you are reading this, just ask yourself: “What’s changed?”

Three silver dimes = gallon of gas in 1960’s = more than a gallon of gas in 2012.

Yet, gas is now over $3 per gallon. 5 in California.

What’s changed?

Could it be that the value of the dollar has changed? Not the value of silver or gasoline?

What’s the yardstick?

This makes the case that gasoline is actually CHEAPER now.

Argh!

And, the politicians tell us there is no inflation!

No wonder the oil sheiks are screaming like stuck pigs. They are getting robbed like the rest of us.

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ECONOMICS: My financial team says …

This fellow leads the group that manages my portfolio (Four years? Average north of 10% for each or the years. One year over 20+%!). While I disagree with him about the long term prospects (i.e.,gold versus the US$), he’s been much “right-er” than I have over the last few years. I think he gives good advice — those four principles — for investors and savers of all sizes.

FWIW!

As usual, the talking heads, politicians, and bureaucrats have, and have had, the “story” all wrong.

Congress causes “bubbles” by messing with stuff it doesn’t understand!

* Either in “moving water from end of the pool to another” it sets off ripples that drown everyone (all of us in the pool). For example, “bailouts”. Failures, even big gigantic enormous ones, are GOOD!

Imagine that instead of enriching Big Labor UAW, the President / Gooferment had the huevos to say:

*** begin quote ***

“Well guys, that’s just too <Expletive Deleted> bad.

We’ll put extra folks on at the Unemployment Office and …

… remember “We, The Sheeple” guarantee your pensions up to 35k/per year just like we did for the Delta pilots.

Executives, we think WalMart needs help. 

And, hey, all you other executives that are running big companies, we want to help you focus — so effective First of Next Month — all salaries in the USA can NOT be more than mine / the President’s. You can’t believe your job is harder than his and hence worth more.

Boards of Directors, you can award more comp to your execs but it has to be in the form of a 25 year equal step ladder of your UNINSURED corporate bonds. I’m sure Treasury Secretary Little Taxcheat Timmy Geitner can explain the concept! (25M$ equals 25 1M$ bonds dated in successive years). By the way BoD’s, your comp regardless of amount will be structure the same way.

That should focus everyone on the big picture.

Thanks for playing “Capitalism version 2.0”

*** end quote ***

* By changing rules, they don’t understand. Example, Glass Stegal, Community Reinvestment Act, and my personal favorite “the short seller’s uptick rule” that allow bear raids on publicly listed companies.

(Note Bene: The “uptick” rule says you can ONLY sell short — borrowing the stock — after an uptick in the sale price of the stock. That means you can put in lots of short sale orders to drive the prices down all by yourself. And, that rule cause the brokers to charge lot’s more for the trade. I know it was at one time 10x the regular trade price at Merrill. They had whole parts of trading desks that managed short sales. Made lots of money doing it. And, when the genius changed that rule, those folks lost their jobs and corporations found themselves under attack (i.e., good companies perceived as weak were subject to bear raid, the stock price was driven down, they were taken over, privatized at that low price, the ordinary players got killed, and the raiders would reap big profits for moving paper.)

* By imposing MEANINGLESS regulations and laws (e.g., GBLA, SOX, Graham, Dodd, etc.) that were supposed to prevent abuses and (a) didn’t plus (b) made everything more expensive by increase admin.

* Finally, by excessive spending and borrowing, they robbed the money of its value. “King Dollar” is a great strategy for the poor and those on fixed incomes because their “money” retains its purchasing power. For example, three silver dimes int he late Fifties Early Sixties bought a gallon of gas; now those same three SILVER dimes can be sold for their melt value and buy 1½ gallons of gas. The politicians point blame at the EVIL oil companies, but IN FACT, gas is “cheaper” now. It’s the money that’s worth less.

At least in the days of King Richard and the Sheriff of Nottingham, the Gooferment had to send the Sheriff’s men out to rob the poor serfs. Or, shave the coins. That’s why coins originally had milled edges; so you could tell if they had been altered.

Argh!

So bottom line:

Ric says: today’s news is better than you’re lead to believe.

This fat old white guy injineer say: “The PAST was MUCH WORSE than you’ve been lead to believe. AND, structurally, you should be upset because the same problem makers are in charge! Still as clueless as they have ALWAYS been.”

Argh! to the N-th power.  

 

———- Forwarded message ———-
From: Edelman Financial Services <client@ricedelman.com>
Date: Fri, Jun 1, 2012 at 5:37 PM
Subject: Market Update
To: XYZXYZXYZXYZ@reinke.cc

Edelman Financial Services

Dear John:

I’ve heard about “A Tale of Two Cities,” but this is ridiculous! Indeed, rarely have we seen such a huge disconnect between the stock market and the economy.

To illustrate, allow me to share some facts with you.

In the past six months, one million Americans who were out of work have found jobs, according to the Bureau of Labor Statistics. The unemployment rate remains too high, but the BLS says the rate is currently at its lowest level in more than three years, despite this week’s “gloomy” news that 69,000 additional Americans found work last month.

Inflation (as measured by the Consumer Price Index) is running at the unusually low annual rate of 2.3% as of April 30. By comparison, inflation has averaged 3.2% since 1926. And I can remember when inflation was 15% back in 1980. (Data from the Bureau of Labor Statistics.)

The price of a barrel of oil fell below $90 last week, reaching its lowest price since October 21, according to the Department of Energy. Stockpiles are at a 22-year high, reports the Energy Information Administration.

Home sales in all four geographic sectors of the U.S. were 10% higher in April than a year ago, says the National Association of Realtors. And the Commerce Department reports that home prices are up 5% from this time last year. Moody’s Analytics called these reports “a genuine rebound” for the housing sector. No wonder that, as Investor’s Business Daily reports, homebuilder sentiment is at a five-year high. And mortgage rates have hit another all-time low, just 3.78% for the 30-year fixed, according to Freddie Mac.

Consumer debt is dropping rapidly. Equifax’s April National Consumer Credit Trends Report and TransUnion have reported:

A 52% decline in the number of write-offs compared to April 2009. We’re now at a level comparable to the pre-recession level of 2006 and the trend continues to improve.
Home finance balances have decreased $1.2 trillion since October 2008, posting the fourth consecutive year of decline.
Home equity revolving balances are $560 billion, down $115 billion from three years ago.
Foreclosures on home equity revolving credit have dropped 37% from a year ago. It’s the lowest in two years.
Auto loans at least 60 days overdue have declined 27% from last April. Meanwhile, Ford’s credit rating was raised by Moody’s to investment-grade for the first time in seven years.

The nation’s banks earned $35 billion in the first three months of 2012. That’s the biggest quarterly profit since 2007, according to the Federal Deposit Insurance Corporation. Two out of three banks reported higher profits than for the same period a year ago. Meanwhile, bank losses on failed loans fell to the lowest level in four years and the number of troubled banks fell for the fourth consecutive quarter, says the FDIC. And the National Credit Union Administration says credit unions have granted nearly $12 billion in business loans, setting a new record.

The banks aren’t the only businesses making money. After-tax corporate profits (as a percent of the nation’s GDP) were 9.75% as of December 31, 2011 – compared to just 5.7% in Q4 1999, at the height of the dot-com craze. (Source: Bureau of Economic Analysis, Department of Commerce). Corporate dividends are on pace for an all-time high, reports Standard & Poor’s, and American corporations have accumulated a record level of cash – $1.2 trillion, according to Moody’s Investors Service.

A new report by educational firm Financial Finesse on employee financial stress says that only 16% of employees now report “high” or “overwhelming” financial stress levels, down 30% from two years ago. And consumer sentiment, measured monthly by the University of Michigan, is now at the highest level since October 2007.

As these facts illustrate, the U.S. economy is continuing its recovery from the depths of the Credit Crisis of 2008, and in many areas we’ve returned to pre-crisis levels. And indications are strong that our nation’s recovery will continue for years to come.

Such positive news would suggest that stock prices should be soaring. And indeed they were for the first three months of this year (the Dow Jones Industrial Average1 gained 8.8% through March 31). And although the economic data continues to be good (as described above), the stock market was flat in April and fell sharply in May. (The Dow dropped 5.8% in May. That might not sound like much, but May produced only five daily gains; the last time a single month had so few daily gains was in 1968! And the last time we experienced a month with just four days of gains occurred – are you ready for this? – in 1903!)

Some folks might say that a pullback makes sense and that stock prices can’t be expected to continue rising at the pace set earlier this year. But that sentiment belies the facts. While the S&P 500 Stock Index2 is at the same level as it was in 2000, the current operating profits of the 500 companies that comprise the S&P 500 are 1.8 times higher than they were then. If prices in 2000 were accurate based on profits, then today’s stock market – based on that math – should be 81% higher than it is. In other words, the Dow Jones Industrial Average should be at 22,431, not 12,293 (which was Thursday’s actual close).

Consider this: the earnings yield on the S&P 500 is 8.7%; the yield on the 10-year Treasury Note is 1.6%. The last time the spread was this wide was 1967! This statistic from Standard and Poor’s, like all the others I’ve shared, is completely at odds with May’s performance.

And there’s more. Since October 2007, when the stock market last attained an all-time high, investors have yanked $420 billion from stock mutual funds. They’ve withdrawn $31 billion this year alone, through May 23, according to the Investment Company Institute. So there is no question that, despite gains in consumer confidence and robust corporate profits, investors are displaying no stomach for stocks. They’d rather own just about anything else, even if it means earning nothing (such as bank accounts and money market funds that pay 0.01% annually), losing money in a desperate effort to avoid, well, losing money (gold prices are down about 15% since the highs reached last August according to The Wall Street Journal, despite the claims of many that gold is a “safe haven”), blindly (and foolishly) chasing some get-rich-quick fad (ever hear of an IPO called Facebook?) or incorrectly thinking that long-term bonds are a safe haven (have you read my Special Report warning about “this most dangerous of assets”? If not, ask us to send you a copy).

We all know why investors are so averse to investing in stocks: their attitudes range from fear (Europe, the U.S. federal deficit and state pension-fund shortfalls top the list) to anger (about our do-nothing Congress, incompetent federal regulators and greedy Wall Street banks and brokerage firms) to confusion (conflicting news reports that are inflicted upon us moment by moment in a never-ending media frenzy, made worse by the fact that this is an election year). None of those sentiments cause one to feel confident about investing in stocks.

So, I’m stumped. Every week, Branderson and I talk to a million people on the radio, trying to explain to them why they shouldn’t be full of fear about today’s economy. Together with our colleague, Financial Educator Keith Spengel, we have talked to thousands of people this year in seminars and webcasts on the same subject. And, of course, all the advisors here at Edelman Financial talk daily with hundreds of people. In each instance, we try to show how much money American companies are earning, and how well positioned we are as a nation to confront, withstand and overcome the many serious challenges that we face. And most importantly, we try to help consumers understand that the key to their future financial security lies not in the actions of Congress or leaders of the Eurozone, but in their own personal actions. We want people to realize that it’s how they handle their money today that will be the key determinant for how much money they will have in the future – that what matters to them personally has more to do with how much they are personally saving and where they are saving it than with whatever new law or regulation comes out of Congress next month or next year.

Unlike the masses, you get it. I know you do. You understand that the key to investment success is found by following four simple rules: diversify extensively3 (so that disarray in the stock market won’t cause you too much harm), focus on your long-term goals (because today’s worries, no matter how severe they appear, will be nothing more than distant memories in the future), rebalance your portfolio (to benefit from short-term volatility by capturing profits and buying shares that are relatively low in price) and keep your costs low (by purchasing investments that are sharply lower in cost than most others). These four rules serve as the basis for your investment in the Edelman Managed Asset Program®, and they serve you well. I know you get it.

Still, it is frustrating when stock prices fall in the short-term due solely to absurd, illogical behavior. It’s disturbing when investors let their imaginations run wild, focusing on what might happen instead of what actually is happening.

So, yes, stock prices in May were down. Not only did U.S. stocks decline, as noted earlier, but it was even worse for foreign stocks. (The EAFE Index2, a measure of foreign stocks, fell 9.4% in May, or twice as much as the S&P 500 – reflecting current angst about Europe.) Despite May’s dreary results, we remain confident, and you should too. Current prices merely reflect the fear, anger and confusion of the moment. Those sentiments will pass, and when they do – as investors realize that they (once again) have been focusing on all the wrong things – we expect prices to rebound with a resurgence that will surprise a great many people.

How close are we to such times? No one knows of course, but consider the chart below: it shows each week’s average recommended stock allocation of the chief market strategists at six large financial firms (Bank of America Merrill Lynch, Bank of Montreal, Deutsche Bank, JPMorgan Chase, Oppenheimer and UBS). Currently, these “experts” are recommending that investors place only 51% of assets in stocks! That low an amount is practically unheard of. In fact, it’s occurred only twice in the 22-year history of this weekly survey. And those two other times were in May 1997 (immediately followed by a 77% gain in the NASDAQ over the next 24 months) and in March 2009 (immediately followed by a 100% gain in the S&P 500 over the next 25 months). If history is any guide, the bearishness of these “experts” is foretelling a major market upswing!

Wall Street Allocation Stock

In the meantime, though, rough markets are likely. As we’ve witnessed several times in the past few years, political leaders and natural disasters can create short-term havoc in the financial markets. Those who panic and sell during such times risk financial devastation, but those who keep their heads, stay focused on their goals and remain committed to their investment strategy discover that they can weather the storm with less volatility than others and potentially emerge with quicker recovery and the achievement of all-time-high account values faster than they might otherwise expect.

Storm clouds surround stock prices, but in our opinion, they are not accurately reflecting the true value of companies both in the United States and abroad. Don’t be surprised at your May statement, and don’t place too much emphasis on it. We certainly aren’t. All the advisors here at the firm still have our own money invested in the Edelman Managed Asset Program®, just like you, and we aren’t changing a thing.

To be sure, market volatility (meaning daily price movements) has been very low for the past six months. But as events continue to unfold in Europe, and as our election approaches, it would not be surprising for the markets to experience a resurgence in volatility, similar to what was experienced in 2011. Don’t assume that volatility is bad, or predictive of anything. High winds often accompany big storms, but in the end, the sun always returns, shining brightly. If you have any questions or concerns be sure to talk to your Edelman advisor.

As always, we’ll keep you posted.

Best,
Ric Edelman
Chairman and CEO

1The Dow Jones Industrial Average is an index that shows how 30 large, publicly owned companies based in the United States have traded during a standard trading session in the stock market.

2An index is a hypothetical portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of securities. Indexes are unmanaged portfolios and should only be used as comparisons with securities with similar investment characteristics and criteria. It is impossible to invest in an index. The performance information for any of the indices does not take into account any taxes imposed on, or any fees, expenses, commissions or other charges which may be incurred by portfolio management or the investor for such a portfolio. Past performance does not guarantee future results.

3Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses. There are no guarantees that a diversified portfolio will outperform a non-diversified portfolio.

Copyright © 2012 Edelman Financial Services. All rights reserved.

Ric Edelman is Chairman and CEO of Edelman Financial Services, a Registered Investment Adviser, and CEO, President and a Director of The Edelman Financial Group (NASDAQ: EF). He is an Investment Adviser Representative who offers advisory services through EFS and a Registered Principal of (and offering securities through) Sanders Morris Harris Inc., an affiliated broker/dealer, member FINRA/SIPC.

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MONEY: No meaningful way to save

http://www.forbes.com/sites/charleskadlec/2012/01/23/gingrich-the-gold-standard-and-the-florida-primary

ForbesOp/Ed|1/23/2012 @ 4:33PM
Gingrich, The Gold Standard, And The Florida Primary Charles Kadlec, Contributor

*** begin quote ***

There is no meaningful way to save for your retirement, for your children’s education, or for the future if you don’t know what the dollar will be worth when you will need to spend it.  That makes us insecure and more dependent on government.  Sound money — a dollar that can buy the same amount 10, 20 or 30 years from now — increases our ability to take care of ourselves, our families and to be far less dependent on government.  That goes to the heart of our ability to live in liberty.

The gold standard also reinforces the constitutional limits on the power of the federal government.  When the dollar is linked to gold, the Federal Reserve cannot finance federal government deficits by printing excessive amounts of money.  If it were to try to do so, holders of dollars could over-rule the Fed by turning in the extra dollars for gold, forcing the Fed to reverse its policies.  Except in times of war, the Federal budget deficits were tiny.  From 1947 to 1967, they averaged just 0.1% a year.  In today’s economy, that would be the equivalent of $15 billion.

Finally, making the dollar as good as gold, and restoring gold to the center of the international monetary system, will give the Unites States an enormous boost in soft power.  According to a recent study by the Bank of England, when compared to even the flawed, post World War II gold standard, the paper dollar standard has been a disaster whose true dimensions have been disguised by the time over which it has been inflicted on people all over the world.   Since 1971, real per capital growth rates have been cut by 1 percentage point a year, even as world inflation increased 1.5 percentage points to average 4.8% per year.  Meanwhile, the frequency and severity of economic downturns have increased, as have the number of banking crises.

*** end quote ***

As far as I know, Gingrich doesn’t support a Gold Standard; only Ron Paul wants to start the process. And, it would have to be a process. A complete process of unwinding the “Era of Big Government”.

There’s a TV commercial on about the old couple at the bank being congratulated about their retirement. The teller is counting out blank pieces of paper. How true is that? In my mind, very.

Social Security was sold to “We, The Sheeple” as “insurance”. Unlike real “insurance”, the politicians and bureaucrats took the “contributions” and spent them on the welfare / warfare state. And, put IOUs in the “lockbox”. What a joke! A fraud. At least Ponzi didn’t force people to participate. If MetLife did what the Gooferment did, all the executives would be jail. The politicians and bureaucrats collect a big Gooferment pension for <synonym for the act of procreation in real time> us.

And, Social Security was never supposed to be taxable. And, inflation adjusted. Until the Gooferment decided that energy and food shouldn’t count towards inflation. Right!

And, good luck saving on your own for your retirement. The FED, to hold down the Gooferment’s borrowing costs, has by diktat keeps interest rates at zero. Or pretty close to it.

401Ks and IRA were introduced to induce savings for retirement and take pressure off Social Security. Since “it was never intended to entirely fund a person’s retirement”. That would surprise “We, The Sheeple” circa 1935.

But then a lot would surprise them!

So, perhaps, youngsters might be better off saving for their retirement in gold or silver bullion coins.

Remember that in ancient Rome two gold coins would buy a fine man’s outfit. Pretty much the same today.

Remember that in 1964, three silver dimes would but a gallon of gas. I can PERSONALLY attest to that. And, they cleaned your window, gave you a free class, and trading stamps. Today, those three silver dimes would be worth about SIX DOLLARS; enough for almost TWO gallons of gas.

So, what has changed?

The dollar!

So returning to that old couple at the bank with a lifetime of paper savings. They’ve been defrauded by society. Hard to imagine, but visualize if they’d put those savings into gold bullion coins that they kept in a kitchen pot. Each week, instead of “saving” with paper, they put some gold or silver away in that pot. Hard to imagine that they would nt be better off.

Finally, returning to Gingrich, I agree he could ignite a fire of reality. But, that’s not going to happen. Because at the end of the road, these guys are all suits who want to control people.

Vote Ron Paul. A return to sanity begines with a single step.

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RANT: The true root of the USA’s problem — faith-based money; no gold

http://www.keywestlou.com/

Saturday, December 17, 2011

*** begin quote ***

The point I was making was that the two biggest ripoff generators in recent years affecting the American public were involved. Oil producers and a bank. The royal family requiring $3 million pocket money for a London vacation. A bank with so much extra money that it invests $7.4 million in a rare gold coin.

Something is wrong with the system! The rich get richer. Poor poorer. The incidents reported sort of like spitting in some one’s face.

*** end quote ***

Amusing about the “oil”? Every President — D and R — since I can remember from Nixon on has promised to make the USA energy independent. Which logically would imply that OPEC would get less of our money. But, demonstrating that politicians and bureaucrats would rather talk than do, the USA, despite having a “department of energy”, ain’t independent.

With respect to gold — I believe that the “little people” have been screwed royally by FDR’s gold seizure (i.e., gold was removed from the money supply). This allowed the banking cartel, the “Federal” Reserve System, to inflate the money supply and destroy the value. It allowed Presidents, politicians, and bureaucrats to spend without concern. Guns and butter. Warfare / Welfare state. Without the check of having to get money from the taxpayers. And, we all fell for the ruse. Ron Paul in one of the debates had a killer line that went like “three silver dimes bought a gallon of gas in the late Sixties, today those same three dimes will buy more than a gallon. It’s not that gas has become more expensive, but the money is worth less.” Absolutely true! I remember buying gas at 25¢ a gallon while getting a free glass, trading stamps, and my windshield cleaned. Argh!

My point is that the poor, the working stiff, the pensioner are screwed by inflation.

(And, when they don’t like the numbers, the bureaucrats exclude energy, food, or whatever other inconvenient component they feel like. Pat us on the head and tell us “move along. nothing to see here.”)

Occupy had many flaws, but I think what they could NOT express cogently was “we’ze gettin’ screwed”. They were just “occupying” the wrong place. Wall Street as a symbol for crony capitalism wasn’t the root. It was the politicians of both parties that are the problem.

And the TRUE ROOT of the problem is faith-based fiat money. From time immemorial, the little guy has been <synonym for the past tense of the procreation act.> by the “King” debasing the monetary unit.

(Go to the Smithsonian and see the French Franc over decades. From the gold hockey puck of Louis 1 to the paper thin collar button of Louis 17. That’s a visual problem statement. Cant do it with a paper dollar, but we know that between 1970 and 2010, it lost 98% of its purchasing power. That’s why there’s no penny candy any more.)

“We, The Sheeple” are SOOOOO dumb!

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