Monday, May 17, 2010

Ayn Rand's Egalitarianism and Inflation: Production to Consumption

In Ayn Rand's Egalitarianism and Inflation she demonstrates the consequences of the introduction of paper money into a thriving agrarian gold-based economy. And she shows how the resulting inflation actually destroys the real-world capital that had previously been accumulated by shifting society's focus from production to consumption.

"Now project what would happen to your community of a hundred hard-working, prosperous, forward-moving people, if one man were allowed to trade on your market, not by means of gold, but by means of paper—i.e., if he paid you, not with a material commodity, not with goods he had actually produced, but merely with a promissory note on his future production. This man takes your goods, but does not use them to support his own production; he does not produce at all—he merely consumes the goods. Then, he pays you higher prices for more goods—again in promissory notes—assuring you that he is your best customer, who expands your market.

"Then, one day, a struggling young farmer, who suffered from a bad flood, wants to buy some grain from you, but your price has risen and you haven’t much grain to spare, so he goes bankrupt. Then, the dairy farmer, to whom he owed money, raises the price of milk to make up for the loss—and the truck farmer, who needs the milk, gives up buying the eggs he had always bought—and the poultry farmer kills some of his chickens, which he can’t afford to feed—and the dairy farmer can’t afford the higher price of alfalfa, so he cancels his order to the blacksmith—and you want to buy the new plow you have been saving for, but the blacksmith has gone bankrupt. Then all of you present the promissory notes to your “best customer,” and you discover that they were promissory notes not on his future production, but on yours—only you have nothing left to produce with. Your land is there, your structures are there, but there is no food to sustain you through the coming winter, and no stock seed to plant.

"Would it make any difference if that community consisted of a thousand farmers? A hundred thousand? A million? The entire globe? No matter how widely you spread the blight, no matter what a variety of products and what an incalculable complexity of deals become involved, this, dear readers, is the cause, the pattern, and the outcome of inflation."

Monday, May 10, 2010

Ron Paul : Greece Is Just The Beginning!

Time to sit down and start to really listen...

Tuesday, May 4, 2010

April 10 Net Worth:

Another great month even though we didn't see a huge amount of growth. We didn't see the stock market do it normal routine of going straight up daily. Still pushing through and hoping we don't hit a bumpy road with the stock market and wedding expenses.
Lets break it down:

Cash & Savings: This month we took a bit of a hit, mostly because purchases of stocks. I am not sure we will see much growth here the next couple of months, the wedding expenses are starting to add up, and do not see it stopping for the next couple months. This money grows from money directly transferred from paycheck to my money market. I do not see this money unless I have a big emergency. It is the money that we are saving for a downpayment on a house.
This bracket holds the funds for insurance, auto maintenance, Roth IRA, and vacation. This is why it can be a little deceiving, it also holds my monthly budget in it. It has about 13-15k 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: My stocks seem to perform well for me this month as gold is moving up everyday. With gold movement it is making all the mining and etfs I have go up as well. One of the best performing miner that I hold right now is Eldorado Gold Corp. (EGO) I am really happy with the purchase of this and wish I would have bought more. One of the stocks I have on my watch list is Silver Wheaton Corp (SLW) which some think is easily worth $30/share. As of right now I am holding back and hopefully save up some cash. The list of stocks I own (GLD)(SLV)(EGO)(AUY)(AVARF)(RGLD)(ZQK)(XOM)(CVX).

*As you can see I am heavy in commodities in my brokerage account. This is all based on my thought that over the next decade the best investments are going to actually be in hard assets. My Roth/IRA/401k are in pretty common index funds and mutual funds so I figure I can go more risky with brokerage. I believe these will out perform equities in the next decade and if nothing else I feel more comfortable with my portfolio diverse. I am bearish on the US Dollar and US Economy, I believe that trillion dollar deficits are not going bode well for the USA.

Retirement 401k: This braket is just me adding money to my 401k every month. Saw a nice little jump this month with the stock market. I'm not really checking on this bracket(daily/weekly) as it really long term and I just keep pumping money into it every paycheck.

Retirement IRA's: Slow growth here this month. I still think the market is going to correct itself. I will keep cash on the sidelines and just try and max out my fianc├ęs and my Roth's next year. In this bracket I have all Vanguard Funds (VTSMX, VGSTX, VEIEX)

Debts and Liabilities - Vehicle under 10K!! Credit Cards done...

Credit Cards: This is just a more wedding stuff purchased with credit (Wedding outfit), it will be paid off before I am charged - I pay off any Credit Card debt monthly.

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 this or next year. We are still saving up for a house so not sure its in our best interest to get rid of our cash sitting to be debt free on my vehicle.

April is now in the bank, I am still extremely bearish on the world economy and the US economy...We are headed for a financial storm and it is very important for all of us to be up to date on current events. It time to be prepared for the worse and pray for the best. I will be saving as much as I can but with the wedding I am going to be running low on cash flow. We will see how it all plays out here...