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CPI Explained – Part 1 – Hedonics

November 3, 2008 By 3 Comments

If you use money, don't brush off understanding it. Let's examine inflation in a way we can all follow.

While the measurement of inflation varies wildly depending on which economist you talk to, here we will examine the official figures published by the Bureau of Labor Statistics (BLS): CPI or Consumer Price Index. The purpose of publishing CPI is to measure inflation and/or deflation, the decreased or increased buying power of the U.S. dollar. Awareness of inflation is essentially an awareness of how much our central banking system, the Federal Reserve, is printing or destroying money through “monetary policy.” This side of economics can get confusing, but it doesn’t have to be. This account will be an understandable explanation intended for accountants and laymen alike.

CPI is not calculated the same today as in the 70s & 80s

While remarkably high inflation is a key part of our memory of the 70s and 80s, if today’s CPI calculation methods were applied to the 70s & 80s, the CPI figures would be revised to show very low inflation – probably under 6%. Why? Two important concepts have [Read more...]

Filed Under: Hyperinflation, Money, Personal Enjoyment Tagged With: bank, bls, cost of living, cpi, debasement, economics, economy, fed, federal reserve, government, inflation, monetary, Money, policy, social security, statistics

Bail yourself out with an Unlimited® 401k

October 21, 2008 By Leave a Comment

With trillions of dollars going to bailing out failing corporations, who’s going to save you?

Take a look around… you’ll probably have to save yourself. Rollover your IRA or 401k funds into an unrestricted account to open a world of possibilities without triggering any taxes. Here are some ideas…

Invest in gold silver, and other precious metals. The last 35 years is just a tiny blip in human history. The rest of the time humans have been walking this earth, gold has been used as money. We came off the gold standard in 1971 and seem to have forgotten that gold will always be valuable while paper will not. Consider buying gold, silver, platinum and other precious metals to store the value of your wealth.

Cash Flow Real Estate. With the real estate market in turmoil, find a bargain. Instead of hoping for appreciation, look for properties that provide a return-on-investment of at least 10% based on rental income, and own it forever.

Raw Land. Buy land in areas that will always have high demand. As energy prices rise, land near dowtown areas of major cities should have a bright future as urban sprawl reverses.

Foreign Currency. If you are petrified of investing, make the safest bet and keep your money in a foreign bank account in a stable currency. Try Canada or Switzerland.

Foreign Stock Markets. Many countries in Asia and South America have booming stock markets. Skip the U.S. middleman and invest directly with a broker in one of these foreign countries.

Private Companies. You can lend money to small businesses. If you find a business that is looking for investors, you may even be able to buy stock in their business. Sometimes evaluating a small, local business is much easier than a large publicly traded one.

Start your own business. You can use up to $50,000 of your retirement funds to start your own business.

Nabers Group helps individuals enter a world of never ending possibilities every day using Self Directed IRA and Solo 401k plans. Don’t let your personal economy be dragged down with the crashing banks and financial service companies. Be independent and take your finances into your own hands.

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Filed Under: Money, Precious Metals, real estate, Self Directed IRA Solo 401k Tagged With: 401k, bank, currency, depression, economy, finance, gold, hedge, inflation, ira, meltown, real estate, recession, self directed, solo, Solo 401k, stock, wall street, wealth

Asset-based thinking in the real economy

October 16, 2008 By Leave a Comment

I’m reposting some of my thoughts from a blog comment discussion from last week.

I agree with the perspective that our currency should go back to being pegged to gold. This would force individuals, corporations, and governments to play by the same rules of economics. The side effect is that we wouldn’t really have bubbles and manias, there wouldn’t be as much real estate development and expansion (or “economic expansion” in general) because we would have a supply-side cap of money rather than an unlimited amount of money based on lending. We would be an asset-based society that rewards actual success rather than a debt-based society that builds its wealth by taking it from the people.

An asset-based society isn’t really wanted by many people who are wealthy thanks to debt. For instance, if you run a corporation that sells a product that people don’t have a strong desire or necessity for, then in an asset-based society you wouldn’t really sell them. In a debt-based society, people will buy your product using debt – by selling their future time simply because they don’t understand the true ramifications of their decision.

In an asset-based society, it’s much harder to start and run a successful business… the only products and services that will sell well are those that people want so much that they will buy them with their actual money. In a debt-based society, people just have to say “yes” to buy something. The decision itself is the form of payment. Unfortunately, that decision is also the forfeiture of future time in their life that could be spent doing enjoyable activities. Instead, the debt-funded “yes” sayer will be working with their future time because they have to in order to fulfill their “yes” obligations. The same concept applies to debts of government, but it’s the people who will pay the obligations through taxes and inflation.

Keep in mind, being “Pro-Dollar” may be anti-American. American principles include [Read more...]

Filed Under: Money, Personal Enjoyment, Precious Metals, real estate, Self Directed IRA Solo 401k Tagged With: 401k, bank, banking, depression, dollar, economy, government, inflation, invest, investing, ira, recession, risky, safe, self directed, solo, Solo 401k, wealth

How to vote against the bailout

October 3, 2008 By 5 Comments

  • Don’t call or write your Senator or representative
  • Don’t sign any petitions online
  • Don’t join a consumer advocacy organization

Our government is not one for the people anymore, and we must oppose the bailing out of failing, irresponsible, fraudulent corporations.

Reasons to vote against the bailout

  1. The corporate officers who made the decision to pursue short term profits at the cost of later bankruptcy often received tens of millions of dollars in bonuses and dismissed adequate warnings from advisers about the future consequences of their decisions.
  2. Bailing these companies out is a reward for behaving dishonestly, unethically, and fraudulently.
  3. If running a company into the ground is rewarded with free money, then this puts sound-minded companies in a position of competitive disadvantage.
  4. This would create new rules of business: If you are a small company, you must follow sound-minded practices to thrive; if you are a very large company, destroy your company and it will be rebuilt at the cost of American taxpayers.
  5. Bailouts are requiring the Fed to create an extraordinary amount of new money which throws fuel on the fire of the already double digit inflation. Runaway inflation steals wealth from citizens to give it to the banking system and the government.

How do I vote against the bailouts?

Because our system of [Read more...]

Filed Under: Money, Personal Enjoyment, Self Directed IRA Solo 401k Tagged With: 401k, bail out, bailout, bank, broker, brokerage, collapse, constitution, economy, fed, government, ira, market, self directed, solo, Solo 401k, sovereign, sovereignty, stock, wealth
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