Saturday, December 26, 2009

Person's Financial vs Government Risk Viability

When calulating an individual person's financial risk and viability, we look at his/her debt to income level (DTI), but when talking about a country we always look at debt to GDP.

However, is this valid?

Every dollar government borrows and spends makes the GDP go up.

This is akin to looking at an individual person and counting everything he has purchased with his credit cards as "income".

(Also, the GDP is not the Government's income. It is ours. As soon as the government starts creating something of value and selling it at a profit, it can count it as it's income.)

Friday, December 11, 2009

Liberty and Tyranny

"We all declare for liberty; but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do as he pleases with himself, and the product of his labor; while with others, the same word may mean for some men to do as they please with other men, and the product of other men's labor. Here are two, not only different, but incompatible things, called by the same name - liberty. And it follows that each of the things is, by the respective parties, called by two different and incompatible names -liberty and tyranny."

The Collected Works of Abraham Lincoln edited by Roy P. Basler, Volume VII, "Address at Sanitary Fair, Baltimore, Maryland" (April 18, 1864), p. 301-302.

What an amazing quote...

Thursday, December 3, 2009

Zimbabwe Ben

Gold Thoughts: Arnold Bock

The following is Copyright © 2009 Arnold Bock and can be found over at Financial Sense.

So why am I so optimistic about the eventual price of gold?

It is because an affinity for and an understanding of the political mindset causes me to understand what decision makers will do…and why. Because a politician follows the political calendar, s/he only concerns himself/herself with the time horizon leading to the next election.
Anything requiring decisions beyond the date of the next election will be the responsibility of whoever is on the next watch. If the politician in office today is in office after the next election, a shrug of the shoulder indicates that worries of that kind can be dismissed for now to be dealt with later.

So major and difficult, but necessary, decisions are inevitably deferred. In their place spending money gives the appearance of concern and of doing something to fix the apparent problem. Aren’t those elected officials doing what we elected them to do? It certainly looks as if they are.
More cynical observers would characterize these actions by the political class and their senior bureaucratic minions as buying time hoping that something positive might magically emerge.
Those who are super cynical would even conclude give-away programs are designed simply to bribe the voters in order to curry goodwill for another term at the levers of power.

What all this means is that there is no discipline or inclination to do anything of real value in fixing the core economic and financial problems. That being the case, new programs, more spending stimulus and money creation will always be the order of the day. Hence the currency will devalue and investors will find gold as their best safe-haven refuge.

The dollar will devalue because massive dilution caused by incessant money creation allows future obligations to become more manageable – for government – because it is the only way that it can meet its future obligations for employee pensions, accumulated debt, Medicare and social security.

A nominal dollar which buys much less in the future than it does today is still a dollar. Unfortunately the holders or recipients of those devalued pieces of paper will find they are essentially fraudulent promises.

These realities make gold the closest thing to a sure-bet investment. They are also the reasons why gold will go much higher than most of us allow ourselves to contemplate.
Buckle your seatbelts and enjoy the ride ahead!


I still think Gold is overbought, it is always a good reminder to keep myself honest by reading stuff like this. I have a lot of events coming up this year wedding, honeymoon, trying to buy house, etc...With all these I am going to need liquidity and not sure holding on to bullion is going to be my best option. I am looking to buy some on the dip (if that ever happens) think I might as well get into som Sliver and Oil.

Tuesday, December 1, 2009

November 09 Net Worth: Not Much Changing

November was a another solid month with a 5.89% growth. I am looking forward to breaking down my yearly net worth in January. I didn't do to much this month and don't really see December being an exciting month, as I am going to ride it out the rest of the year, unless gold has a strong decline.

Lets break it down:

Cash & Savings: Saw only a small jump this month as we added some cash into our brokerage account. I still do not see much growth in this area over the next 4-5 months with all the wedding and honeymoon stuff that we will have to pay for. This bracket holds the funds for my down payment on house(which is pushed back another year), engagement ring, insurance, auto maintenance, Roth IRA(before I max it out), and vacation. This is why it can be a little deceiving, it also holds my monthly budget in it. It has about 16-17k sitting around as savings the rest are funds that are going to be used at some point over the year. The rest is used on a daily bases for covering expenses, rent, food, auto, etc...

Stocks/Brokerage: As you can see I sold all my stocks this month. Most all of that $688 is all shorting the financials/stock market and the rest sitting in cash in my brokerage account.

Precious Metals: All the money from selling my stocks I bought gold stocks and looking to buy more on the dip, which we just had, but did not pull the trigger.

Retirement 401k: This braket is just me adding money to my 401k every month. Not seeing much growth here this last month. I not really checking on this bracket as it really long term and I just keep pumping money into it every paycheck.

Retirement IRA's: I have finally moved all my IRA/Roth IRA into the same bracket. I still have a big chunk of cash sitting on the sidelines which will hopefully be maxed out before April 15th. If I still think the market is going to correct itself I will keep it on the sidelines and just try and max out my fianc├ęs and my Roth's next year.

Debts and Liabilities - Vehicle and Credit still high

Credit Cards: All of this is still the engagement credit card with a 12 month 0% APR, I am not going to put much of a dent into this debt until the 12 month or January/February, when I will pay it off in full. I have that money going straight into my saving account creating a little interest off of it till I pay it in full.

Car Loan: I am paying 4% APR on it so I am paying a little but not a ton. Still looking to pay it off early-will probably be a goal next year.

November was great month. It was the third month in a row with positive gain, and five out of last six months, so I cannot complain, especially since this is through this recession.