Posts Tagged ‘personal’
Knowledge, understanding, and wisdom are complimentary and synergistic. However, it should be clear that only wisdom embodies the qualities of all three. It is possible to have an abundance of knowledge, deep understanding, and a complete lack of wisdom.
NAZI Germany (and successors totalitarian governments around the world today) demonstrated this gap most shockingly when it applied knowledge of what is required to sustain human life and understanding of how to eliminate those requirements to annihilate six million Jewish and other human beings. Wisdom was absent.
When discussing knowledge, understanding, and wisdom as they relate to personal economics, considering the role of education is essential. 21st century Americans do not understand money. One of America’s leading commentators on money, wealth, and business in general said this:
“In most cases, when people make more money, they get deeper in debt.” – Robert Kiyosaki
These folks have knowledge and understanding but a serious deficit in wisdom.
Nonsense from VP Joe Biden and Others
Our educators, legislators, unions, big businesses, and government bureaucracies have led Americans down a similar path to financial ruin. Many Americans’ personal economies are already broken and the US government is following a fools path to financial ruin with its insistence that “We the people” need more debt.
“Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’. The answer is yes, that’s what I’m telling you.” – VP Joe Biden
Debt Equals Loss of Liberty
The foundation for a personal (or national) economy is money that you control. Debt is money that others control. Worse still, it is money that you actually pay those others to control. You give up your libertyand pay others to do so as if it were a privilege.
Alternative to Debt
EUREKONOMICS™ teaches that money serves you in four – and only four – ways.
- It serves to eliminate debt and regain control of money that was previously ceded to others.
- It serves as ready cash to deal with life’s surprisingly unsurprising surprises – unexpected expenses and opportunities.
- It serves to deliver inflation protected income at a time of your choosing that you don’t have to work for and you can’t outlive.
- Finally – in every sense – your money and your wisdom about money allow you to deliver a legacy to those you care most about.
Debt is financial death and the death of liberty. Presidents, Vice Presidents, legislators, union bosses, big business execs, and individual Americans that fail to recognize this fact lack knowledge, understanding, and wisdom.
Going Broke in Style
While the Chinese, Middle Eastern, and Indian economies achieve new levels of diversity based on productive labor, America’s economic charm seems to lie in the misguided and misanthropic measures flowing out of the US Congress at the behest of President Obama. America is putting on heavy chains of debt, locking it in for decades and giving the keys to foreign governments that have our demise as one of their primary goals.
Where Is The Fourth Estate?
Don’t the successless sychophants in the mainstream media recognize that the Federal Government is following precisely the same path illustrated in the famous (or perhaps infamous) Stanley Johnson commercial? The Congress and the President have us up to our eyeballs in debt, and it’s debt to the wrong people.
What does that mean for your personal economy?
- It means that money that you have faithfully deposited into retirement accounts is at great risk.
- It means that every penny of debt you have personally, compounds the debt you have as a US citizen.
- It means that the advice you received over the past thirty years is wrong.
- It means the rules have changed, or at least reverted to the more sensible guidlines that allowed our forebears to live and die comfortably without relying on debt-to-others.
- It means – most of all – that those who change their way of creating and managing their personal economies and personal wealth will have a much better chance of escaping the swamp into which our “leaders” are guiding us.
Keep Your Eye on the Prize
Personal economics is like a jigsaw puzzle. If you don’t know what the final picture looks like, you’ll have a great deal of difficulty solving it. Americans have lost sight of the end result - creating and managing their personal economies – and have been deluded into thinking that the pieces of the puzzle – investments, mortgages, IRA’s, etc. – are what’s truly important.
The problems in DC and the problems in your household are the same. The pieces make up the puzzle, but no one piece is the solution. Instead, we recommend that you find a “soulution” that fits you and your family.
by Jeffrey Reeves MA, EUREKONOMIST
Originally posted on July 24, 2008 and worth repeating…
Americans have been bamboozled into thinking that they can get rich and retire comfortably by putting their money in the hands of people whose only aim is to move money from your pocket into some Behemoth’s accounts; IRA’s, mutual funds, variable annuities, variable insurance policies, ETF’s, and on an on.
Here’s a simple rule to apply to your personal economy: invest from savings, not from income; speculate only with money you expect to lose [if you win add the winnings to your savings.] If you never develop a savings program, you can’t recover by ‘investing’ unless you are just plain lucky. Why? Because most ‘investments’ are actually speculative.
Benjamin Graham, The Dean of Wall Street, and Warren Buffett’s teacher, taught that an investment has two characteristics: safety of principle and a reasonable return. Hmmm! Honestly evaluate what Wall Street calls an investment today.
- Is it really an investment or is it speculation?
- Is your money safe and secure?
- Are you getting a reasonable rate of return?
- Is it enough to be re-assured that all will be well “in the long-term”?
Guess what? The answers are all NO. You don’t live in the long-term. If you are losing money today, hoping that tomorrow will produce better results is foolish at best. Properly saved money guarantees a reasonable rate of return in the short-term and is safe for the long-haul. Once you have money in hand, and enough money in hand to care for your personal needs, then you can consider investing.
Consider this: many Americans take money directly from their pockets [payroll deducted in many cases] and place it in accounts that produce unpredictable returns for them but assured profits for the Behemoths. Not only that, at the same time they borrow from credit cards and mortgage companies at rates that are guaranteed to be higher than their ‘investment’ account returns. Go figure…
Imagine how much better off these Americans would be if they put their money into financial products that fit the definition of Benjamin Graham referenced above.
It’s time to shift paradigms, to change models; save first, invest later, speculate never!
by Jeffrey Reeves, MA
The sum is sometimes greater than the total of all of the parts. That isn’t so when it comes to economics.
I rarely quote an entire entry from another source. This is one of those exceptions. R. Nelson Nash, one of the clear thinkers in the area of personal economics, contends that macroeconomics are irrelevant. John Mauldin’s preface to an article by Louis Gave reinforces this idea.
Your personal economy is all that really matters. If you manage it well you will be financially stable in good times and bad. Bubbles bursting, markets crashing, Wall Street acting like Dull Street – none of that matters when you have control of your money.
by Jeffrey Reeves
Where Will the Growth Come From?
February 9, 2009
One of my most significant learning experiences came from a basic forecasting mistake. Back in 1998, I looked at 40 years of documented evidence that 50% of all large programming projects ended up coming in late. That set of data was consistent over all industries and over decades. I checked it out with industry experts. I really did my homework. And thus I said that the Y2K bug would be a problem, as a sufficient number of corporations around the world would have bugs that would create supply and management problems, which would slow the economy down. I did not suggest that we would see blackouts or major problems, just enough to slow things down and, when coupled with other macro issues (like the tech bubble), could trigger a recession. We had the recession, so my investment advice actually turned out to be right (lucky?), but it was not caused by Y2K.
Almost 100% of the Y2K fixes came in on time. From a metric that said 50% was the norm, we went straight to 100%. What caused the change? I had a debate with (my good friend) the late Harry Browne, who many of you will remember as a very wise investment counselor, multi-book best-selling author, two-time presidential nominee of the Libertarian Party, gold bug, and from the school of Austrian economics. He said that Y2K would be a non-event. When presented with my marshaled facts, he said, “John, each company will figure out what it has to do to survive. That is the way markets work.” And sure enough, faced with extinction if they failed, it seems that CEOs found ways to get the programmers to meet a very clear deadline. Besides knowing they fudged deadlines in the past, we now know if you hold a gun to their heads and give them resources, they can in fact perform.
Why this comment to open today’s Outside the Box? Today we read a piece sent to me by my friend Louis Gave of GaveKal (and who will be at my conference in April). It is entitled “Where Will the Growth Come From?” It reminds us of the lessons that Harry gave me. Each person and company is responsible for their own part of the recovery. You can’t rely on mass statistics, or you miss the important lesson in individual responsibility.
I don’t think anyone can accuse me of being bullish the past few years. Interestingly, I get a lot of emails from people telling me the end of the world is coming, and deriding my longer-term optimism. They are convinced we are going into some deep national morass worse than the Great Depression (and such deflationary times will somehow make their gold go to $3,000!?!?). Yet they are working to make sure their own personal worlds are covered. I get no letters from people who are simply giving up. What company will keep a CEO who does not work hard to figure out how to keep the company alive? If you lose your job, do you not try and get another one or figure out how to make ends meet? Do you not put in extra hours to try and make your personal life or business or job better? Even if it is terribly difficult, the very large majority of people don’t throw in the towel. Each of us, in our own way, gets up every morning to fight the good fight, even when the swamp is full of more alligators than we ever counted on. We just pick up a baseball bat, wade into the swamp, kill as many alligators as we can in one day, and then go home to get ready to fight the next day.
The lesson from Harry is the same as it was in 1998: It is the individual working to get his or her own house in order that will help us all collectively get our national house in order. This is not to diminish the Herculean tasks we have in front of us, collectively. We have dug ourselves into a very deep hole of credit and leverage. It is going to take lots of time. The way back is not entirely clear at this point. This is not an ordinary business-cycle recession. But each of us will do what we can to make our small corner of the world better. And in the fullness of time, we will collectively get back to trend growth and a rational market.
Of course, we will then find we have other problems to face. There is no nirvana. There will always be more problems. But that’s what a free-market collection of motivated individuals does: We face problems and solve them to the best of our ability. And as a group, the clear path for centuries is one of growth and progress. Cautious optimism is the proper long-term stance.
So, today Louis speculates about what sectors might come back first, and offers a good lesson in economics along the way. I think you will enjoy this Outside the Box, unless you just want to believe in the end of the world.
John Mauldin, Editor
Outside the Box