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scatmanrav
Brainy Smurf


Registered: 05/08/04
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: Stonehenge]
#16911525 - 09/25/12 09:33 PM (11 years, 4 months ago) |
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Stonehenge said: Why would you pay a debt today charging a reasonable rate of interest when you can pay it off later with inflated dollars perhaps at 10 cents on the dollar or less?
Because his interest is not reasonable. 175$ in interest a month out of the 250 dollar payment? 75$ toward the principle? How can you not pay that off first?
Everyone giving advice has ignored the fact that his payment is 70% interest.
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Lana
Head Banana


Registered: 10/27/99
Posts: 3,109
Loc: www.MycoSupply.com
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: Stonehenge]
#16913603 - 09/26/12 08:43 AM (11 years, 4 months ago) |
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Stonehenge said: In ordinary times, i would agree to pay off debts first. However, we are looking at a financial cliff and congress is playing a game of chicken with it. USA debt has already been downgraded and will go down some more. QE is on constant flow now instead of just now and then. The result is massive inflation coming down the road.
Why would you pay a debt today charging a reasonable rate of interest when you can pay it off later with inflated dollars perhaps at 10 cents on the dollar or less? The same thinking goes toward taking a mortgage. Save your cash, keep your credit sparkly and get a home loan. There are huge tax advantages and in many states your primary residence can't be touched by bankruptcy.
5 years down the road when the stuff hits the fan (or sooner) the min wage might be $30, a gallon of gas about the same price and your mortgage and student loan is priced in old dollars. That huge $40k loan back then looks like perhaps $6k in future dollars. You might pay it off out of a few paychecks. That 125k mortgage looks a lot less too. You still don't need to pay them off, in a few more years it will be so small you can pay it out of pocket.
Inflation raises all prices including labor. Unfortunately not as fast as food, rent, electricity, gas, etc. But wages will have to go up too so fixed debt goes down relatively. The losers will be those on fixed income; pensions, ss, annuities, etc. The value of that home will skyrocket as will gold, silver, etc.
A few years from now expect lots of posts from people saying "how come no one told me gold was going way up?" or similar comments.
Well said and true. As usual Stonehenge, good post.
Lana
-------------------- Myco Supply - Distributors of Mycological Products http://www.MycoSupply.com The Premiere Source for Mushroom Growing Supplies. Visit us online or call us toll free
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DieCommie

Registered: 12/11/03
Posts: 29,258
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: scatmanrav]
#16913668 - 09/26/12 09:04 AM (11 years, 4 months ago) |
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scatmanrav said:
Quote:
Stonehenge said: Why would you pay a debt today charging a reasonable rate of interest when you can pay it off later with inflated dollars perhaps at 10 cents on the dollar or less?
Because his interest is not reasonable. 175$ in interest a month out of the 250 dollar payment? 75$ toward the principle? How can you not pay that off first?
Everyone giving advice has ignored the fact that his payment is 70% interest.
I dont think so. His interest is tax deductible and student loan interest rates are usually relatively low.
All loans are more interest when you start paying them off and more principle when you finish paying them off. This is because people prefer to have a standard fixed monthly payment and the payment time is nice and long.
I am purposefully putting paying as little as I can on my loan for these reasons.
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memes
Blessed



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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: Lana]
#16915001 - 09/26/12 02:33 PM (11 years, 4 months ago) |
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Quote:
Lana said:
Quote:
Stonehenge said: In ordinary times, i would agree to pay off debts first. However, we are looking at a financial cliff and congress is playing a game of chicken with it. USA debt has already been downgraded and will go down some more. QE is on constant flow now instead of just now and then. The result is massive inflation coming down the road.
Well said and true. As usual Stonehenge, good post.
Lana
Yeah! great post except for the (obvious) exclusion of the small detail that massive inflation is not a explicit direct result of QE (ceteris paribus) in an economic environment with a depressed velocity of money [see below].

Thanks.
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qman
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: memes]
#16915272 - 09/26/12 03:27 PM (11 years, 4 months ago) |
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Quote:
meams said:
Quote:
Lana said:
Quote:
Stonehenge said: In ordinary times, i would agree to pay off debts first. However, we are looking at a financial cliff and congress is playing a game of chicken with it. USA debt has already been downgraded and will go down some more. QE is on constant flow now instead of just now and then. The result is massive inflation coming down the road.
Well said and true. As usual Stonehenge, good post.
Lana
Yeah! great post except for the (obvious) exclusion of the small detail that massive inflation is not a explicit direct result of QE (ceteris paribus) in an economic environment with a depressed velocity of money [see below].

Thanks.
Great chart means, it is one that tells the economic story of the US, and it is not pretty. Despite all the Fed's efforts, they can not stimulate the economy via QE, as the chart shows the velocity is slowing down even worse.
What QE does is devalue the currency, which does result in inflation. We do need high velocity of money to have inflation today. At some point, as the QE goes into overdrive, there will be a mad rush into hard assets.
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memes
Blessed



Registered: 01/11/05
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: qman]
#16915924 - 09/26/12 05:30 PM (11 years, 4 months ago) |
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qman said: At some point, as the QE goes into overdrive, there will be a mad rush into hard assets.
Like houses?
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pothead_bob
Resident Pothead



Registered: 04/12/08
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: xtokex]
#16919014 - 09/27/12 06:49 AM (11 years, 4 months ago) |
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I agree with you pothead bob, anybody can manage their finances successfully. The question is do most people set aside enough time and actually do it? Probably not. A financial planner is most useful if you got a complex financial situation and a lot going on in your life (like I mentioned earlier, getting married, starting a family, buying a house). Second, you will have to look around to find a good financial planner, but the returns you will getting from the planner should be abnormal returns (beating the market) while optimally diversified among growth assets like REIT's and equities and income assets like short term debt and long term debt.
If a person is too lazy to spend a cumulative 40 hours to read a book and do some research online for investments to get into, then I suppose it's in their best interest to get a financial planner and settle for sub-par returns. To me, though, that sounds like a bad investment right there. I'm married, I have kids, and I have a lot going on in my career over the past few years, and yet I still managed to get my investment strategy together and stick with it. The method discussed in that book I mentioned couldn't be easier or less time-intensive to keep up on.
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Regarding your investment strategy of investing in passively managed index funds, I would say that you are not properly diversifying your portfolio. Yes, you are spread out among stocks so that reduces the firm-specific risk, but your entire portfolio consists of equities and it leaves it wide open for systematic risk. If your portfolio consists of >80% equities, it is a bad strategy overall for the long term unless you like big fluctuations. Market conditions that cause one asset class to do poorly often cause another to have above average returns (i.e. stocks; bonds).
They make passively managed index funds that track other things besides stocks, you know? I own funds that track large cap US equities, small cap US equities, medium risk US corporate bonds, short term US federal bonds, international value stocks, real estate investment trusts, etc. You can even buy funds that track the healthcare industry and precious metals, though I own my precious metals in physical form.
As for the 401k thing, I'm aware that some companies require you to stay at the company for a few years to keep the money they invested on your behalf. I don't really see that as a big problem. Of course they want to encourage you to stay with them and I think most people would at least be staying with their organization for 3-5 years. If the company isn't a fit, then you forgo the contributions they made on your behalf and chock that up to you making a bad decision on who you chose to work for. Otherwise, it's like you're getting an additional 3-4% return every year for nothing. To me, that seems like a no brainer. Yes there are fees, but that 3-4% you're getting should cover that several times over. And it's not like those fees are more than what your financial planner that you spoke of would be charging you.
-------------------- No knowledge can be certain, if it is not based upon mathematics or upon some other knowledge which is itself based upon the mathematical sciences. -Leonardo da Vinci (1425-1519) Speak well of your enemies. After all, you made them.
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pothead_bob
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: DieCommie]
#16919031 - 09/27/12 06:55 AM (11 years, 4 months ago) |
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but the returns you will getting from the planner should be abnormal returns (beating the market)
Correct me if I am wrong, but on average financial planners do not beat the market. In fact, they average less than the S&P. Is that not right?
Bingo. And to add to that, I point to a 1968 paper by Michael Jensen, published in the Journal of Finanace. He looked at the performance of 115 actively managed mutual funds over 20 years and found that they weren't able to beat the buy-and-hold strategy that I speak of. I'll reproduce the abstract below. Note the sentence that I bold-faced.
Quote:
In this paper I derive a risk-adjusted measure of portfolio performance (now known as Jensen's Alpha) that estimates how much a manager's forecasting ability contributes to the fund's returns. The measure is based on the theory of the pricing of capital assets by Sharpe (1964), Lintner (1965a) and Treynor (Undated). I apply the measure to estimate the predictive ability of 115 mutual fund managers in the period 1945-1964 - that is their ability to earn returns which are higher than those we would expect given the level of risk of each of the portfolios. The foundations of the model and the properties of the performance measure suggested here are discussed in Section II.
The evidence on mutual fund performance indicates not only that these 115 mutual funds were on average not able to predict security prices well enough to outperform a buy-the-market-and-hold policy, but also that there is very little evidence that any individual fund was able to do significantly better than that which we expected from mere random chance. It is also important to note that these conclusions hold even when we measure the fund returns gross of management expenses (that is assume their bookkeeping, research, and other expenses except brokerage commissions were obtained free). Thus on average the funds apparently were not quite successful enough in their trading activities to recoup even their brokerage expenses.
-------------------- No knowledge can be certain, if it is not based upon mathematics or upon some other knowledge which is itself based upon the mathematical sciences. -Leonardo da Vinci (1425-1519) Speak well of your enemies. After all, you made them.
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qman
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: memes]
#16919433 - 09/27/12 08:53 AM (11 years, 4 months ago) |
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Quote:
meams said:
Quote:
qman said: At some point, as the QE goes into overdrive, there will be a mad rush into hard assets.
Like houses? 
In the year 2000, it took 700 ozs of gold to buy a house (US average home price), today it takes 133 ozs. Myself and others see the ratio headed even lower in the future for a variety of reasons.
Buying real estate for investment purposes (becoming a landlord) requires stable economic conditions, I don't see that environment going forward.
Gold and silver are going to the ultimate safe havens in this monetary policy experiment, I am sure their are some real estate opportunities out there today, but overall I see real estate prices headed lower in real money terms (gold).
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Stonehenge
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: qman]
#16919793 - 09/27/12 10:26 AM (11 years, 4 months ago) |
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qman, i'm with you on gold and silver. Real estate in some parts of the country is way overpriced. I would not invest in it if i was in such an area. However, people have to live somewhere and are forced to buy housing. No one is forced to buy gold or silver. In some areas r/e is cheap and i was lucky enough to live in one such area. Those out of a job still often have govt benefits such as section 8, welfare and so on. If govt can no longer pay those benefits they may unfortunately become homeless. People will take a room or a shack in exchange for services which might be cleaning houses or whatever they are good at in exchange for a roof over their head. Young good looking women will never lack for shelter unless they choose to lack it.
People can cut back on energy use but can't eliminate it altogether. Food is another necessity and if you have some land you can grow food on it. Gold and silver are just a means of exchange, they are what you may have to use to buy food and shelter.
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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xtokex
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: Stonehenge]
#16924580 - 09/28/12 12:57 AM (11 years, 4 months ago) |
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Quote:
Stonehenge said: In ordinary times, i would agree to pay off debts first. However, we are looking at a financial cliff and congress is playing a game of chicken with it. USA debt has already been downgraded and will go down some more. QE is on constant flow now instead of just now and then. The result is massive inflation coming down the road.
Why would you pay a debt today charging a reasonable rate of interest when you can pay it off later with inflated dollars perhaps at 10 cents on the dollar or less? The same thinking goes toward taking a mortgage. Save your cash, keep your credit sparkly and get a home loan. There are huge tax advantages and in many states your primary residence can't be touched by bankruptcy.
5 years down the road when the stuff hits the fan (or sooner) the min wage might be $30, a gallon of gas about the same price and your mortgage and student loan is priced in old dollars. That huge $40k loan back then looks like perhaps $6k in future dollars. You might pay it off out of a few paychecks. That 125k mortgage looks a lot less too. You still don't need to pay them off, in a few more years it will be so small you can pay it out of pocket.
Inflation raises all prices including labor. Unfortunately not as fast as food, rent, electricity, gas, etc. But wages will have to go up too so fixed debt goes down relatively. The losers will be those on fixed income; pensions, ss, annuities, etc. The value of that home will skyrocket as will gold, silver, etc.
A few years from now expect lots of posts from people saying "how come no one told me gold was going way up?" or similar comments.
Quote:
Stonehenge said: qman, i'm with you on gold and silver. Real estate in some parts of the country is way overpriced. I would not invest in it if i was in such an area. However, people have to live somewhere and are forced to buy housing. No one is forced to buy gold or silver. In some areas r/e is cheap and i was lucky enough to live in one such area. Those out of a job still often have govt benefits such as section 8, welfare and so on. If govt can no longer pay those benefits they may unfortunately become homeless. People will take a room or a shack in exchange for services which might be cleaning houses or whatever they are good at in exchange for a roof over their head. Young good looking women will never lack for shelter unless they choose to lack it.
People can cut back on energy use but can't eliminate it altogether. Food is another necessity and if you have some land you can grow food on it. Gold and silver are just a means of exchange, they are what you may have to use to buy food and shelter.
Are you crazy? Seriously do you have all your marbles? Inflation is never going to be as severe as you are making it out to be. In public policy making, our government very rarely acts in rational, sweeping decisions (for example, FDR's new deal in the 1930's after the great depression). Instead, it acts in incremental changes in public policy because it is easiest to implement and easier for the public to understand. For what you just described to happen in your first post, the government would have to be completely blind and oblivious to public support for changes to curb rising inflation and increasing costs of living for several years straight, which would never happen.
As for gold, you can always mess around with GLD if you want to play in gold, and this way you avoid all the problems associated with physical ownership.
Edited by xtokex (09/28/12 01:15 AM)
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qman
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Registered: 12/06/06
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: xtokex]
#16925167 - 09/28/12 05:28 AM (11 years, 4 months ago) |
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Quote:
xtokex said:
Quote:
Stonehenge said: In ordinary times, i would agree to pay off debts first. However, we are looking at a financial cliff and congress is playing a game of chicken with it. USA debt has already been downgraded and will go down some more. QE is on constant flow now instead of just now and then. The result is massive inflation coming down the road.
Why would you pay a debt today charging a reasonable rate of interest when you can pay it off later with inflated dollars perhaps at 10 cents on the dollar or less? The same thinking goes toward taking a mortgage. Save your cash, keep your credit sparkly and get a home loan. There are huge tax advantages and in many states your primary residence can't be touched by bankruptcy.
5 years down the road when the stuff hits the fan (or sooner) the min wage might be $30, a gallon of gas about the same price and your mortgage and student loan is priced in old dollars. That huge $40k loan back then looks like perhaps $6k in future dollars. You might pay it off out of a few paychecks. That 125k mortgage looks a lot less too. You still don't need to pay them off, in a few more years it will be so small you can pay it out of pocket.
Inflation raises all prices including labor. Unfortunately not as fast as food, rent, electricity, gas, etc. But wages will have to go up too so fixed debt goes down relatively. The losers will be those on fixed income; pensions, ss, annuities, etc. The value of that home will skyrocket as will gold, silver, etc.
A few years from now expect lots of posts from people saying "how come no one told me gold was going way up?" or similar comments.
Quote:
Stonehenge said: qman, i'm with you on gold and silver. Real estate in some parts of the country is way overpriced. I would not invest in it if i was in such an area. However, people have to live somewhere and are forced to buy housing. No one is forced to buy gold or silver. In some areas r/e is cheap and i was lucky enough to live in one such area. Those out of a job still often have govt benefits such as section 8, welfare and so on. If govt can no longer pay those benefits they may unfortunately become homeless. People will take a room or a shack in exchange for services which might be cleaning houses or whatever they are good at in exchange for a roof over their head. Young good looking women will never lack for shelter unless they choose to lack it.
People can cut back on energy use but can't eliminate it altogether. Food is another necessity and if you have some land you can grow food on it. Gold and silver are just a means of exchange, they are what you may have to use to buy food and shelter.
Are you crazy? Seriously do you have all your marbles? Inflation is never going to be as severe as you are making it out to be. In public policy making, our government very rarely acts in rational, sweeping decisions (for example, FDR's new deal in the 1930's after the great depression). Instead, it acts in incremental changes in public policy because it is easiest to implement and easier for the public to understand. For what you just described to happen in your first post, the government would have to be completely blind and oblivious to public support for changes to curb rising inflation and increasing costs of living for several years straight, which would never happen.
As for gold, you can always mess around with GLD if you want to play in gold, and this way you avoid all the problems associated with physical ownership.
You obviously have very little understanding of economics and monetary policy, your confidence in government is laughable. I highly suggest educating yourself in this field of study. Also, GLD is a fraud and a scam, and its owners will learn it the hard way at some point.
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memes
Blessed



Registered: 01/11/05
Posts: 27,785
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: xtokex]
#16929120 - 09/28/12 07:57 PM (11 years, 3 months ago) |
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Quote:
xtokex said:
Quote:
Stonehenge said: In ordinary times, i would agree to pay off debts first. However, we are looking at a financial cliff and congress is playing a game of chicken with it. USA debt has already been downgraded and will go down some more. QE is on constant flow now instead of just now and then. The result is massive inflation coming down the road.
Why would you pay a debt today charging a reasonable rate of interest when you can pay it off later with inflated dollars perhaps at 10 cents on the dollar or less? The same thinking goes toward taking a mortgage. Save your cash, keep your credit sparkly and get a home loan. There are huge tax advantages and in many states your primary residence can't be touched by bankruptcy.
5 years down the road when the stuff hits the fan (or sooner) the min wage might be $30, a gallon of gas about the same price and your mortgage and student loan is priced in old dollars. That huge $40k loan back then looks like perhaps $6k in future dollars. You might pay it off out of a few paychecks. That 125k mortgage looks a lot less too. You still don't need to pay them off, in a few more years it will be so small you can pay it out of pocket.
Inflation raises all prices including labor. Unfortunately not as fast as food, rent, electricity, gas, etc. But wages will have to go up too so fixed debt goes down relatively. The losers will be those on fixed income; pensions, ss, annuities, etc. The value of that home will skyrocket as will gold, silver, etc.
A few years from now expect lots of posts from people saying "how come no one told me gold was going way up?" or similar comments.
Quote:
Stonehenge said: qman, i'm with you on gold and silver. Real estate in some parts of the country is way overpriced. I would not invest in it if i was in such an area. However, people have to live somewhere and are forced to buy housing. No one is forced to buy gold or silver. In some areas r/e is cheap and i was lucky enough to live in one such area. Those out of a job still often have govt benefits such as section 8, welfare and so on. If govt can no longer pay those benefits they may unfortunately become homeless. People will take a room or a shack in exchange for services which might be cleaning houses or whatever they are good at in exchange for a roof over their head. Young good looking women will never lack for shelter unless they choose to lack it.
People can cut back on energy use but can't eliminate it altogether. Food is another necessity and if you have some land you can grow food on it. Gold and silver are just a means of exchange, they are what you may have to use to buy food and shelter.
Are you crazy? Seriously do you have all your marbles? Inflation is never going to be as severe as you are making it out to be. In public policy making, our government very rarely acts in rational, sweeping decisions (for example, FDR's new deal in the 1930's after the great depression). Instead, it acts in incremental changes in public policy because it is easiest to implement and easier for the public to understand. For what you just described to happen in your first post, the government would have to be completely blind and oblivious to public support for changes to curb rising inflation and increasing costs of living for several years straight, which would never happen.
As for gold, you can always mess around with GLD if you want to play in gold, and this way you avoid all the problems associated with physical ownership.
As you can see from qman's response to this post of yours, there are quite a few people on here who have an insatiable appetite for denouncing the economic rationality of our current economic administration and and equally insatiable appetite for teachings and ideas that mimic Hayek and Mises
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Stonehenge
Alt Center


Registered: 06/20/04
Posts: 14,850
Loc: S.E.
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: memes]
#16931818 - 09/29/12 10:39 AM (11 years, 3 months ago) |
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>As you can see from qman's response to this post of yours, there are quite a few people on here who have an insatiable appetite for denouncing the economic rationality of our current economic administration...
The current and previous administrations policies have not been very rational. This is what happens when bribery is the norm and policy does not follow function. The dollar has lost over 98% of its value since the early 1900's and now they are creating more money out of thin air because they can't borrow enough to cover the bills. The only rational conclusion is that disaster is looming and well nigh unavoidable. An economic genius put at the controls today could do no more than soften the crash landing a bit. This is the result of years of mismanagement, looting of the treasury and various acts of misfeasance and malfeasance. The real estate implosion and resulting financial meltdown was totally a result of mismanagement and could have been foreseen and avoided. With the likes of bernanke and his predessesor greenspan, the foxes were truly in charge of the henhouse.
Politicians and fat cats will walk off with their pockets bulging while the little people are left to pay the bill and pick up the mess. I predict no less than a world wide depression no matter what they decide to call it. Let the finger pointing begin.
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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qman
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: Stonehenge]
#16938498 - 09/30/12 01:50 PM (11 years, 3 months ago) |
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Stonehenge said: >As you can see from qman's response to this post of yours, there are quite a few people on here who have an insatiable appetite for denouncing the economic rationality of our current economic administration...
The current and previous administrations policies have not been very rational. This is what happens when bribery is the norm and policy does not follow function. The dollar has lost over 98% of its value since the early 1900's and now they are creating more money out of thin air because they can't borrow enough to cover the bills. The only rational conclusion is that disaster is looming and well nigh unavoidable. An economic genius put at the controls today could do no more than soften the crash landing a bit. This is the result of years of mismanagement, looting of the treasury and various acts of misfeasance and malfeasance. The real estate implosion and resulting financial meltdown was totally a result of mismanagement and could have been foreseen and avoided. With the likes of bernanke and his predessesor greenspan, the foxes were truly in charge of the henhouse.
Politicians and fat cats will walk off with their pockets bulging while the little people are left to pay the bill and pick up the mess. I predict no less than a world wide depression no matter what they decide to call it. Let the finger pointing begin.
I agree, mismanagement is what our policy makers have been doing for years. The policy makers really don't care about inflation affecting the common working person, the fact that they have deliberately understated the real inflation rate for decades makes that obvious to all. What does the Fed always state? Inflation remains tame at 1.5%, of coarse that is if a person does not use food, energy, education, and health care.
Any central bank which adopts a policy that discourages savers with real negative interests rates, is a corrupt organization. Why should I lose 5-6% per year in purchasing power today by having my money in a savings account? Those dollars should at lest maintain purchasing power. Do our policy makers really care about this? Not at all.
Edited by qman (09/30/12 01:52 PM)
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xtokex
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: qman]
#16944198 - 10/01/12 11:17 AM (11 years, 3 months ago) |
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Inflation at 5-6%? So over the last 5 years, your saying that we lost around 30% of our purchasing power? I don't know where you are picking up these incorrect ideas... nothing that an average person needs has risen 30% over the past 5 years in price. I'm sorry but I seriously don't get why some of you guys spew these crazy theories about how the future is all doom and gloom and how we should all by precious metals that are extremely overvalued right now. You obviously can't raise the price of the precious metals (pump and dump) with such baloney on this forum since it gets hardly any views.
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Stonehenge
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Registered: 06/20/04
Posts: 14,850
Loc: S.E.
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: xtokex]
#16944332 - 10/01/12 11:39 AM (11 years, 3 months ago) |
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"crazy theories"? One crazy theory is that the nat debt is greater than the gdp. Actually, that is a fact. Some of us think that going deeper into debt every year, creating money out of thin air with nothing to back it up and spending like there was no tomorrow is a bad idea. But don't worry about it, just go back to sleep and let the govt run things.
I'm not sure how much inflation there has been the last few years but the govt said it was flat up until this year. But it was just a couple years ago gas was in the low $2's and now its around $3.60 or more some places. Food has been rising steadily with a lot of other things.
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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xtokex
Stranger
Registered: 10/22/09
Posts: 662
Loc: SoCal
Last seen: 7 years, 7 months
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: Stonehenge]
#16944500 - 10/01/12 12:08 PM (11 years, 3 months ago) |
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The price of gasoline went up because of speculators on the price of oil and instability in the middle east, not because of inflation. Food prices are also tied to gasoline prices since it costs more money to transport the food due to more expensive gasoline. Food is also related to tons of other factors (i.e. droughts in certain areas and not enough rainfall for the crops, which cause a shortage and spike in prices). Of course inflation plays a tiny role in the rise of gasoline/oil prices, but it is pretty much negligible compared to the natural fluctuation of gasoline/oil prices.
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qman
Stranger

Registered: 12/06/06
Posts: 34,927
Last seen: 23 hours, 45 minutes
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: xtokex]
#16945731 - 10/01/12 02:58 PM (11 years, 3 months ago) |
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Quote:
xtokex said: Inflation at 5-6%? So over the last 5 years, your saying that we lost around 30% of our purchasing power? I don't know where you are picking up these incorrect ideas... nothing that an average person needs has risen 30% over the past 5 years in price. I'm sorry but I seriously don't get why some of you guys spew these crazy theories about how the future is all doom and gloom and how we should all by precious metals that are extremely overvalued right now. You obviously can't raise the price of the precious metals (pump and dump) with such baloney on this forum since it gets hardly any views.
I will admit there are many different ways of trying to calculate inflation, I will tell you that the CPI which excludes food and energy is not accurate at just 1.5%.
Lets look at some commodity prices today, oil is at over $90 per barrel, and this is with gasoline and oil consumption down. I know, it's all the evil speculators in the trading pits, but the reality is currency debasement is a key factor.
Food prices are also much higher, yes bad crops have played a major role in the last 3 months, but food prices have been moving higher for the last 10 years.
Gold and silver, which are the opposites of paper currency have been in bull markets since 2001, silver is up over 800% and gold is up over 700%, this is the truest refection of currency debasement. It's not just the US dollar under pressure, it's all the currencies in the world, Euros, Pounds, Yen, ect.
I have no reason to pump PM's, if I can help some people protect themselves going forward, great, but my main concern is myself and family. As far as PM's being overvalued, I don't think you have any reasons to say that other than price action, if you have any fundamental reasons, I am open to listening.
I have made the case on this board many times why PM's are extremely undervalued. What many people/investors don't realize it that the actions by the Fed and other central banks are unprecedented, this is not normal monetary policy, it is desparate measures.
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memes
Blessed



Registered: 01/11/05
Posts: 27,785
Loc: In a Tree
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Re: Risk-Aversion & Building your Net Worth from the ground up [Re: qman]
#16946453 - 10/01/12 04:50 PM (11 years, 3 months ago) |
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I love how people talk about increases in food and gas prices and point to inflation but completely ignore the fact that there is a GROUP OF PEOPLE AS POPULOUS AS THE UNITED STATES (the new chinese middle class) that now has a disposable income where they didn't before. And that's just China. That ignores India and Brazil, and all the other developing economies with a burgeoning middle class. Heard of supply and demand? Looks like this:
Edited by memes (10/01/12 04:57 PM)
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