“To the victor, the spoils.”
And spoil indeed it does.
The biggest reason why federal stimulus is a horrible idea…
It rewards that which does not work. Literally, and figuratively. Symbolically, and actually.
I wrote this article and a day later this major news outlet published this interview where even financial experts are saying the true nature of the world economy is impossible to gauge due to the distortions caused by the world’s central banks and their manipulation of the world’s currencies.
Let’s go ahead and define exactly what I mean by that.
At the very basic level, it’s welfare. It’s entitlement spending to protect the status quo, instead of changing what’s broken. It’s not called welfare but then again, no welfare is called welfare.
I don’t mean welfare babies. I don’t mean unemployed. I don’t even mean the government which does not produce wealth but does tax and redistribute it by it’s very institutional nature.
And I’m not complaining, because as always, that can be saved for another post until I finally forget that I felt the need to complain. 🙂
Amazing what not complaining does for your productivity and happiness by the way 😉
So what exactly and why exactly does stimulus not work?
Because capital which does not circulate spoils.
I’m talking specifically about retirees and people in the upper middle-class that continue to feed the monster by investing in companies that need to die natural deaths, and by waiting and holding onto stocks whose value is being artificially inflated through monopolistic practices or old school business models.
Retiring? Don’t Get Complacent!
Current retirees and people approaching retirement can be very complacent, and they have utmost faith their government is going to bail out any and all failed companies, especially if they are large and have been around for many years.
And they may be right.
However, that does not change the consequences, outcomes, and effects of continued EZ Money policy of the United States federal reserve bank.
I am currently giving dictation to my iPhone for this post (i.e. hands free talk to text) and even my iPhone knows that easy money should be spelled like the pawnshop or payday loan center it represents! Haha
The fact is a lot of upper middle-class Americans benefited from the taxpayer-funded bail-out of 2008 and continued federal stimulus of the last five years, though it was a happy coincidence more than anything, because we all know the most wealthy are out for #1.
The holding companies, banks, and other financial institutions that manage the funds and retirement accounts- accounts which are comprised of many too big to fail American companies, which ultimately served/saved the banking derivatives scandal and indirectly the current and recent retirees.
I had a conversation with a retiree today who encouraged me to buy stock in RadioShack. RadioShack. Can you believe that? A retiree with $40,000 worth of Radio Shack. So how’s Radio Shack been doing anyway?
I didn’t even know RadioShack’s stock price for the last 20 years. I didn’t care. I only looked it up after having the conversation and openly disagreeing with the retiree, saying RadioShack is not relevant to today’s market. I had even been to a RadioShack recently and nothing in the store did anything for me. It’s a store that came out of a market need of the 80’s due to the ushering in of the era of consumer electronics (like the Sony Walkman) where devices required all sorts of different sized batteries. RadioShack was a battery store!!!
And no more. And soon, to be never more.
RadioShack, an absolutely wonderful idea in the 80s and now, outdated due to Amazon.com and Best Buy. The same retiree encourage me to buy stock in JCPenney.
Currently this person probably has a lot more money than I do, but while they were trying to sell me on RadioShack and JCPenney I was showing them on my laptop but today’s earnings for the stock GoPro, the California-based company which produces recording devices for extreme sports athletes poised to take over even more market share with their new pricing and innovative new products.
Go Pro stock is up about 35% in the last two weeks and is the most successful IPO of 2014.
Their reasoning: too big to fail is “in” and the mantra “don’t get anxious, wait it out” was repeated.
And that only works 30 years ago and if you already have lots of capital already invested in big blue-chip stocks or bonds.
Problem is most Americans do not. And not only that, one out of three people on the street in America currently has a debt and collections. Not only that, you actually believe reports that the government is issuing which I do not, you will see that all of these new jobs being created are part-time jobs and many employers are already adjusting workers’ schedules to bypass the numerous stipulations in the Affordable care act legislation.
How the upper-middle-class suddenly became millionaires:
1. The accumulation of capital when it was much easier to get (pre-recession)
2. The benefit of being heavy into US dollars whether it be currently in savings (back when saving was actually an acceptable concept) and company stocks denominated in US currency back when dollar momentum was stronger and federal debt substantially lower
3. Extensive lobbying by the American Association of Retired Persons which is the largest lobbyist group in America (this has caused a net increase in median income among the retirees during a recession, and the rate of increase as beating out regular working Americans)
4. By doing absolutely nothing
It’s true. There was a time when you could handover money to an account manager and as long as nothing exploded, you would make serious money. The Soviet Union failing was a large part of that.
Sure America is way better than Russia in many regards, but the fact is the Soviet Union sucked really bad for really long time before it eventually collapsed.
So while many people are comfortable with waiting and seeing what happens, I personally am not. Regardless of any investment you make, you should have an entrance and exit strategy in mind.
Or, as in the case when I bought Go Pro Stocks, you buy with value long-term in mind for the marketplace, the consumer, and for the sake of innovation.
And if you have a lots of money tied up in the stock market, which is currently trading sideways and has been for the last year, I would suggest you diversify your positions.
The same person recommending RadioShack to me also said he did not mess with metals. Because, according to him, metals haven’t done anything lately.
That is not why you get into metals.
I have a small but very important number of specific reasons to take a position in gold either in gold bullion bars as an IRA or when appropriate, physical gold you can hold:
1. You get into metals because you are already wealthy and you want to protect your wealth.
2.You get into metals because once you recognize a valuable opportunity with a company which can legitimately handle the transaction for you honestly and dependably, you realize another excellent investment instrument at your fingertips.
3. You get into a metal’s IRA or gold IRA to diversify or hedge on your current IRA.
4. You own physical gold as a backup or emergency currency because this is important to you.
Let me tell you something about gold: it is much harder to mine gold than it is to print money.
I’m just relaying what Uncle Sam has told us all, and how the news reported that it costs more to print a penny than to spend a penny.
So while the value of a piece of paper is largely dependent on many factors outside of your in my control, one thing is for certain and that is gold has always held real monetary value your regardless of any paper currency anywhere.
Don’t let the government reports which gloss over inflation and factor out financial realities for many working class and middle-class Americans form your opinions.
If you don’t think your government would lie, then why have the remaining files on the JFK assassination been locked up all this time and the release date is continuously pushed back and back and back.
To quote any US president ever “if you have nothing to hide, you have nothing to worry about”.
So then perhaps we should worry, because there’s plenty being hidden in plain view… at least if you go by that logic.
Or you can just listen to Janet Yellen and pretend it’s all okay.
As for me, I have only this to say.
Just the facts ma’am. Just the facts.
Sent from my iPhone