Written a few years ago - has anything changed for the better?

No wonder high prices for collectibles – an abundance of FIAT money.....?

A person wishes to save money. They put it in a bank and in return, receive almost no interest whatsoever. But still, the idea is that, by putting it in the bank, at least it will be safe. A bank is not a casino, ooops maybe it is? They are supposed to be run according to basic prudent lending criteria and risks are supposed to be managed.

Central banks and regulatory authorities have they done their jobs? You can decide. They are the same people that have now granted themselves powers of confiscation over other people’s money. For me personally the primary lesson is not to invest in banks.

The biggest "investors" in the European banks (I do not know in the US) are the EU pension funds, insurance funds etc. EU banks are buying the public debt of their respective governments in order to fund their hefty pensions, salaries, high standard of living. Now the money is gone and what with the EU?

In case law, a depositor is an unsecured creditor of a bank. After you deposit funds in the bank, the bank owns the money. (Maybe knowing this you will demand a high interest rate to mitigate the risk the bank takes with your money in the future)

“Bail-In” is only a temporary solution.

It will make little difference as all banks are bankrupt, probably to the tune of $400trillion.

SOLUTION - i am not smart enough to give an answer

Today buy physical gold, silver, other pieces, art, coins, diamonds, yes it creates bubbles trying to get rid of currency and other worthless paper etc.. (The benefit is you hold a tangible asset even maybe at an inflated price, but you have an asset)

We have had it all too easy for a long time and now we must pay it back. In the future your retirement accounts could be nationalized. You will probably have a lien put on your property. You may even eventually agree with all of this.

Perhaps it will be for the best. If you want out of the system you should do some serious research

 

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You're right, doomsday is around the corner. Not going to be fun paying shipping when I send my silver rounds to the electric company for my monthly payment. But guess I'll get rid of my fiat currency anyway.

 

It's all crazy talk.








Until it happens.

 

All of the above are only valued as an asset as long as people value it as such. If fiat falls, it will in the whole world, but most likely outside of the USD first for a period of time, and the value of all of those "assets" will increase or hold for a short while AS long as USD is still the placeholder. If the USD goes out, all of those asset value will be as bad or worse than paper. If one said Property with legal and replenishable clean water rights, A Medical storehouse with properly stored devices and medications, Firearms or ammo they might have an argument. In such a case I would rather own a large salvage/junk yard than a handful of diamonds. Only 1 person out of a million has the skills to tell a real diamond from a synthetic these days. Art , coins, gold , silver are nice as long as there is something to trade for it, but few people do, and most hoarders( not all) , especially those in a large city, would die, counting their bullion, or jewelry, eating dog pancreases trying to fend off their diabetes. IMO

 

The best wealth preservation strategy I know is sponsored by the Safe Wealth Group based in Switzerland. Unfortunately, their minimums are quite high ($100k for metals, $250k for currency storage and $5MM for the private Swiss bank recommend).

For most where that isn't an option, there is the Perth Mint for metals based in Australia to which I would add Treasury Direct for fiat dollars held in the US. I also agree everyone should own some metals with at least some of it stored directly by you.

Ultimately, I expect a huge financial crash and a deflationary depression.

 

Is it just ‘fear of fear’ are we just imagining that something could happen? Could something really happen within the financial structure we live in?

Who or what group of people can guide us so we can use our energies in a more product way?

More people in the world want more than a boil of rice as the world buys cheaper products. On the other hand those that have created extra wealth who today now create nothing want more and more and politicians fear to put the brakes on. They just print FIAT money.

Will it just continue? A large war? The end of globalization as we know it? A closing of boarders?

Tell me a safe way forward?

 

Warren Buffet probably knows as much about world economy as any.

From Buffet's newsletter,
"American GDP per capita is now about $56,000," he said. "As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well."

Again, Buffett acknowledges that GDP growth is indeed slow. But not something we should be terribly worried about. He used a low 2% rate in his example."
http://finance.yahoo.com/news/warren-buffett-problem-with-gdp-report-122556630.html

IMO, Anyone who tries to say they have a safe way forward, or know how humans or civilization will become extinct ~ and when , are lying , delusional, or very poorly informed. ( Not getting into politics or religion. )

 

board·er
ˈbôrdər/
noun
plural noun: boarders

1. 1.
   a person who receives regular meals when staying somewhere, in return for payment or services.

What do you mean closing of boarders? My super is a boarder.

 

What Buffet has never said to my knowledge is that much of this "growth" in GDP (per capita and aggregate) is the result of an unsustainable credit mania and waste. GDP is actually only a measure of transactional turnover in monetary terms, not an accurate measure of changes in living standards. Moreover given his politics, he is certainly aware of the current lopsided income and wealth distribution and that the majority of people are worse off now than they were going back to at least 1999.

In the backwards mirror of economic statistics, the more the US spends on medical care, "education", housing and 70% of the world's lawyers, the larger the GDP. There is little if any correlation between this spending and a productive or improving economy or rising living standards. You don't get "richer" by paying more for something that others are buying for less.

The only thing preventing the decline in living standards obvious is artificially cheap credit and absurdly low credit standards, caused by price fixing and moral hazard. This enables people to buy and finance things they otherwise cannot afford and for the government to pay for "guns and butter" at the same time. The day central banks lose control over interest rates (at the latest) is when living standards will better reflect what most people can actually afford.

To that, you can add more outsourcing, more offshoring and more automation which will continue to decrease both the number of jobs and wages. The distribution of most productivity gains and essentially free financing for leveraged speculation all but continues to assure that the lopsided proportion of people will benefit at most marginally (if at all) from any future "growth".

I have and continue to expect that most Americans will continue to become poorer or a lot poorer over the indefinite future. The same applies most everywhere else.

 

Pay cash for everything, unless it's cheap credit - and use that money to develop recurring revenue - particuarly in contracts.

Everyone says "what if it fails" but - for a moment think "what if it succeeds" and you miss it?

Review history and find out what happens if things fail and judge for yourself the end result, the consequences, and the downstream effects.

Banks in the USA have checking and savings that are insured, so in theory the only way a person would lose that wealth is to have the USA fail as a whole. They have also figured out that risk is expensive - and to get you to take risk - they offer basically zero interest on the accounts.

That is drastically different from when I was a kid, when someone could put money in an insured account and make a modest return on investment.

Government overhead (taxes, expansion, benefits, welfare, services) have largely killed any return you could hope for. It's the cost of doing business that is the core that chews up profits.

When I was a kid, sales tax was 5.5% here in good ol' Ka-lee-for-nee. Now it's over 9%. That's a larger increase than anyone can imagine because not only has the cost of the goods gone up (candy bar from a quarter to a dollar) but the percentage of tax on that purchase has gone up.

For every candy bar sold, the tax went from .01 cents to 9 cents. (.25 * .055 = $.013. 1.00 * .09 = $.09

So while the cost of the goods sold went up 300% - the cost of the tax on the same goods went up almost 900%

Consider the long term impact of this math, and make your bets accordingly.

 

please keep writing it becomes more interesting

 

"Missing out" on potential gains is one of the primary drivers of excessive risk taking and directly contributed to by moral hazard. Sure, it is a 'risk" but most people never consider the disproportionate outcome from being wrong versus being right. And to provide a hint, when most people are wrong, given the pittance they have in savings and net worth, it could ruin them as has already occurred due to the "Great Recession". Millions have had their financial lives changed forever because they lost much of their savings, then lost their job and since then found one that paid less or much less. Seven years into this economic "recovery", the data I have seen states that the inflation adjusted median net worth is about a third less than 15 years ago, at about $54,000 today versus over $80,000.

Reviewing history is fine except that history until recently didn't include the greatest asset, credit and debt mania in the history of civilization. This is exactly what we are living through now and have been since at least the mid-1990's. Most people are just not aware of it because they now consider it "normal", possibly have never experienced anything else, recency bias and a false sense of confidence in the ability of government to prevent declining living standards.

FDIC deposit insurance is a form of moral hazard and has contributed mightily to the current reckless banking practices which are generally considered but actually anything but "safe and sound". It ultimately won't prevent anything but instead create a "fat tail" distribution "black swan" event which is at best part of a giant put option on the USD. Moreover, I wouldn't count on getting 100% of your deposit balance back in a crisis. Bank "bail ins" are definitely going to be an option, whether most people believe it or not. The "money" most think they have on deposit with the bank is actually a loan to the bank.

 

Math check on aisle 3...

If .25 to 1.00 is a 300% increase (and it is), then .013 to .09 is a 592% increase.

I don't know when the CA combined tax was 5.5% -- that rate doesn't show up in this historical table -- but I'm guessing that if it was long enough ago for prices in general to increase fourfold, wages have probably increased more or less proportionately. As for the 64% increase in the tax rate ((9/5.5 - 1) * 100%), well, there's little I can say within the confines of "no political discussion".

 

The state and local don't tell the whole story. There's the addition of numerous additional sales taxes based on measures (increase funding for various things). There is nowhere in California currently charging the base 7.5%. Sacramento itself is now either 9.0% or 9.25%.

Historical sales tax rate table for California -

https://www.boe.ca.gov/sutax/taxrateshist.htm

The same time window for minimum wage showed a similar increase to the cost of goods. ~300%

http://www.dol.gov/whd/minwage/chart.htm

So while people made 300% more, goods cost 300% more.

And we can argue or bicker over exact timing - in general trend, prices went up equally with cost of goods ( both at ~300%) while sales taxes have gone up at double the rate of wages and prices at - per your math - ~592%.

 

Yup. Doesn't seem especially sustainable, does it?

Over here on the other coast, our NC sales taxes perhaps haven't risen quite so sharply, but our legislature this year "avoided a tax rate increase" by declaring that services would now be taxable at the same rate.

 

The entire global economy, wealth of all nations, persons, corporations, etc. combined is worth less then 200 trillion

 

Yeah, but Justin Timberlake bought MySpace - so that could double to $400 trillion any day now.

 

We'll see... We are going to see some kind of a huge reset. It's inevitable... I used to live in a country where the currency value dropped by half in a month. It worked out well for a friend who bought a farm and between the time he signed the contract and he had to pay he saved half! It could happen here, believe it or not. There have been lots of crazy inflation and deflation events in history. That's why we go for the bullion. Insurance...

 

I expect prolonged deflation in asset prices and possibly temporary deflation in goods and services prices. If it happens, gold and silver are likely to get hammered. Both crashed in 2008 during the "Great Recession" and silver as well during the 1930's.

If it happens again, its likely to for the same reason, overleveraged speculators for paper contracts and "metal bugs" for the physical metal who must do so to "pay the light bill".

 

Buying into assets (physical gold, silver, other pieces, art, coins, diamonds, etc) as a bet against cash, retirement accounts has it's own ups and downs.

Here's a chart adjusted for inflation (check box at the top) of the price of Gold over time. http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

back in the 2009 recession people were not buying many assets and/or their value decreased considerably.

Thus, if you plan on using certain assets during depressed times you may lose money on that. How much, well, you'll find out as it's all dependent.

I tried to sell an asset in 2010 that was worth $2,000 just 2 years earlier. Then it was near worthless as there were no buyers for much of anything. It's not worth anything if there are no buyers.

Learning to save and distribute the savings by using multiple mediums will provide better wealth. For instance, I found a savings account that pays 0.7% interest (American Express apparenty has a 0.9% savings acct) or 13mth CODs that pay 1.15%+ which are much better than most . Or even income/interest type mutual funds. Granted, no where like they used to be in the early 1990s where I have a guaranteed minimum account at 5.5% (long ago discountinued though I'm grandfathered into it).

Also in the US we have banks and Credit Unions though both are insured to certain amounts by the Federal Govt. I know EU banks have been buying like crazy to balance out the various gov't debts and cash flow. I'm curious when it's all going to come crashing down.

But you have to be careful. Are you buying diamonds at retail, when you may or may not knowing selling them would be a huge loss, and dependent upon the market ?

It's best to make sure you have a roof over your head, then emergency cash to keep that roof over your head if you income is stalled, then start distributing savings around, and building up various investments that grow well. It all requires research and talking to many investment people that can give good analytics on good savings/growth areas.

But in the end there are no guarantees. A meteor could hit your house and hit the insurance exclusion of "act of god" clause, along with your safe full of cash, gold and diamonds.