Sunday , 21 July 2024

Today’s Many Uncertainties Require Cautious Money Management Tomorrow – Here’s Why

The next six months could be the most conflicted period that most of us have ever experienced, so, global_economic_crisisI’m suggesting that we enter it open-eyed, cautious, and conservative in managing our money and financial affairs at least through the spring.
A guest post by Bernard Dozier, a Founding Contributor to (see his profile here) which may have been enhanced – edited ([ ]) and abridged (…) – by (Your Key to Making Money!)  to provide you with a faster & easier read.  Register to receive our bi-weekly Market Intelligence Report newsletter (see sample here , sign up in top right hand corner)
Uncertainty breeds stress, and there is much uncertainty, which is being exacerbated by those who exploit social and political issues.  Those who can profit by destabilizing society are busy doing so.  Extremists are antagonizing and dividing as many Americans as they can in as many ways as they can.
Let’s examine some of the issues that should make us exercise great care and wisdom over the coming months.
1. The Inflated Stock Market: The top-heavy stock market is always one of the indicators we use to judge the economy.  The problem with it is that since the Fed was given power to regulate the economy, markets (all of them) are centrally managed.  Markets no longer have price-discovery minds of their own, and depend on force-fed highs from injections by the Fed and the Treasury’s Equalization Stabilization Fund, which aim at stimulating speculation.  Avoid speculation.
2. Multi-Trillion Dollars of Debt: “Trillion” has become an indispensable word in the government’s vocabulary, but it’s such a huge number that the mind resists counting that high, so we have to address “trillion” by establishing comparisons with familiar references. We know a million is a thousand thousand and a billion is a thousand million, but a trillion is a million million.  In approximate terms of time, a million seconds is 12 days.  A billion seconds is almost 32 years.  A trillion seconds is 31,710 years!
Global debt, according to the IMF, is a staggering $152 TRILLION! The world has bought that much stuff on credit, and we know what happens when we buy stuff we can’t pay for – and it ain’t good.
  1. $152 trillion is twice as much money as all the economic activity on earth generates in a year’s time.
  2. If all the money generated by all the  nations was devoted to paying off global debt, we’d still have $76 Trillion unpaid.

That kind of debt is stifling the economic activity that would pay off the debt.  It:

  • discourages economic activity and
  • strangles the credit cycle–the goose that lays the economic eggs.

Debt feeds off what true wealth remains like a serpent devouring itself.  Debt is ruled by the universal law of Cause and Effect, so that excessive out-go inevitably results in restricted in-come, which we call Depression.  Depressions are corrective, and exist until balanced causes produce balanced effects.

3. U.S. Political Parties In A Shambles: On top of debilitating debt, we may face years of political uncertainty, infighting, and struggle in Washington’s halls of power.  Both mainstream political parties are:
  • in shambles – ripped apart by time-dated, out-dated policies,
  • fractured and weakened…having lost identity, and with it their veto power over minor parties.

We might expect the Green and Libertarian parties–along with parties yet unformed–to stir Washington’s Power Pot for years to come.  All that would mean uncertainty and unpredictability.

4. Deutschbank In Downward Spiral: How can Deutschebank not continue its downward spiral (and downward pull on other banks) as more revelations surface like the recent one telling how the Fed bailed out Deutschebank five times from 2008-11, dumping more dollars into that German “black hole” than into US banks?
Deutschbank is still so toxic that there aren’t enough trees to make enough paper for enough $100 dollar FRNs to make it whole again.  We hear that IF global bank assets were marked to market, Deutschebank wouldn’t be the only bankrupt bank in Europe…or the world.
It seems old-fashioned horse sense to keep cash in a safer, handier place than a bank which can claim your money to redeem its greed-based poor judgment.
5. Excessive Money Printing: Reason and Experience must assume that as long as the Big Bankers are Big Bankers they will manufacture paper and electronic currencies. This means that the manufacture of currencies (printing currency isn’t manufacturing and it isn’t money) will be destructive of their value or purchasing power, leading to eventual and inescapable hyper-inflation.
In ancient times rulers instituted periodic nullification of consumer debt when their economic losers (who had nothing more to lose) might gang up to nullify the ruler.  Whether our modern ruler-bankers have enough sense to declare a Debt Cancellation Holiday or not remains to be seen, but history testifies to the fact that Earth’s economics tend toward getting out of whack and have to be re-set periodically.
6. Unemployment & a Potential Reset of the Minimum Wage: 23% of the US workforce is jobless, which is stressful enough, but activist agitators are pushing for a $15 minimum hourly wage which would only makes it more economical for employers to hire Robots and push unemployment numbers that much closer to 24 million.
7. House Ownership No Longer a Good Investment: Conventional wisdom once said, “Pay off the mortgage to reduce monthly living costs.”  That made sense once upon a time when a couple got married and settled down into predictable lifetime employment followed by secure retirement, but nothing is that stable and secure nowadays.  People pick up and move every six or seven years. Years ago homeowners looked at their houses as an investment, expecting the value of the house to appreciate steadily, but that is no longer the automatic case.
Paying off a mortgage may look like security, but its more of a money trap, for if your money is tied up in a house, the cost of repairs and maintenance compromises its investment potential, particularly in today’s market.  Besides, if your cash is tied up in a house, it is far from accessible.  Furthermore, if you had to move, or if you had such a need for cash that you needed to sell your house, there’s no assurance that it would sell quickly and market conditions might force you to sell to a bottom-feeder at a price far below its actual market value.
8. Then add the following to the above list of uncertainties:
  1. the derivatives problem,
  2. immigration,
  3. ungoverned borders,
  4. domestic terrorism,
  5. the fact that every other American wouldn’t have $400 in ready cash for an emergency,
  6. the fact that 70% of American young adults are economically disadvantaged and are forced to live with their parents,
  7. the fact that housing is a shaky business,
  8. the fact that rental housing prices are becoming unaffordable because institutional buyers are buying up distressed properties,
  9. the fact that real salaries haven’t grown for thirty years,
  10. the fact that 2% annual inflation takes $2 out of every $100 you put in your wallet, so just since 2006 your dollar buys 20% less,
  11. un-funded and under-funded pensions…and inadequate retirement income for those who depend on Social Security….
Get Prepared: Obviously I can’t list everything that is contributing to our stress,  anxiety, fear, and indiscriminate rage, but the list is a long and growing one…[That being the case] I suggest it would be wise to:
  • stock
    • some cash,
    • some precious metal,
    • some food,
    • some medications,
    • some water and
    • a good water filter;
  • figure out a way to:
    • stay warm,
    • heat food,
    • provide light,
    • treat injuries,
    • protect yourself,
    • wash and dry clothes,
    • and to entertain yourself should worse come to worse for a few weeks – or months.

I applaud the lead Germany has taken by telling its citizens to do these things,  Preparedness just seems prudent in a day when hackers can shut down anything they please any time they please.

The part of preparedness that is never mentioned by secular experts may be the most important, and that is the spiritual foundation of wealth and prosperity – and here’s what Charles Fillmore wrote about it: “Watch your thoughts when you are handling your money, because your money is attached through your mind to the one source of all substance and all money.  When you think of your money, which is visible, as something directly attached to an invisible source that is giving or withholding according to your thought, you have the key to all riches and the reason for all lack.” For me, it’s comforting and reassuring to know that regardless of earthly economic conditions, those who are linked with the invisible reality that surrounds this tiny sliver we call the Third Dimension will always have access to what they need.

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Do you think there may be other key financial or economic events that could rock the markets this year? Share your thoughts with us in the comments below.