My economic spider sense is tingling again

About a year and a half ago I became public with all my concerns about the American economy.  The reaction at that time?  “Oh this is just the media whipping people up in a frenzy.”  Less than two months later all the stock markets cratered and a wave of bankruptcies threatened to take down the whole system.  It has been a year and a half and the problem hasn’t been fixed.  A few government bailouts eased some pressure on the banks and temporarily reflated the housing market but it had to borrow billions upon billions of dollars to do it.  Even the word “borrow” isn’t so accurate as the Federal Reserve printing money out of thin air and started buying up US debt.  What they have done is no better than a family using their low rate credit to pay off their higher rate credit card and the bank is about to jack up the rate on it too.  All they have done is bought some time and changed the implosion point from some big bank to the US government or its currency.

It is hard to know what is going to happen.  The gold market thinks that we are going to see inflation.  The bond market sees deflation.  The problem is monetary value is something of an illusion.  Someone can save up thousands of dollars in cash and hide it securely in their backyard and a bout of serious inflation can make that money worth much less than it was originally worth.  A house has value as shelter but its market price can rise and drop at the whim of the market.  Without maintenance it depreciates.  The value of gold and silver fluctuates.  Even life insurance is only as secure the companies offering it.  If I had wealth I wouldn’t know where to stick it right now.  The easiest investment to make it to pay down debt.  Aside from that I’d seriously consider giving a lot of it away.  Go back to Jesus’ adage of building up treasure in heaven.  If you have a whole lot of something that you aren’t sure is going to be worth much, use it to make the world a better place.  Invest in things that matter, things that have value that can be never taken away.

  1. #1 by Bene D on December 9, 2009 - 2:07 am

    A friend who is a financial advisor who tends to look at different kinds of trends, history, human nature and the usual (gold etc) is very busy meeting with his deliberately small client base and making moves in short term investments (oil, potash; preparing to move out of gold because it will peak soon then fall, and is encouraging some socking away of cash gained from short term gain, and I think he might be encouraging some copper investing) but I don’t invest so I don’t have details.
    Whatever he is seeing, he sees as a whole, and wasn’t wrong last plunge.
    He has helped stabilize money management for average people (not the big guys).
    He encourages his investors to stay out of debt.

    He isn’t personally invested in things (odd for a finance guy).

    He sees a second market crash coming, sooner than later, nothing built on borrowed money can stay propped up.

    Your spidey sense serves you well LT.

  2. #2 by Keith on December 14, 2009 - 5:16 pm

    I was recently reading Ecclesiastes and a verse popped into my mind as I was reading your blog (Ecc 2:26 NIV) “To the man who pleases him, God gives wisdom, knowledge and happiness, but to the sinner he gives the task of gathering and storing up wealth to hand it over to the one who please God. This too is meaningless, a chasing after the wind.” I don’t know exactly what my connection is to the post or if it’s appropriate but I feel like we (generally speaking of course) are the gathers’ in our part of the world and God is handing it over to the ones who are pleasing God. Perhaps I’m reading into the text too much but the verse kinda sticks out.

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