This is a response to a blog post that my dear friend, Tamela Rich, who is a fabulous business writer, entrepreneur, and contributor to http//diebrokeblog.com StockTwits.com ’s personal finance blog, for which I am fortunate to be the current editor. And what I am about to say I do not get paid to say. If you need a savvy business writer or ghost writer, you are foolish not to involve Tamela Rich. She is a fabulous writer with real world experience. We are fortunate to have her at DieBrokeBlog.
I did not want to park this on The Buffalo Trader, but I have yet to fully set up, www.buffalorants.com for which commentary like this will soon appear.Let us hope that by mid-next week I will have the one-page blog in full operation, with other design changes following shortly.
I just had way too much to say to pollute her comment section. For that reason, I will pollute my own blog with it. This was written rather hastily, but I think it covers the basic territory. When that blog is started, I may surprise many of you with my opinions. I am definitely a liberty-loving pragmatic libertarian who thinks all political parties are pretty much cancerous and devoid of logic. Though I am not purely objectivist as Ayn Rand, I do believe that reason trumps demagoguery. That is the anterior opposite of the current American political landscape. I will anger many if not all of you at one point or another. I run afoul of the Republican orthodoxy here locally and that is fine with me. I do listen to commentary from all sides, but when I make my decision, it is uniquely mine in most cases. I do not wear politics on my sleeve however. I am as disgusted with Fox, CNN, ABC, NBC,CBS, and other broadcast and cable media as most of you are. All news outlets to me these days are nothing but trite political spin and smear for the most part. Most so-called “conservative” media is equally hypocritical as well, in my opinion, for reasons I may discuss later.
I promise not to do this again, and in fact, when the new blog is ready, I will move this post to it. I deal with trading and economics in this blog. Ranting really doesn’t belong here. At any rate, here goes.
Here is the original post.
Here is my response:
“The problem with investing, whether it be in paper financial assets, commodities like gold, or real estate is the fact that so many in all walks of life including government, attempt to mislead the investor into the inherent goodness, safety, and “high potential return” it has. All of them are appropriate instruments in which to invest if one understands which investment cycle is in a positive phase. We spent the better part of 30 years in a booming paper investment boom, fueled largely by low interest rates and easy money policy. Pres. Carter, Reagan, and Bush the elder helped to fuel this boom by making it insanely easy to borrow money. Congress continued to press this, until the financial sector decided the money would not stop flowing. When equities hit a bubble in 2000, all that cash flowed to housing, and once again, government, the financial sector, banking, and the mortgage industry saw an easy way to grind out the commissions and they stopped verifying incomes and checking the financial soundness of buyers. President Clinton, Sen. Phil Gramm, and Barney Frank decided to accelerate the Community Reinvestment Act and to revoke Glass-Stegall Act, which formed a permanent wall between relatively low risk commercial lending and high risk investment banking.
The insane leveraging continued until the system virtually collapsed (and in standard commercial banking, still lies in virtual tatters, as the FDIC is still bankrupt as of this writing, under water by at least 8 billion, with some 400 banks on the verge of collapse in the USA). Please note that I did not choose a political party to side with. There were plenty of both parties’ filthy hands on the mess they put us in. Government became the wellspring of easy money. Why? Because the flow of easy money BUYS VOTES. Healthcare and Social Security entitlements (a Democrat scheme), prescription drugs (a Republican scheme) all have helped to bankrupt this nation in the manner that the dole destroyed the Roman Empire with the onset of the Caesars. Other civilizations faced similar downfalls by voting the Treasury into bankruptcy to garner political support.
While I do believe Glenn Beck is attempting to garner enough cash out of TV, capitalizing on his earlier radio success, to make up for some really poor choices he has made in life, he IS correct in the general nature of his argument.
Why is that? Oh, I forgot that last point. We have a current President who has increased the national debt by 50% and has spent more money than all of the other Presidents combined. He also lifted the ceiling on the borrowing limit on Fannie Mae and Freddie Mac and is encouraging, along with Congress, the same easy money home lending process that got us to the near-Gotterdammerung that we are standing in today.
All we have gotten is more and more economic idiocy. In eight years we went from one President who was quoted as saying “Deficits don’t matter” to one who believes solvency and currency stability doesn’t matter with his very actions. Do you see ANY difference between the two leaders? I don’t. That is why I never voted for either of these two buffoons.
Gold is not the problem. Gold for centuries was a standard bearer of value. A basket of commodities, material, mineral, and agricultural, could perform the same purpose. Gold is not G – O – D. Currencies held their value over the many centuries when empires and nations were strong because they were backed by quantitatively valuable materials or fruits of labor. Sadly, government is GOD to many and current government is arrogent enough now to believe it is also.
For all his many flaws and hypocrisies, President Ronald Reagan was right when he said, “In this present crisis (the economic recession he faced in 1981), government is not the solution to our problem, government IS the problem.” I think that statement is truer now than it was in 1981, shown here.
http://www.youtube.com/watch?v=x59wNGHe6iI
The link to that video also references Pres. Reagan’s contrast between political elitism and self-rule. Though Reagan talked a good fight, he often caved into the forces of government that have placed us on the precipice of the economic annihilation of our American culture. Government has purported falsely, and most Americans, in their own self-concern, if not selfishness, have bought into the notion that government will provide a danger-free existence for us if we will just subside and let it do the work for us. The current two-party system, particularly in the last 50 years, has done nothing but offer money for votes to the point that there is no value to the money we currently hold.
America’s education system has refused to teach its young about the system of government that helped hold it together in times of deep crisis, and instead has only lauded the bureaucrats that run it. Education no longer covers basic mathematics, economics, personal finance, or other important issues required for an individual to be self-reliant. Education has helped us to be pawns of government. Financial malfeasance will make us slaves of government if we let it.
But whose fault is that? It is ours, the voting public, and only ours, because we have lulled ourselves to sleep. Hopefully in this next decade another generation will realize what we are about to lose in freedoms and prosperity as a society and restore the essentials of self-reliance and concerned ethical self-governance so that the economic value of our economy and our currency will be restored. If that happens, then we will not have to listen to Glenn Beck, even though very many elements of what he discusses are true. Instead, we will have an educated group of individuals who will be prepared to cut down the current stream of greedy self-absorbed elitist leaders of BOTH POLITICAL PARTIES at the ballot box, or if necessary, in the streets if it comes to that. Thomas Jefferson believed that, and again, I believe he was right in thinking so.
We do need a resurgence of ethics in this nation, and more importantly a resurgence of G-O-D, that is, governance over demagoguery. Be it the current Marxist-Fascist brand, or the neo-conservative brand (as defined not by hack bloggers but by Mark Levin in his book, “Liberty and Tyranny, A Conservative Manifesto”, meaning conservatives who consider national defense THE number one priority even over domestic policy as was basically the case with President George W. Bush), both are power-centric elitist elements that only want to remain in and concentrate power for themselves and ONLY for themselves.
Natural financial cycles, between financial assets and commodity or hard assets, are as old as civilization itself. They are often cruelly exacerbated by government intervention when it happens.
The reason I bought land and refuse to hold many financial assets outside of trading is because I remember what happened to my grandfather Bowie in 1933, when he lost ALL of his money, including money he needed to operate his farm during FDR’s bank holiday. He never put money in a bank again, preferring to literally bury it in a vault on his property. He died in 1957, so his money never saw the inside of a bank for 24 years.
I have, over the last year, begun to prepare for the worst but hope for the best. I now own both arable farmland and timberland that could support me if something DOES go wrong. One cannot eat gold, as was stated previously in your blog. Government, as it has in past times, can confiscate gold at will if it wants. As we are still in the overhang of a deflationary cycle, I purchased land at much lower than even depressed market prices. In that way, I can afford to wait until the inflation does kick in.
Without an exit strategy for stimulus money pumped into the economy, and with the brutal waste of TARP (and so far, there is none), any positive economic blip will bring inflation into play. I will own the appropriate amount of land (a physical asset) in my asset portfolio that will appreciate greatly as inflation expands, which it ultimately will. I will trade at the margins and be ready to expand into other assets as I see the interest rate cycle turn.
I saw an article by someone I respect that said saving was for suckers. Clearly he has not studied market cycles very closely because investing can also be for suckers if one chases every fast-moving market. What that person still may not realize is that there has never been a U.S. equity bull market in 200 years started in earnest until price earnings ratios hit the mid single digits. We are in the mid to even high teens currently. Not sure I want to fully load up on that bandwagon just yet.
Investing blindly is for suckers. Strategically deployed cash and savings are NOT if there is a purpose for holding them. In deflationary cycles, cash is king and should be used to ACQUIRE inflationary assets in anticipation of that inflation. In INFLATIONARY cycles, CASH is indeed TRASH, as the value of it is destroyed by too few goods chasing too much cash. That condition of too much cash has been created by the great destroyer of economic growth, the Federal Government with its two-party political system.
How did I learn all this? A tiny bit of it I learned in a high school economics class. A small portion of it I learned at Georgia Tech. The vast bulk of it I learned on my own because I saw members of my family lose everything, saw businesses fail, including one of my fathers, and saw the economy of the last 40 years unwind wildly, to great heights until 2000, and then into the abyss during the last three years.
I, not some bureaucrat, decided that I needed to learn this. I wanted to remain as self-reliant as I could be, regardless of what was crashing around me. All Americans need to WAKE UP and do the same thing. Each day we wait the uncaring rabble of criminal scum walking around the halls of Congress and the Senate is taking everything, including your choices, away from you. We still have the freedom and the power if WE exercise it, but sadly, we are not. We are fiddling with our iPods and watching some reality show. The real reality show, the rest of your life, is currently being written, and it has a horrifying end for us. You need in 2010 and 2012 to take the pen away and even break the arms of the writers of that ending. We desperately need to toss all incumbents out of office and instigate through some Constitutional process a 100-year moratorium on multiple terms. That is the only way we will walk away from the abyss. It has nothing to do with gold fever; it has all to do with encroaching government and its offer of complete dependency upon it for our survival. I sure hope people wake up before it is too late. I have prepared myself for it, but I remain vigilant and hope for the best. The American People are far better than the group of thugs who run the Federal government be they Republican or Democrat. I hope they at last realize it, and sterilize the halls of government of that bunch up there.”
