by Michael Myers on September 29, 2009
Howard Katz describes how and why investing in stocks, real estate, and gold can provide a real yield for retirement. He also provides a historical review of retirement income and economics. Excepts below.
Link: Gold Dip Below $1,000 and NO Retirement, by Howard Katz
The first thing to learn about retirement is that it is a fairly new idea in the scheme of things. Prior to 1785-86, there was no retirement. Everybody worked until they died (unless they were rich, in which case they did not work at all).
Retirement was invented in 1785-86 by Noah Webster, who is best known for being the author of the first American dictionary. Webster, then a young man, took a trip through the 13 newly independent states in 1785-86. He talked to state legislators and other influential people, and he convinced them to legalize interest. (This was only done in the northern states; the South waited until after the Civil War.) The following year the British philosopher, Jeremy Bentham, wrote a paper entitled, “In Defense of Usury [Interest],” and interest was legalized in Britain shortly thereafter. [click to continue…]
by Michael Myers on September 25, 2009
Stewart Dougherty delivers some bitter medicine for retirement investing. But he also recommends an antidote.
Link: The Metastasis of Moral Hazard and its Effect on Gold - by Stewart Dougherty
As average American citizens lose their jobs by the millions, become mired in financial distress and are crushed by the largest debt increase in the history of civilization to pay for government bailouts and fiscal stimulus programs, several Wall Street firms, in actions so arrogant they beggar and defy belief, have announced that they will pay record bonuses in 2009. These bonuses commonly amount to 20 – 200+ times the median American wage, in other words, 20 – 200+ times the earnings of the citizens whose taxes were spent only a few months ago to keep the Wall Street firms from imploding.
Nurses, police officers, school teachers, store clerks, truck drivers, gas station attendants, firemen, flight attendants, ambulance drivers and everyday workers of every other description, many of them struggling to provide only a humble, basic lifestyle for themselves and their families, were asked to reach deep into their pockets to help Wall Street survive. Now that Wall Street has taken their money, it will use it to lavish huge bonuses upon itself, in a callous Roman orgy of excess.
The American psychological landscape has been parched by the searing winds of financial desperation, surging inequality and dying hopes. And the tinder of the desiccated American Dream, once the great calling and aspiration of a nation, is now piled so high that a spark igniting it would unleash raging flames reaching up to and scorching an astonished Sun. Yet politicians and the press are so divorced from reality that when the people express at town meetings and other venues their deep, legitimate frustration over the loss of their hopes and nation, they are viewed as whiners, or paid political activists. As noted earlier, denial is very dangerous drug. [click to continue…]
by Michael Myers on September 7, 2009
John Mauldin provides some insight into the muddy economic forces that dominate the financial arena in 2009. Lessons from the past do not fit perfectly, so we must listen to wise and objective people to give us some perspective in investing our retirement money. Excerpts below.
Link: The Elements of Deflation - John Mauldin’s Thoughts from the Frontline
Deflation is a major economic game changer…. We face the deflation of the Depression era, and central bankers of the world are united in opposition…. If we don’t have a problem with inflation in the future, we are going to have far worse problems to deal with.
Saint Milton Friedman taught us that inflation is always and everywhere a monetary phenomenon. That is, if the central bank prints too much money, inflation will ensue. And that is true, up to a point. A central bank, by printing too much money, can bring about inflation and destroy a currency, all things being equal. But that is the tricky part of that equation, because not all things are equal. The pieces of the puzzle can change shape. When the elements of deflation combine in the right order, the central bank can print a boatload of money without bringing about inflation. And we may now be watching that combination come about.
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For instance, inflation always seems to be accompanied by higher wages. That makes sense, as workers want more to justify their labor if prices are rising. But today we have wages dropping over time. Yes, even though wages went up this month by 0.3%, it was all due to a one-time increase in the minimum wage. Without that government mandate wages would have been flat or falling. Look for wages to fall over the rest of the year. [click to continue…]