The Fragility of a Consumer Economy August 4, 2009
Posted by Jeff Nabers in : Money, Personal Enjoyment, Personal Productivity, Self Directed IRA Solo 401k , add a comment
When an economy is based on healthy, sustainable activity with a balance of production and consumption, the type of depression we are in can’t happen. In our consumption-based economy, on the other hand, nothing can “stimulate” things back on track. This is because the track we were on is unsustainable. There’s no going back on it. American consumers can’t spend & consume more today in an effort to “save” the economy because we already spent and consumed the goods of today.
Despite the “green shoots” talk that all the economists and politicians are spreading on TV and in magazines and newspapers (pay no mind that these are the very people who didn’t see the crash coming–we are expected to now value their opinion about what’s going to happen next), what’s next isn’t good for the general economy. As illustrated by Ian Mathis of at Daily Reckoning, by the end of the year about 1.5 million jobless Americans will exhaust their unemployment benefits.
We know that unemployment is sky high right now (10% official figures and 20% as figured by shadowstats.com), but millions of those jobless Americans are receiving checks from the government that are continuing to pay for their rent, groceries, Venti 7 Pump White Mochas, etc. By year’s end, about 1.5 million Americans will no longer have a source of income. In other words, the further reduced consumption affiliated with unemployment hasn’t even come home to roost yet.
Waiting for the “general economy” to be brought back to life will turn out to be a disappointing plan. Your personal economy is what matters, and thriving is a matter of what you make for yourself. Just as the Soviet Union taught us that central planning doesn’t work, we will relearn that lesson as central planning continues to fail in the United States. Don’t wait around for stock markets to go into a long term rebound (as opposed to the bear market rally or “bounce back” that comes before the next leg down in every stock market crash) or for the government to get your job back for you. If anyone’s going to bring your prosperity, it’s going to be you!
5 Steps To Freedom: How to Cut Your Dependence on Institutions and Escape Financial Slavery July 6, 2009
Posted by Jeff Nabers in : Money , add a comment
Finally, it’s here! Amazon won’t have it in stock for another 2 to 4 weeks, but you can use the buy now button above to order the book and I’ll ship it directly to you immediately. (If you’ve already ordered one, it’s going out to you today.)
If you’re reading my blog, I assume you want to take control of your finances and your life. Get the book to find out…
- Why a rising stock market steals from us
- Why savings accounts don’t save
- Why you’re on track to working harder for longer for less
- An action plan for escaping financial slavery
- 5 simple steps to freedom
Here’s the official (more…)
Is my home an investment? March 18, 2009
Posted by Jeff Nabers in : Self Directed IRA Solo 401k, real estate , add a comment
Recently I received a question from somebody looking into self-directed IRA/401(k) investment for themselves. They said, “I ran this by my financial planner in New York who said to roll over my IRA to put some of its money into my home is illegal.” This statement is technically correct. Putting IRA money into his primary residence would be a prohibited transaction. The disturbing thing about the situation is that these three people (a person, their realtor, and their financial planner) could all be on the same page about something so fundamentally ridiculous.
The misconception
In the past 10 years, many people think “real estate investing” equals “putting money into my home”. Their home can’t be an investment in the first place because they are paying for it rather than having it paid for by a renter.
When somebody wants to help people rationalize buying the stuff they sell, they often call it an “investment”. Bill Clinton started changing the way people thought about government spending (when he was increasing it) by calling it an investment.
An investment or a consumer product?
Selling a primary residence to a home buyer is selling a consumer product. It’s for their use. They can buy what they really need. Or they could get extravagant and buy the Lexus/Mercedes version of a home and spend more. Either way, it’s a consumer product if they are paying for it and using it themselves.
But realtors followed Clinton’s spin move and started calling home buying an investment. This really caught on once Fannie Mae, Freddie Mac, and the Fed all took actions to artificially inflate home prices in order to defer the recession of 2002. Once you could buy this consumer product (the home) and then have it rapidly increase in value (supposedly) and realize this value by selling it or doing a refinance cash out, then the talk about the home being an investment seemed to make sense.
Today, the bubble is over, and the illusion that your home is an investment should be easy to correct. If it was an investment, then somebody else would be paying the mortgage. If somebody else was paying the mortgage, they’d probably live in it instead of you.
It’s not to say that buying a home is a stupid thing to do. That can only be decided on a case-by-case scenario that depends on the buyer and the home in question. Buying a home can be a financially beneficial thing to do in some cases, but it hardly could be truthfully classified as “real estate investing”.
Back to basics: real estate investing means buying properties that produce income. And, yes, real estate investing can be done inside an IRA or 401(k). 
How to Cope with Your New $50k in Forced Debt This Year March 6, 2009
Posted by Jeff Nabers in : Money, Personal Enjoyment, Personal Productivity, Uncategorized , add a commentThere are about 100 million non-government, non-taxpayer-paid workers in the U.S.
$3 trillion normal government spending + $2 trillion additional emergency spending = $5 trillion government spending in 2009.
That amounts to $50,000 of government spending per non-government, non-taxpayer-paid U.S. worker in a single year.
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News Flash: World Decides Not To End February 25, 2009
Posted by Jeff Nabers in : Money, Precious Metals , add a commentI want to get this news flash out to you, but there’s no sense in reinventing the wheel. I think the first half of Bill Bonner’s recent blog post sums it up. See it here.
Microwavable economic epiphany for the lazy or ADD February 23, 2009
Posted by Jeff Nabers in : Money, Personal Enjoyment, Personal Productivity, Precious Metals, Self Directed IRA Solo 401k, real estate , add a commentI’ve written several times about what I believe is one of the most important films ever produced: I.O.U.S.A. The film is 80 minutes long and came out in August of 2008. It’s a project of the former Comptroller General of the United States (our government’s chief accountant). He resigned to make this movie to warn our country about the coming financial train wreck of the government.
A few months ago, I linked you to a shorter, free 30 minute version available on YouTube. If you haven’t taken the time to watch the 30 minute or 80 minute version, then here’s the 2 minute, 24 second version;
[youtube=http://www.youtube.com/watch?v=gGgjU-h_xQw]
^— The hidden track record of U.S. deficits as told by the U.S. government’s chief accountant!
[youtube=http://www.youtube.com/watch?v=-FSoXKapKQs]
^– If you can watch this video and (more…)
This January was worst for stock market in 113 years February 22, 2009
Posted by Jeff Nabers in : Money , add a comment
According to the article The Market Is Shorting Obama’s ‘Stimulus’, we’ve just had the worst January in over 113 years of the stock market. Professors of Finance, Ecomonics, and Law at the University of Kansas and George Mason University report that the stock market is not impressed by Obama’s stimulus. Read the whole story here.
While 99% of the stories out there that use logic and reason to argue (more…)
Could Obama's Stimulus Really Work? February 20, 2009
Posted by Jeff Nabers in : Health, Money, Personal Enjoyment, Personal Productivity , add a comment
Our economy is 70% consumerism. That means it is mostly based on individuals buying stuff. So the current setup of our economy holds two basic facts:
- Individuals buying more stuff than they can afford to buy (based on their income) has a net effect that is good for the economy.
- When individuals lower their spending and save and invest money, the net effect is bad for the U.S. economy.
That said, should we even care about “the economy” in its current setup? If individuals were really doing what is good for themselves (saving and investing), it would be terrible for the economy.
So could Obama’s stimulus really work? Absolutely not. Not if you consider “it really working” to mean more than just temporarily. We don’t need a stimulus. We don’t need a boosted economy. We need a changed economy. There are only three ways out of (more…)
I.O.U.S.A – Former U.S. Controller warns country's finances are unsustainable August 24, 2008
Posted by Jeff Nabers in : Money , add a comment
This week I attended a special viewing of a new documentary, I.O.U.S.A. This film substantiates the concerns that our country’s government and citizens are going broke. One of the main authorities featured is David Walker, former U.S. Comptroller General. Other notables include Warren Buffett (CEO of Berkshire Hathaway), Alan Greenspan (former Fed chairman), Paul O’Neill (former U.S. Secretary of Treasury), Robert Rubin (former U.S. Secretary of Treasury), Paul Volcker (former Fed chairman), and Bob Bixby.
Following the viewing of the film itself was a live satellite feed of a town hall discussion including Buffett, Walker, Pete Peterson (chairman of The Blackstone Group & chairman of the Peter G. Peterson Foundation), William Niskanen (chairman of the CATO institute), and Bill Novelli (CEO of AARP).
The Documentary
I expected the film itself to be very eye opening, and that it was. All I can say is you should go see it immediately. Check here to see when it’s showing in your city. If you think that all of the talk of the government heading towards bankruptcy is a bunch of fear mongering, then you owe it to yourself to let this film play devil’s advocate. Opinions are one thing, but I.O.U.S.A. certainly isn’t void of facts.
Live Discussion
The town hall discussion afterward was also rather informative. Truth be told, Warren Buffett’s involvement in this event is what caught my attention enough to attend. When it came down to the actual live (satellite fed) discussion following the film, Buffett was virtually useless. In one of his first comments, he said something about how we was going to be the “pollyanna” of the group. Just as promised, every time Buffett opened his mouth something came out about how our finances will just turn out magnificent because of America’s greatness. These comments were squeezed in between others’ contradictory sentiments explaining that simple unbiased economic forecasting holds the squandering of our greatness in the future if something isn’t done to change our path.
Of course Americans themselves are beating a path to the poor house, but that wasn’t the focus of the film. Much more attention was paid to the finances of the U.S. government. I walked away from this film with the sense that, in all probability, there are three places for us to end up in the next decade or two:
- MUCH higher taxes – Who wants to live in a place with taxes higher than socialist countries, yet without free college, medical care, or any other actual benefit?
- Governmental & economic collapse – The world has seen many countries rise and fall. No economic system defies the economic/mathematical laws on which it’s built.
- Major federal government reduction – Most of the “government” programs we actually see/use/need are actually from local or state government… such as roads, police departments, fire departments, etc. If we all woke up tomorrow with 80% less laws, 80% less government programs, and 80% less government spending, I don’t think it would be the chaotic anarchy that some people might imagine.
The Bottom Line
Most everything that we each do throughout our normal day is based on the assumption that things are being taken care of in a sound manner in Washington, D.C. and in the board room of the Fed. We go about our lives as if we will be the richest and most powerful country in the world forever. This film will shatter these assumptions and divert your attention to an undeniable fact: Some major changes must take place soon in order for the United States to remain a solvent and sovereign country.
How the little guy can profit from $4 gas June 11, 2008
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment
It’s everywhere: GAS PRICES! ENERGY CRISIS!
However, this blog post is different. Turn on the tube to CNN and hear about how “We’re trying very hard to find a viable source of alternative energy to reduce our dependency on oil.” Personally, you can simply buy an electric car (right now). Those savings can be significant, but they can only go so far for your finances. Besides saving money, consider making money off of $4 per gallon gas. Assuming you don’t own Exxon or BP, here are some ideas:
The Contraction of Real Estate Demand – Sprawl Reversal
In this instance I don’t mean “contraction” in terms entire real estate markets losing value, I mean “contraction” in the sense of density. Before recent gas prices started changing the world, suburban sprawl was rampant in the U.S. The easy to obtain mortgage financing provided by the growth of the housing bubble only multiplied sprawl. In cities across America, middle class people found themselves moving to the outer suburban areas where they could have a 4,000 square foot house with a 3 car garage. They were all sipping lemonade on their huge front porches, admiring their white picket fences, and trading stories about flippers and spec homes just before getting sucker punched by gas prices and their rising Adjustable Rate Mortgage payment.
As the “look I’m rich, I swear!” house of cards finally fell, many middle class Americans are finding themselves in one of two categories: (more…)
