I had the opportunity to speak about the silver market and other issues on the widely-followed Max Keiser program a few days ago.
To get straight to the interview, go to 14:45 point.
Happy holidays...
Paul Mladjenovic
RavingCapitalist.com
Friday, December 3, 2010
Saturday, October 23, 2010
Gold and the Great Depression; the Great Myth
October 24, 2010
By Paul Mladjenovic
Copyright 2010 Paul Mladjenovic. All rights reserved.
As I peruse the usual financial sites that I am also fortunate to be on, I noticed an article that made a reference about gold and the Great Depression. The writer normally covers investing and the financial markets but this time he veered into a topic that I have had a keen interest in since my college days; the Great Depression.
Just know that the causes and issues of the Great Depression are not bygone events; They are very relevant to today’s economy and financial markets.
I will try to keep this article short but I read something in his piece that compelled me to address it. He writes:
“…We no longer have a gold standard, which is a GOOD thing.
The gold standard of years past…was largely to blame for the Great Depression.”
Now, keep in mind that I normally think that this writer offers good commentaries and I wish him well. Readers will find his views on financial markets very useful. However, I can’t let items like this pass by without commentary. Let me state the main point of my essay:
The Gold standard had NOTHING to do with creating the Great Depression.
Absolutely NOTHING!
Blaming the gold standard for the Great Depression would be like blaming a seat belt for a multi-car crash. It defies common sense and logic.
In fact, had the federal government adhered to a gold standard, it would have curtailed the dangerous over-production of fiat currency. Remember that the first event of the Great Depression was the collapse of the stock market in 1929. This event was largely due to the government’s reckless creation of easy credit and a currency bubble (sound familiar?). If America’s central bank, “the Fed”, was constrained by a gold standard, a bubble would not have been created in the first place. A gold standard puts a “straight jacked” on reckless currency inflation.
We must also keep in mind that the Great Depression was not a singular event…it was a series of events induced by federal government blunders that hurt (and suppressed) economic activity for over a full decade.
Massive, stifling regulations (such as Smoot-Hawley) were implemented along with oppressive tax rates (hitting 96% by World War II!) that kept the economy struggling throughout the 1930s. From massive stimulus spending, the government burden grew beyond the economy’s ability to carry it (does that also sound familiar?).
In addition, federal wage policies made hiring employees too expensive and this forced unemployment to stay at artificially high levels for years. It can not be emphasized enough; depressions are NOT caused by a private, free market economy. The culprit is government.
Lastly, the next persistent myth was that that World War II got us out of the Great Depression.
Wrong! Wrong! Wrong!
World War II only gave us the ability to give the unemployed a uniform and a gun and ship them overseas.
War doesn’t solve economic problems…it creates them. If war actually helped an economy then the answer is simple; produce a million bombs and then dump into in the ocean! Wouldn’t that create prosperity?! Of course not!
War is actually the most obvious example of the “broken window fallacy” that the great Henry Hazlitt so ably described in his book, “Economics in One Lesson” (available at Fee.org).
Before we make the same destructive mistakes (which have been happening in recent years anyway, it seems), we need to understand the truth because the causes and symptoms of depressions and recessions. A good place to start would be to go the Mises institute website (Mises.org) and get a copy of Murray Rothbard’s excellent book, America’s Great Depression.
The bottom line is that if America (our government, actually) adhered to a gold standard, we would be much, much better off than we are now.
The sooner we learn the lessons of history (and the value of gold and a gold standard), the sooner we would be much more prosperous.
Until the government its their act together (never?), we need to take measures to protect our personal prosperity. Accumulating gold and voting for those that want to severely limit the government’s role in meddling in our private economy are good for starters.
-----------------------------------------------------------------------
Paul Mladjenovic, CFP is the author of the ebook “Financial Firewall: How to Protect your Money and Investments in the Age of Financial Chaos” and he also does national seminars on investing and financial planning concerns. He is also the editor of the free financial newsletter, the Prosperity Alert ezine, which is found at www.RavingCapitalist.com.
By Paul Mladjenovic
Copyright 2010 Paul Mladjenovic. All rights reserved.
As I peruse the usual financial sites that I am also fortunate to be on, I noticed an article that made a reference about gold and the Great Depression. The writer normally covers investing and the financial markets but this time he veered into a topic that I have had a keen interest in since my college days; the Great Depression.
Just know that the causes and issues of the Great Depression are not bygone events; They are very relevant to today’s economy and financial markets.
I will try to keep this article short but I read something in his piece that compelled me to address it. He writes:
“…We no longer have a gold standard, which is a GOOD thing.
The gold standard of years past…was largely to blame for the Great Depression.”
Now, keep in mind that I normally think that this writer offers good commentaries and I wish him well. Readers will find his views on financial markets very useful. However, I can’t let items like this pass by without commentary. Let me state the main point of my essay:
The Gold standard had NOTHING to do with creating the Great Depression.
Absolutely NOTHING!
Blaming the gold standard for the Great Depression would be like blaming a seat belt for a multi-car crash. It defies common sense and logic.
In fact, had the federal government adhered to a gold standard, it would have curtailed the dangerous over-production of fiat currency. Remember that the first event of the Great Depression was the collapse of the stock market in 1929. This event was largely due to the government’s reckless creation of easy credit and a currency bubble (sound familiar?). If America’s central bank, “the Fed”, was constrained by a gold standard, a bubble would not have been created in the first place. A gold standard puts a “straight jacked” on reckless currency inflation.
We must also keep in mind that the Great Depression was not a singular event…it was a series of events induced by federal government blunders that hurt (and suppressed) economic activity for over a full decade.
Massive, stifling regulations (such as Smoot-Hawley) were implemented along with oppressive tax rates (hitting 96% by World War II!) that kept the economy struggling throughout the 1930s. From massive stimulus spending, the government burden grew beyond the economy’s ability to carry it (does that also sound familiar?).
In addition, federal wage policies made hiring employees too expensive and this forced unemployment to stay at artificially high levels for years. It can not be emphasized enough; depressions are NOT caused by a private, free market economy. The culprit is government.
Lastly, the next persistent myth was that that World War II got us out of the Great Depression.
Wrong! Wrong! Wrong!
World War II only gave us the ability to give the unemployed a uniform and a gun and ship them overseas.
War doesn’t solve economic problems…it creates them. If war actually helped an economy then the answer is simple; produce a million bombs and then dump into in the ocean! Wouldn’t that create prosperity?! Of course not!
War is actually the most obvious example of the “broken window fallacy” that the great Henry Hazlitt so ably described in his book, “Economics in One Lesson” (available at Fee.org).
Before we make the same destructive mistakes (which have been happening in recent years anyway, it seems), we need to understand the truth because the causes and symptoms of depressions and recessions. A good place to start would be to go the Mises institute website (Mises.org) and get a copy of Murray Rothbard’s excellent book, America’s Great Depression.
The bottom line is that if America (our government, actually) adhered to a gold standard, we would be much, much better off than we are now.
The sooner we learn the lessons of history (and the value of gold and a gold standard), the sooner we would be much more prosperous.
Until the government its their act together (never?), we need to take measures to protect our personal prosperity. Accumulating gold and voting for those that want to severely limit the government’s role in meddling in our private economy are good for starters.
-----------------------------------------------------------------------
Paul Mladjenovic, CFP is the author of the ebook “Financial Firewall: How to Protect your Money and Investments in the Age of Financial Chaos” and he also does national seminars on investing and financial planning concerns. He is also the editor of the free financial newsletter, the Prosperity Alert ezine, which is found at www.RavingCapitalist.com.
Thursday, October 7, 2010
Come Hell or High Water…Discipline is Profitable
October 7, 2010
By Paul Mladjenovic
Copyright 2010 Paul Mladjenovic. All rights reserved.
Yesterday (Oct. 6th) gold hit an all-time high of $1,349 (spot price) while silver hit a 30-year high of $23.19. Today, Gold and silver are pulling back from these record highs as profit-taking is occurring.
In recent years, you and I have constantly heard about the problems with precious metals. We have seen and heard much about the corrections and bearish forecasts. When a particularly strong pull-back occurs, the critics tell us “the bubble has popped” or “the bull market in gold and silver is over”.
I have heard from students and readers about their worries about gold plummeting or how the price of silver cratered. We all remember the second half of 2008. Gold held up well but silver was massacred! Silver was over $20 during the spring of 2008 but massive panic selling forced the price of silver to a mind-boggling low of $9.17 by November 2008 (using the data at Kitco).
In 2008, Silver started the year at $14.93 and ended at a dismal $10.79 for a disheartening plunge for the full year of about 28%. However, as of yesterday, silver over the past 24 months had risen by 120%. Of course, you know gold’s performance during that time. The precious metals had proven their “mettle”. Those that were buyers (especially in bullion and quality mining stocks and ETFs) in recent years and stayed the course were rewarded with strong gains. Short-term speculators were hammered but long-term investors prospered.
In 2008, Gold was one of the few investments that ended up. It started the year at $846.75 and ended the year at $869.75 for a gain of about 3%. In a normal year that is nothing to crow about but don’t forget how bad that year was; most investments were down by double-digit percentages. Many stocks ended up in the graveyard of forgotten securities like Bear Stearns and other financial firms (R.I.P.).
How many investors panicked and sold their quality holdings at the bottom of the plunge? Investing means that you choose wisely and logically and then have the discipline to stay the course.
A student of mine was quite disheartened when she bought a silver stock at $14 during the first half of 2008 only to see it lose over 50% of its value in the subsequent months. During that horrific period, the best stocks joined the worst stocks in a terrifying plunge. However, when the recovery took place, the best stocks regained their footing while bad stocks stayed down for the count.
Fortunately, that student did not panic and her silver stock is up 80% since she acquired it. yes…discipline can be profitable.
For us, the lessons are clear. In recent years, precious metals have been a good place to put our money. If you choose good investments, they will make it through the market storms that occur. Unfortunately, the market storms have gotten very strong in recent years and the volatility and tumultuous activity will continue and probably get worse. For investors, that means not only diversification and patience (and aspirin) but also discipline.
This does not mean being complacent and hands-off with your investments. It just means that you monitor them and see if they still make sense as the market goes through its roller-coaster path. It the investment has strong fundamentals and nothing is a direct threat to it, in due course it will do well.
What is the outlook for precious metals and their related securities (stocks and ETFs)? The fact that the economy is still very shaky and the central banks of the world will continue to pump up their money supplies bodes well for gold and silver. Yes… they will continue to have un-nerving corrections.
As I tell always tell my students, bull markets zig-zag upward while bear markets zig-zag downward. Precious metals (along with commodities in general) are in a long-term, historic bull market. Their fundamentals have been strong in recent years and that strength should continue.
The wise investor uses the corrections in a bull market to accumulate more positions. In the end, the disciplined and patient investor wins.
------------------------------------------------------------------------------------
Get Paul Mladjenovic's free financial newsletter, Prosperity Alert found at www.RavingCapitalist.com.
Find out how to Profit from Gold, Silver and other commodities with Paul's
audio seminar “How to Profit from the Commodities Super-Boom”.
Find out more by CLICKING HERE.
By Paul Mladjenovic
Copyright 2010 Paul Mladjenovic. All rights reserved.
Yesterday (Oct. 6th) gold hit an all-time high of $1,349 (spot price) while silver hit a 30-year high of $23.19. Today, Gold and silver are pulling back from these record highs as profit-taking is occurring.
In recent years, you and I have constantly heard about the problems with precious metals. We have seen and heard much about the corrections and bearish forecasts. When a particularly strong pull-back occurs, the critics tell us “the bubble has popped” or “the bull market in gold and silver is over”.
I have heard from students and readers about their worries about gold plummeting or how the price of silver cratered. We all remember the second half of 2008. Gold held up well but silver was massacred! Silver was over $20 during the spring of 2008 but massive panic selling forced the price of silver to a mind-boggling low of $9.17 by November 2008 (using the data at Kitco).
In 2008, Silver started the year at $14.93 and ended at a dismal $10.79 for a disheartening plunge for the full year of about 28%. However, as of yesterday, silver over the past 24 months had risen by 120%. Of course, you know gold’s performance during that time. The precious metals had proven their “mettle”. Those that were buyers (especially in bullion and quality mining stocks and ETFs) in recent years and stayed the course were rewarded with strong gains. Short-term speculators were hammered but long-term investors prospered.
In 2008, Gold was one of the few investments that ended up. It started the year at $846.75 and ended the year at $869.75 for a gain of about 3%. In a normal year that is nothing to crow about but don’t forget how bad that year was; most investments were down by double-digit percentages. Many stocks ended up in the graveyard of forgotten securities like Bear Stearns and other financial firms (R.I.P.).
How many investors panicked and sold their quality holdings at the bottom of the plunge? Investing means that you choose wisely and logically and then have the discipline to stay the course.
A student of mine was quite disheartened when she bought a silver stock at $14 during the first half of 2008 only to see it lose over 50% of its value in the subsequent months. During that horrific period, the best stocks joined the worst stocks in a terrifying plunge. However, when the recovery took place, the best stocks regained their footing while bad stocks stayed down for the count.
Fortunately, that student did not panic and her silver stock is up 80% since she acquired it. yes…discipline can be profitable.
For us, the lessons are clear. In recent years, precious metals have been a good place to put our money. If you choose good investments, they will make it through the market storms that occur. Unfortunately, the market storms have gotten very strong in recent years and the volatility and tumultuous activity will continue and probably get worse. For investors, that means not only diversification and patience (and aspirin) but also discipline.
This does not mean being complacent and hands-off with your investments. It just means that you monitor them and see if they still make sense as the market goes through its roller-coaster path. It the investment has strong fundamentals and nothing is a direct threat to it, in due course it will do well.
What is the outlook for precious metals and their related securities (stocks and ETFs)? The fact that the economy is still very shaky and the central banks of the world will continue to pump up their money supplies bodes well for gold and silver. Yes… they will continue to have un-nerving corrections.
As I tell always tell my students, bull markets zig-zag upward while bear markets zig-zag downward. Precious metals (along with commodities in general) are in a long-term, historic bull market. Their fundamentals have been strong in recent years and that strength should continue.
The wise investor uses the corrections in a bull market to accumulate more positions. In the end, the disciplined and patient investor wins.
------------------------------------------------------------------------------------
Get Paul Mladjenovic's free financial newsletter, Prosperity Alert found at www.RavingCapitalist.com.
Find out how to Profit from Gold, Silver and other commodities with Paul's
audio seminar “How to Profit from the Commodities Super-Boom”.
Find out more by CLICKING HERE.
Thursday, September 16, 2010
Government vs. Gold
By Paul Mladjenovic
September 16, 2010
Copyright 2010. Paul Mladjenovic. All rights reserved.
Some recent headlines look ominous…
“Healthcare bill reveals hidden tax for precious metals transactions”
“Congress starts hearings on gold”
When I wrote the book Precious Metals Investing for Dummies, I included a chapter on the treatment of certain assets as “strategic assets” that garner the attention and involvement of both our government and governments abroad. Gold is certainly in the category of “strategic asset”. Oil is another example of a “strategic asset”.
What do I mean when I write “strategic asset”. It is an asset that goes beyond mere economics. Most “things” have some type of economic value certainly. Grains, copper, zinc, lumber and thousands of other useful resources certainly have economic value. But some assets—such as gold, oil and even silver—tend to have a higher profile and are more intertwined with the destinies of governments. Certainly these assets tend to be “strategic” since having enough of this asset gives a nation some clout as it interacts with other nations. As nations compete on the world stage, some assets take on a value given certain conditions and events.
A good example of what I am talking about is oil. During the late 1970s, an energy crisis hit the West. The U.S. and other countries became exceptionally dependent on foreign oil. The lion’s share of oil rested with Saudi Arabia and other members of the Oil Producing & Exporting Countries (OPEC). Very quickly, OPEC had power on the world stage. Oil was indeed a great economic asset but it became a “strategic asset” when it was used to leverage and influence conditions and events with the non-OPEC world.
I think that oil is still a strategic asset and in the next few years will regain its strength as a strategic asset. Right now, gold is very quickly becoming widely-acknowledged as a strategic asset.
Don’t get me wrong…I think that throughout history, gold usually had a prominent spot and recognition as a strategic asset but sometimes it burns very brightly in that spot to the world-at-large. Why?
In general, governments—specifically central banks—see gold in a negative light. Sometimes, it sees gold as a threat. In today’s world, gold is indeed a “threat” to many in the world of government. That brings us back to those headlines at the beginning of this essay.
For many governments (including ours), they see gold as a “competitor” to their chosen currencies. They don’t like this and this is why there have been so many incidents in world history when governments sought to push gold into obscurity or to ban or outlaw the metal.
A good example is Zimbabwe. A few years ago the government banned citizens from owning gold. That was done at a time when they were hyper-inflating their currency into oblivion. Basically, the citizens couldn’t own something that held its value…they were forced to trade in a currency that was losing value literally by the day (and even hour!).
Most certainly you will see more anti-gold actions by governments across the globe since most of the governments of the world are busy growing their money supplies to cope (according to their logic) with burgeoning debt and fiscal problems. It’s as if government acted liked a spoiled kid saying “if you can’t play with our toys (fiat currencies) then we will take away what you have (gold)”.
Right now, many citizens are turning to gold because it is a good way to diversify oneself when “paper assets” such as bonds, stocks, mortgages and …yes…currencies…are growing more suspect. But when government encroaches on the world of precious metals, what should one do?
Points to consider:
* Keep buying gold. But be diversified when you buy it. get some bullion coins (such as gold eagles and gold maple leafs), but now may be a good time to also consider gold numismatic coins as well. Why? Because modern governments tend to leave collectibles alone since they usually target bullion coins and bars. I don’t have the space to give further details but one can find more detailed assistance on these matters in places.
* I would certainly suggest that you get very familiar with the writings and works of reliable pros such as David Morgan, Jay Taylor, James Turk, Roger Wiegand, Peter Grandich, Jeff Christian, James Dines, Howard Ruff and many others that write at this website and related ones. Their insights and guidance are great!
* I am usually very hesitant to mention numismatic coins because they do REQUIRE more diligence when buying. When you buy numismatic coins you have to be very aware of matters such as authenticity, condition, rarity and so on. Organizations such as the American Numismatic Association can also offer guidance.
* Lastly, please make your views known to your representatives in Congress. Americans and others should be able to buy and sell gold and silver and other precious metals with little interference from politicians and bureaucrats. Write them…call them…visit them! Just let them know that precious metals are an important part of a person’s ability to prosper in the age of financial uncertainty and chaos.
------------------------------------
Find out more about how to protect your wealth and financial security.
My latest audio ebook, “Financial Firewall: How to Protect your Money and investments in the age of Financial Chaos” is at
www.RavingCapitalist.com.
September 16, 2010
Copyright 2010. Paul Mladjenovic. All rights reserved.
Some recent headlines look ominous…
“Healthcare bill reveals hidden tax for precious metals transactions”
“Congress starts hearings on gold”
When I wrote the book Precious Metals Investing for Dummies, I included a chapter on the treatment of certain assets as “strategic assets” that garner the attention and involvement of both our government and governments abroad. Gold is certainly in the category of “strategic asset”. Oil is another example of a “strategic asset”.
What do I mean when I write “strategic asset”. It is an asset that goes beyond mere economics. Most “things” have some type of economic value certainly. Grains, copper, zinc, lumber and thousands of other useful resources certainly have economic value. But some assets—such as gold, oil and even silver—tend to have a higher profile and are more intertwined with the destinies of governments. Certainly these assets tend to be “strategic” since having enough of this asset gives a nation some clout as it interacts with other nations. As nations compete on the world stage, some assets take on a value given certain conditions and events.
A good example of what I am talking about is oil. During the late 1970s, an energy crisis hit the West. The U.S. and other countries became exceptionally dependent on foreign oil. The lion’s share of oil rested with Saudi Arabia and other members of the Oil Producing & Exporting Countries (OPEC). Very quickly, OPEC had power on the world stage. Oil was indeed a great economic asset but it became a “strategic asset” when it was used to leverage and influence conditions and events with the non-OPEC world.
I think that oil is still a strategic asset and in the next few years will regain its strength as a strategic asset. Right now, gold is very quickly becoming widely-acknowledged as a strategic asset.
Don’t get me wrong…I think that throughout history, gold usually had a prominent spot and recognition as a strategic asset but sometimes it burns very brightly in that spot to the world-at-large. Why?
In general, governments—specifically central banks—see gold in a negative light. Sometimes, it sees gold as a threat. In today’s world, gold is indeed a “threat” to many in the world of government. That brings us back to those headlines at the beginning of this essay.
For many governments (including ours), they see gold as a “competitor” to their chosen currencies. They don’t like this and this is why there have been so many incidents in world history when governments sought to push gold into obscurity or to ban or outlaw the metal.
A good example is Zimbabwe. A few years ago the government banned citizens from owning gold. That was done at a time when they were hyper-inflating their currency into oblivion. Basically, the citizens couldn’t own something that held its value…they were forced to trade in a currency that was losing value literally by the day (and even hour!).
Most certainly you will see more anti-gold actions by governments across the globe since most of the governments of the world are busy growing their money supplies to cope (according to their logic) with burgeoning debt and fiscal problems. It’s as if government acted liked a spoiled kid saying “if you can’t play with our toys (fiat currencies) then we will take away what you have (gold)”.
Right now, many citizens are turning to gold because it is a good way to diversify oneself when “paper assets” such as bonds, stocks, mortgages and …yes…currencies…are growing more suspect. But when government encroaches on the world of precious metals, what should one do?
Points to consider:
* Keep buying gold. But be diversified when you buy it. get some bullion coins (such as gold eagles and gold maple leafs), but now may be a good time to also consider gold numismatic coins as well. Why? Because modern governments tend to leave collectibles alone since they usually target bullion coins and bars. I don’t have the space to give further details but one can find more detailed assistance on these matters in places.
* I would certainly suggest that you get very familiar with the writings and works of reliable pros such as David Morgan, Jay Taylor, James Turk, Roger Wiegand, Peter Grandich, Jeff Christian, James Dines, Howard Ruff and many others that write at this website and related ones. Their insights and guidance are great!
* I am usually very hesitant to mention numismatic coins because they do REQUIRE more diligence when buying. When you buy numismatic coins you have to be very aware of matters such as authenticity, condition, rarity and so on. Organizations such as the American Numismatic Association can also offer guidance.
* Lastly, please make your views known to your representatives in Congress. Americans and others should be able to buy and sell gold and silver and other precious metals with little interference from politicians and bureaucrats. Write them…call them…visit them! Just let them know that precious metals are an important part of a person’s ability to prosper in the age of financial uncertainty and chaos.
------------------------------------
Find out more about how to protect your wealth and financial security.
My latest audio ebook, “Financial Firewall: How to Protect your Money and investments in the age of Financial Chaos” is at
www.RavingCapitalist.com.
Wednesday, August 25, 2010
Headlines Sound the Alarm about Deeper Economic Problems
by Paul Mladjenovic
August 25, 2010
Copyright 2010. Paul Mladjenovic. All rights reserved.
The following three headlines are alarming symptoms of the economic insanity unfolding before our eyes:
1. “Philly requiring bloggers to pay $300 for a business license”
2. “LA unveils $578-Million school, costliest in the nation”
3. “Record Number Of Americans Using Retirement Funds As Source Of Immediate Cash”
Yes, those are actual headlines. They may seem like random and disjointed stories but really they are connected to the same economic and financial crisis that is here now and threatens to get much worse.
Philadelphia is forcing bloggers that make little or no money cough up $300 for what is annoyingly labeled a “Business Priviledge Tax”. The struggling city is searching for new revenue to pay for their over-spending. This silly tax may yield some modest revenue for the city but the unintended consequence will be to chase away budding entrepreneurs. In other words, they will get much less revenue than they think. This is at a time when they desperately need to attract and encourage entrepreneurs.
Many politicians and pundits forget that “demand and supply” is a reference to “consumption and production”. Our country is awash with people that consume and “demand”. However, those that supply us with goods and services (production…meaning ”entrepreneurs and businesses”) are struggling. We need to encourage production as much as possible since this is THE major path to greater economic strength and stability.
History tells us that skyrocketing demand (especially by the public sector) and stagnating or shrinking supply (a private sector that keeps diminishing) is a recipe for economic disaster. That disaster is unfolding right now. Anyway, let me continue…
The second headline is also galling. The Los Angeles school district is spending eye-popping amounts of taxpayer money while the school district and the city itself is drowning in a severe fiscal crisis. To add insult to injury, this particular school system is among the worst performing in the country in terms of student performance and drop-out rates. The politicians and bureaucrats in that once-great city just don’t get it.
The third headline tells us that a record number of folks are strapped for cash and dipping into their 401K retirement accounts. This tells us that the private sector is indeed hurting. I am sure that they realize that taking money out will possibly mean tax penalties in the short-term and a smaller nest egg longer-term. I am sure that they are not doing it because it is a good idea; they are doing it because they need the money.
There are many, many more stories like these across the country. The forecasts that many of you have read from my prior essays months and even years ago are now reality. Very sad! These stories and reports are symptomatic of the deep economic crisis that we have in our midst today. They are also blaring reminders that government is oblivious not only to its own excesses but also to the pain that is being felt by those that support it.
Hundreds of local and state governments are spending lavishly and irresponsibly billions. The federal government is lavishly and irresponsibly spending trillions. Why not? It’s not their money…it is (was!) the money of hard-working and struggling taxpayers. The same taxpayers that tightening their belts…and removing money from accounts that were meant for the future. That future is now looking more uncertain.
Unfortunately for all of us, these are not short-term developments. Many states and municipal governments are pushing themselves (and their tax-paying citizens) toward economic crisis. Many of those collectively responsible for this massive and painful nonsense will only realize “the error of their ways” when it is too late.
To my readers, I say that we may not be able to save the world or change the future but we can do what it takes to protect ourselves and our loved ones. Some points to keep in mind:
Keep striving toward financial safety and economic self-sufficiency. If you are dependent on a third-party (a company or government agency), it would serve you well to…
• Keep accruing cash & precious metals like gold and silver
• Generally avoid municipal bonds or (at the very least) consider only AAA-rated municipal bonds.
• Find new ways to generate income in your spare time.
• Review your investments with those that are familiar with today’s economic problems.
Build your “Financial Firewall” as soon as possible because coming events will be unkind to the unprepared.
---------------------------------------------------------------
Paul Mladjenovic is the author of “Financial Firewall: How to Protect your Money and Investments in the Age of Financial Chaos” and his website is RavingCapitalist.com. He is the author of “Precious Metals Investing for Dummies” and he edits the free financial ezine, Prosperity Alert.
August 25, 2010
Copyright 2010. Paul Mladjenovic. All rights reserved.
The following three headlines are alarming symptoms of the economic insanity unfolding before our eyes:
1. “Philly requiring bloggers to pay $300 for a business license”
2. “LA unveils $578-Million school, costliest in the nation”
3. “Record Number Of Americans Using Retirement Funds As Source Of Immediate Cash”
Yes, those are actual headlines. They may seem like random and disjointed stories but really they are connected to the same economic and financial crisis that is here now and threatens to get much worse.
Philadelphia is forcing bloggers that make little or no money cough up $300 for what is annoyingly labeled a “Business Priviledge Tax”. The struggling city is searching for new revenue to pay for their over-spending. This silly tax may yield some modest revenue for the city but the unintended consequence will be to chase away budding entrepreneurs. In other words, they will get much less revenue than they think. This is at a time when they desperately need to attract and encourage entrepreneurs.
Many politicians and pundits forget that “demand and supply” is a reference to “consumption and production”. Our country is awash with people that consume and “demand”. However, those that supply us with goods and services (production…meaning ”entrepreneurs and businesses”) are struggling. We need to encourage production as much as possible since this is THE major path to greater economic strength and stability.
History tells us that skyrocketing demand (especially by the public sector) and stagnating or shrinking supply (a private sector that keeps diminishing) is a recipe for economic disaster. That disaster is unfolding right now. Anyway, let me continue…
The second headline is also galling. The Los Angeles school district is spending eye-popping amounts of taxpayer money while the school district and the city itself is drowning in a severe fiscal crisis. To add insult to injury, this particular school system is among the worst performing in the country in terms of student performance and drop-out rates. The politicians and bureaucrats in that once-great city just don’t get it.
The third headline tells us that a record number of folks are strapped for cash and dipping into their 401K retirement accounts. This tells us that the private sector is indeed hurting. I am sure that they realize that taking money out will possibly mean tax penalties in the short-term and a smaller nest egg longer-term. I am sure that they are not doing it because it is a good idea; they are doing it because they need the money.
There are many, many more stories like these across the country. The forecasts that many of you have read from my prior essays months and even years ago are now reality. Very sad! These stories and reports are symptomatic of the deep economic crisis that we have in our midst today. They are also blaring reminders that government is oblivious not only to its own excesses but also to the pain that is being felt by those that support it.
Hundreds of local and state governments are spending lavishly and irresponsibly billions. The federal government is lavishly and irresponsibly spending trillions. Why not? It’s not their money…it is (was!) the money of hard-working and struggling taxpayers. The same taxpayers that tightening their belts…and removing money from accounts that were meant for the future. That future is now looking more uncertain.
Unfortunately for all of us, these are not short-term developments. Many states and municipal governments are pushing themselves (and their tax-paying citizens) toward economic crisis. Many of those collectively responsible for this massive and painful nonsense will only realize “the error of their ways” when it is too late.
To my readers, I say that we may not be able to save the world or change the future but we can do what it takes to protect ourselves and our loved ones. Some points to keep in mind:
Keep striving toward financial safety and economic self-sufficiency. If you are dependent on a third-party (a company or government agency), it would serve you well to…
• Keep accruing cash & precious metals like gold and silver
• Generally avoid municipal bonds or (at the very least) consider only AAA-rated municipal bonds.
• Find new ways to generate income in your spare time.
• Review your investments with those that are familiar with today’s economic problems.
Build your “Financial Firewall” as soon as possible because coming events will be unkind to the unprepared.
---------------------------------------------------------------
Paul Mladjenovic is the author of “Financial Firewall: How to Protect your Money and Investments in the Age of Financial Chaos” and his website is RavingCapitalist.com. He is the author of “Precious Metals Investing for Dummies” and he edits the free financial ezine, Prosperity Alert.
Friday, August 13, 2010
Inflationary Depression Forecast Revisited…We are Half-Way There
Going back a few years ago, I made a forecast that America would be heading toward an inflationary depression. I made that forecast during 2007 and early 2008 when the federal government’s policies were very bad.
Today in 2010, the federal government has replaced the bad policies of a few years ago with much, much worse policies today. It is mind-boggling how bad these policies are and it is astonishing that most politicians and many economists don’t see the obvious dangers.
A forecast of an inflationary depression is actually two forecasts since a “depression” and “inflation” are technically two separate events. Therefore, I have to make clear that we are talking about two separate forecasts.
It is an old saying that the “road to hell is paved with good intentions”. Well, in recent years, that road has been changed to a super-highway! America was put on that super-highway a few years ago and right now we are traveling at break-neck speed toward the financial abyss.
PART 1 OF MY TWO-PART FORECAST: DEPRESSION
I believe that my forecast of a “depression” is accomplished. If you think that our experience of 2008-2009 was a garden-variety recession, I would ask you to re-consider that. The trillion-dollar spending policies enacted during the late Bush yeas and now the Obama years are extraordinarily dangerous. The federal government (and the state & local governments, too) are spending beyond our means as well as theirs. Bankruptcies, foreclosures, business contraction and unemployment are certainly at depression-level. Talk of a recovery is wishful thinking since the effects of still more bad policies are on the horizon. Look at what we have right now:
1. Unemployment is at 17%. I am not talking about the much reported yet highly inaccurate “official unemployment rate” which is a sham; I am talking about what is called the “U-6” employment rate that the Bureau of Labor Statistics compiles. It is a much less reported yet more accurate measure of unemployment. This statistic includes those counted in the “official unemployment rate” and adds in those that dropped out of the job search; the so-called “discouraged” unemployed. U-6 also includes those that are “under-employed” which means those that want full employment but have had to settle for part-time employment.
2. Foreclosures are at all-time highs.
3. Bankruptcies are at all-time highs.
4. Personal debt is still at record levels.
5. Government debt is at a mind-boggling all-time high and still soaring.
Then couple the above list with what is coming:
1. The tax-cuts enacted in the past decade are set to expire by January 2011. If this goes as planned, the effect is a tax increase that would deliver a body-blow to an already weak economy. A tax increase is nothing more than money taken by force by the government from the private economy. Basically that would mean less income and less invest-able capital for the private sector as the government forcibly siphons these resources and redirects it to a bureaucracy that is already the biggest in American history.
2. Congress and the president’s economic team have made noise about a “Value-Added-Tax” which is dumb during good economic times and quite stupid during bad economic times. Even the name is idiotic since taxes don’t add “value”…it merely increases the price or cost of that particular product or service.
3. The same folks are still considering pushing through what is called “Cap-and-Trade” legislation that would raise energy costs greatly since the legislation is nothing more than a huge hidden tax on energy usage. This legislation would do little (nothing?) for the environment but it would do much harm to our economy.
Therefore, consider the depression here and now. If taxes, regulations and other burdens and risks are not decreased immediately and substantially, then this depression will continue.
PART TWO OF MY FORECAST: INFLATION
Some readers have asked about the prospects for inflation. I am on record that I think that inflation is not an “if” but a “when”. As the federal reserve keeps creating trillions of dollars out of thin air, there will be consequences. Technically, they are indulging in “monetary inflation” but of course most people think of inflation by its symptom which is “price inflation”. Since many observers don’t see price inflation, they assume that deflation is winning the day and will be here for the foreseeable future. This is wrong.
If you have read my prior essays on inflation, I point out that inflation will become evident when two conditions occur:
1. The excessive creation of money (again, this is “monetary inflation”)
2. …When this money circulates through the economy (also referred to as “velocity”)
If the government creates trillions of dollars and these dollars do not circulate, then velocity will not occur. But just keep in mind that “velocity” occurs where there is DEMAND. This is a key reason why I am a long-term bull on commodities in general and “human need” commodities in particular. I believe that this is such an important consideration for investors that I even did a national seminar on commodities investing.
There are many areas where there is simply no substantial demand (such as housing and autos). Money will not flow there in this economic environment. However, money does flow to areas of “human need”.
For example, a recent report has shown that the price of wheat has gone up 71% during the past 12 months. I think that similar price movements (or higher!) are in store for many essentials. Commodities tied to “human need” will definitely see their prices continue to zig-zag upward.
I also believe that gold and other precious metals such as silver will continue their bull market. Why?
I consider gold and silver to be “human need” essentials in today’s economic environment. As inflation unfolds among essential commodities, people will need a “store of value” as the world’s major currencies keep on being over-produced. When people start to see that the dollars they hold (or other currency) start to lose value as the government over-produces it, they will then see that having cash is not a “safe harbor”; inflation will erode its value.
They will then seek to replace currencies that are “depreciating” or losing value and shifting their resources to that which holds value…gold and silver.
In fact, as people world-wide see the problems with fiat currencies (dollar, euro, etc.) and with paper assets (stocks, bonds, etc.), they will migrate into those things that will hold value or appreciate over time. The flight will be from “paper” to “stuff”. “Stuff” like precious metals, food, water and other essentials.
THERE WILL BE LITTLE OR NO INFLATION
IN THOSE THINGS THAT PEOPLE DO NOT NEED.
The corollary to that (and this goes back to my forecast) is this…
THERE WILL BE SEVERE INFLATION (EVEN HYPERINFLATION)
IN THOSE THINGS THAT PEOPLE DO NEED.
We have a huge world population and their needs will be addressed. When you couple this demand with expanding money supplies across the globe, rising prices will be the result.
The stage is being set for historic price inflation…in those commodities that are “essential”. Investors need to prepare.
Investors can learn about investing in human need from Paul Mladjenovic’s audio seminar “Cash in on the Commodities Super Bull Market”. He is the author of Stock Investing for Dummies and you can get his free financial newsletter, the Prosperity Alert at www.RavingCapitalist.com.
Today in 2010, the federal government has replaced the bad policies of a few years ago with much, much worse policies today. It is mind-boggling how bad these policies are and it is astonishing that most politicians and many economists don’t see the obvious dangers.
A forecast of an inflationary depression is actually two forecasts since a “depression” and “inflation” are technically two separate events. Therefore, I have to make clear that we are talking about two separate forecasts.
It is an old saying that the “road to hell is paved with good intentions”. Well, in recent years, that road has been changed to a super-highway! America was put on that super-highway a few years ago and right now we are traveling at break-neck speed toward the financial abyss.
PART 1 OF MY TWO-PART FORECAST: DEPRESSION
I believe that my forecast of a “depression” is accomplished. If you think that our experience of 2008-2009 was a garden-variety recession, I would ask you to re-consider that. The trillion-dollar spending policies enacted during the late Bush yeas and now the Obama years are extraordinarily dangerous. The federal government (and the state & local governments, too) are spending beyond our means as well as theirs. Bankruptcies, foreclosures, business contraction and unemployment are certainly at depression-level. Talk of a recovery is wishful thinking since the effects of still more bad policies are on the horizon. Look at what we have right now:
1. Unemployment is at 17%. I am not talking about the much reported yet highly inaccurate “official unemployment rate” which is a sham; I am talking about what is called the “U-6” employment rate that the Bureau of Labor Statistics compiles. It is a much less reported yet more accurate measure of unemployment. This statistic includes those counted in the “official unemployment rate” and adds in those that dropped out of the job search; the so-called “discouraged” unemployed. U-6 also includes those that are “under-employed” which means those that want full employment but have had to settle for part-time employment.
2. Foreclosures are at all-time highs.
3. Bankruptcies are at all-time highs.
4. Personal debt is still at record levels.
5. Government debt is at a mind-boggling all-time high and still soaring.
Then couple the above list with what is coming:
1. The tax-cuts enacted in the past decade are set to expire by January 2011. If this goes as planned, the effect is a tax increase that would deliver a body-blow to an already weak economy. A tax increase is nothing more than money taken by force by the government from the private economy. Basically that would mean less income and less invest-able capital for the private sector as the government forcibly siphons these resources and redirects it to a bureaucracy that is already the biggest in American history.
2. Congress and the president’s economic team have made noise about a “Value-Added-Tax” which is dumb during good economic times and quite stupid during bad economic times. Even the name is idiotic since taxes don’t add “value”…it merely increases the price or cost of that particular product or service.
3. The same folks are still considering pushing through what is called “Cap-and-Trade” legislation that would raise energy costs greatly since the legislation is nothing more than a huge hidden tax on energy usage. This legislation would do little (nothing?) for the environment but it would do much harm to our economy.
Therefore, consider the depression here and now. If taxes, regulations and other burdens and risks are not decreased immediately and substantially, then this depression will continue.
PART TWO OF MY FORECAST: INFLATION
Some readers have asked about the prospects for inflation. I am on record that I think that inflation is not an “if” but a “when”. As the federal reserve keeps creating trillions of dollars out of thin air, there will be consequences. Technically, they are indulging in “monetary inflation” but of course most people think of inflation by its symptom which is “price inflation”. Since many observers don’t see price inflation, they assume that deflation is winning the day and will be here for the foreseeable future. This is wrong.
If you have read my prior essays on inflation, I point out that inflation will become evident when two conditions occur:
1. The excessive creation of money (again, this is “monetary inflation”)
2. …When this money circulates through the economy (also referred to as “velocity”)
If the government creates trillions of dollars and these dollars do not circulate, then velocity will not occur. But just keep in mind that “velocity” occurs where there is DEMAND. This is a key reason why I am a long-term bull on commodities in general and “human need” commodities in particular. I believe that this is such an important consideration for investors that I even did a national seminar on commodities investing.
There are many areas where there is simply no substantial demand (such as housing and autos). Money will not flow there in this economic environment. However, money does flow to areas of “human need”.
For example, a recent report has shown that the price of wheat has gone up 71% during the past 12 months. I think that similar price movements (or higher!) are in store for many essentials. Commodities tied to “human need” will definitely see their prices continue to zig-zag upward.
I also believe that gold and other precious metals such as silver will continue their bull market. Why?
I consider gold and silver to be “human need” essentials in today’s economic environment. As inflation unfolds among essential commodities, people will need a “store of value” as the world’s major currencies keep on being over-produced. When people start to see that the dollars they hold (or other currency) start to lose value as the government over-produces it, they will then see that having cash is not a “safe harbor”; inflation will erode its value.
They will then seek to replace currencies that are “depreciating” or losing value and shifting their resources to that which holds value…gold and silver.
In fact, as people world-wide see the problems with fiat currencies (dollar, euro, etc.) and with paper assets (stocks, bonds, etc.), they will migrate into those things that will hold value or appreciate over time. The flight will be from “paper” to “stuff”. “Stuff” like precious metals, food, water and other essentials.
THERE WILL BE LITTLE OR NO INFLATION
IN THOSE THINGS THAT PEOPLE DO NOT NEED.
The corollary to that (and this goes back to my forecast) is this…
THERE WILL BE SEVERE INFLATION (EVEN HYPERINFLATION)
IN THOSE THINGS THAT PEOPLE DO NEED.
We have a huge world population and their needs will be addressed. When you couple this demand with expanding money supplies across the globe, rising prices will be the result.
The stage is being set for historic price inflation…in those commodities that are “essential”. Investors need to prepare.
Investors can learn about investing in human need from Paul Mladjenovic’s audio seminar “Cash in on the Commodities Super Bull Market”. He is the author of Stock Investing for Dummies and you can get his free financial newsletter, the Prosperity Alert at www.RavingCapitalist.com.
Wednesday, July 21, 2010
Job Creation versus Job Destruction
Copyright 2010. Paul Mladjenovic. All rights reserved.
We all want to see more jobs. As soon as possible and for everyone that wants a job. And even though I have touched on this subject before, it is an important topic that needs further attention.
At both the public and private levels, the talk is about “jobs” and doing “everything we can to create jobs” but the great tragedy is that federal economic policy makers (and many state level economic policy makers) simply don’t understand how to create jobs and are in fact enacting policies that destroy jobs. The reason why these policy makers are harming job creation and spurring on job destruction is really quite simple:
1. They have never run a business.
2. They have never met or managed a payroll.
3. They have never worked in the private sector.
4. They have never created goods or services.
5. They were educated by people with no business experience or knowledge.
6. Many are ideologues that understand politics but not real economics.
In addition, these same decision-makers don’t understand (or don’t care to know) the difference between “private jobs (VERY necessary) and “public jobs” (funded by private jobs!).
With that said, let’s try to clear the air about how jobs get created and how they get destroyed.
Point#1: Understand why “private jobs” are more necessary than “public jobs”.
Many politicians and bureaucrats crow about how government allegedly “creates jobs”. But the ONLY jobs created by government are public jobs and the ONLY way these public jobs are created is by destroying (inadvertently I will add) private jobs. Private jobs provide tax revenues that help to fund public jobs. \
When the government adds a “public job” (such as an administrator, fireman, teacher, policeman, soldier and so on), it must first get the resources from the private sector (via taxes or government debt). This, in turn, crowds out the resources to create a private sector job (retail, manufacturing, etc.). As private jobs shrink due to government growth and public jobs increase due to more spending by government, you set into motion a dangerous dynamic that is unsustainable long-term.
The bottom line is that more private jobs are necessary if we are serious about a healthy economy and a sustainable government budget. So how are private jobs created?
Point# 2: the first and most important job is the entrepreneur.
The first and most important job (from an economic policy point of view) is the entrepreneur. This is a small business person that is the starting point of all business. The entrepreneur is a risk-taker that is seeking profit by providing (or hoping to provide) goods and services for a profit. Profit is CRUCIAL for business start-up and expansion. Without profit, there is no incentive to start and grow a business. For those that vilify the idea of profit, they miss this point entirely and forget that Profit is the key to a healthy, growing economy that ultimately creates the private jobs that are necessary for a healthy and sustainable government sector.
When an entrepreneur reaches profitability, then job creation becomes necessary for the enterprise to keep growing. In the world of supply and demand which many policy makers keep ignoring, the entrepreneur is the visible and necessary engine of “supply”(production). We must remember that supply and demand are embodied in the functions of “production and consumption”.
Consumption (demand) is VERY easy since all of us have wants and needs. We all want more stuff! The trick is…production (supply). Production is very, VERY hard. Don’t believe it? Become an entrepreneur and start a business from scratch! You will quickly find out that it is both risky and hard work. When I teach my home business seminars, I usually advice my students to start part-time from home if possible.
When the entrepreneur succeeds, the hard work and risk does not end. Managing an ongoing business in today’s economy (mostly devastated by short-sighted, blunderous trillion-dollar government policies!) is a risky and difficult endeavor. Getting and keeping employees while satisfying customers and government rules, regulations, mandates and a plethora of business and payroll taxes is VERY difficult.
Therefore, if legislators and government policy makers are truly serious about “getting the economy back on track” and “job creation”, they must make every effort for business start-up, growth and expansion (again, this is production) as EASY AS POSSIBLE. Lower the costs and barriers of entrepreneurship and business expansion!
This includes (but is not limited to) tax cuts, regulatory reform and cutting the red tape, paperwork and bureaucratic hurdles that usually stymie business start-up and development. Cutting (or better yet abolishing) corporate taxes would be a huge boost for business expansion and private job creation.
Unfortunately, government at this moment is unwittingly (purposely??) enacting job destruction policies. Right now, public employees are paid far more than private employees for comparable work and if you do the math, you will see that every 2 public jobs created destroys at least 3-4 private sector jobs. Whether we like it or not, the bottom line is that government (rightly or wrongly) siphons money, jobs and resources from the private economy. Should taxes go up in 2011 (as scheduled), this will only shrink the private economy and accelerate private job destruction.
Point# 3: Private jobs lost today end up with public jobs lost later on.
As the private economy shrinks, this, in turn, will mean less tax revenue for the federal and state governments. Also, as the unemployment ranks swell, that means more government spending on unemployment benefits and public assistance. That results in growing government budget deficits and expanded government borrowing. If and when this continues, this will inevitably be unsustainable and will result in a painful economic crisis.
Those “public jobs” that were created earlier will then start disappearing as well. The resulting scenario will end up being very similar to what has happened throughout history (Greece is only the latest example).
What readers should consider:
The more self-sufficient you are the better. I tell all my readers, clients and students that a business (easily done in your spare time from home) should be considered an economic necessity. It is also why I am self-employed and why I teach about starting a home business. Whether you are unemployed or not, you should launch a business in your spare time. The current economic situation is warning you about this right now!
------------------------------------
For a resource that will help you earn money easily from home,
SEE BELOW....
------------------------------------
ZERO-COST INCOME FROM HOME:
Make Real Money in Your Spare Time
with a No-Cost Low-Risk, High-Profit
Internet Business!
The economy is frightening and job security is everyone’s concern. No one is safe from a bad economy…not even the government! It is time to become more self-sufficient and more financially secure. Don’t just wait for your
financial concerns to go away…gain greater prosperity RIGHT NOW!
This brand new, information-packed audio seminar program can help you earn more money immediately. Paul Mladjenovic, the best-selling author, home-based entrepreneur and national seminar leader can help you start your own spare-time business from the comfort of home. He has helped hundreds of thousands over the past 25 years. You can gain his valuable strategies and resources instantly and for less than the cost of a single meal!
His latest seminar … ZERO-COST INCOME FROM HOME packs a lot of information and easy-to-do strategies for making more money at home…in your spare time!
You will learn…
• How to start a money-making website or blog… within a few hours..free!
• Where to find profitable products and services
• How to do your business with little risk and NO COST!
• How to easily sell other people’s products and services with no hassle
• How to make money on the internet…even when you are asleep or on vacation!
• Zero-cost marketing strategies that Paul has used for years
• Search engine and traffic generating strategies that are free
• Case studies of actual students that made six-figures…a month!
TO GET THE PROGRAM INSTANTLY, CLICK HERE
This information (and more!) are packed in my full 2 ½ hour live seminar (instantly downloadable). But I won’t stop there. I WANT YOU TO SUCCEED. Here are the free bonuses I have added for you…
Free bonus #1:
The classic MAIL ORDER BUSINESS ON THE INTERNET seminar! This is nearly 3 hours of timeless business-building information and guidance that has helped thousands for nearly 20 years! Use the money-making concepts and strategies along with your ZERO-COST INCOME FROM HOME audio.
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Is the economy bad? Yes...but you can do something about immediately and in your spare time.
To order and download your copy of ZERO-COST INCOME FROM HOME and the free bonuses… CLICK HERE.
We all want to see more jobs. As soon as possible and for everyone that wants a job. And even though I have touched on this subject before, it is an important topic that needs further attention.
At both the public and private levels, the talk is about “jobs” and doing “everything we can to create jobs” but the great tragedy is that federal economic policy makers (and many state level economic policy makers) simply don’t understand how to create jobs and are in fact enacting policies that destroy jobs. The reason why these policy makers are harming job creation and spurring on job destruction is really quite simple:
1. They have never run a business.
2. They have never met or managed a payroll.
3. They have never worked in the private sector.
4. They have never created goods or services.
5. They were educated by people with no business experience or knowledge.
6. Many are ideologues that understand politics but not real economics.
In addition, these same decision-makers don’t understand (or don’t care to know) the difference between “private jobs (VERY necessary) and “public jobs” (funded by private jobs!).
With that said, let’s try to clear the air about how jobs get created and how they get destroyed.
Point#1: Understand why “private jobs” are more necessary than “public jobs”.
Many politicians and bureaucrats crow about how government allegedly “creates jobs”. But the ONLY jobs created by government are public jobs and the ONLY way these public jobs are created is by destroying (inadvertently I will add) private jobs. Private jobs provide tax revenues that help to fund public jobs. \
When the government adds a “public job” (such as an administrator, fireman, teacher, policeman, soldier and so on), it must first get the resources from the private sector (via taxes or government debt). This, in turn, crowds out the resources to create a private sector job (retail, manufacturing, etc.). As private jobs shrink due to government growth and public jobs increase due to more spending by government, you set into motion a dangerous dynamic that is unsustainable long-term.
The bottom line is that more private jobs are necessary if we are serious about a healthy economy and a sustainable government budget. So how are private jobs created?
Point# 2: the first and most important job is the entrepreneur.
The first and most important job (from an economic policy point of view) is the entrepreneur. This is a small business person that is the starting point of all business. The entrepreneur is a risk-taker that is seeking profit by providing (or hoping to provide) goods and services for a profit. Profit is CRUCIAL for business start-up and expansion. Without profit, there is no incentive to start and grow a business. For those that vilify the idea of profit, they miss this point entirely and forget that Profit is the key to a healthy, growing economy that ultimately creates the private jobs that are necessary for a healthy and sustainable government sector.
When an entrepreneur reaches profitability, then job creation becomes necessary for the enterprise to keep growing. In the world of supply and demand which many policy makers keep ignoring, the entrepreneur is the visible and necessary engine of “supply”(production). We must remember that supply and demand are embodied in the functions of “production and consumption”.
Consumption (demand) is VERY easy since all of us have wants and needs. We all want more stuff! The trick is…production (supply). Production is very, VERY hard. Don’t believe it? Become an entrepreneur and start a business from scratch! You will quickly find out that it is both risky and hard work. When I teach my home business seminars, I usually advice my students to start part-time from home if possible.
When the entrepreneur succeeds, the hard work and risk does not end. Managing an ongoing business in today’s economy (mostly devastated by short-sighted, blunderous trillion-dollar government policies!) is a risky and difficult endeavor. Getting and keeping employees while satisfying customers and government rules, regulations, mandates and a plethora of business and payroll taxes is VERY difficult.
Therefore, if legislators and government policy makers are truly serious about “getting the economy back on track” and “job creation”, they must make every effort for business start-up, growth and expansion (again, this is production) as EASY AS POSSIBLE. Lower the costs and barriers of entrepreneurship and business expansion!
This includes (but is not limited to) tax cuts, regulatory reform and cutting the red tape, paperwork and bureaucratic hurdles that usually stymie business start-up and development. Cutting (or better yet abolishing) corporate taxes would be a huge boost for business expansion and private job creation.
Unfortunately, government at this moment is unwittingly (purposely??) enacting job destruction policies. Right now, public employees are paid far more than private employees for comparable work and if you do the math, you will see that every 2 public jobs created destroys at least 3-4 private sector jobs. Whether we like it or not, the bottom line is that government (rightly or wrongly) siphons money, jobs and resources from the private economy. Should taxes go up in 2011 (as scheduled), this will only shrink the private economy and accelerate private job destruction.
Point# 3: Private jobs lost today end up with public jobs lost later on.
As the private economy shrinks, this, in turn, will mean less tax revenue for the federal and state governments. Also, as the unemployment ranks swell, that means more government spending on unemployment benefits and public assistance. That results in growing government budget deficits and expanded government borrowing. If and when this continues, this will inevitably be unsustainable and will result in a painful economic crisis.
Those “public jobs” that were created earlier will then start disappearing as well. The resulting scenario will end up being very similar to what has happened throughout history (Greece is only the latest example).
What readers should consider:
The more self-sufficient you are the better. I tell all my readers, clients and students that a business (easily done in your spare time from home) should be considered an economic necessity. It is also why I am self-employed and why I teach about starting a home business. Whether you are unemployed or not, you should launch a business in your spare time. The current economic situation is warning you about this right now!
------------------------------------
For a resource that will help you earn money easily from home,
SEE BELOW....
------------------------------------
ZERO-COST INCOME FROM HOME:
Make Real Money in Your Spare Time
with a No-Cost Low-Risk, High-Profit
Internet Business!
The economy is frightening and job security is everyone’s concern. No one is safe from a bad economy…not even the government! It is time to become more self-sufficient and more financially secure. Don’t just wait for your
financial concerns to go away…gain greater prosperity RIGHT NOW!
This brand new, information-packed audio seminar program can help you earn more money immediately. Paul Mladjenovic, the best-selling author, home-based entrepreneur and national seminar leader can help you start your own spare-time business from the comfort of home. He has helped hundreds of thousands over the past 25 years. You can gain his valuable strategies and resources instantly and for less than the cost of a single meal!
His latest seminar … ZERO-COST INCOME FROM HOME packs a lot of information and easy-to-do strategies for making more money at home…in your spare time!
You will learn…
• How to start a money-making website or blog… within a few hours..free!
• Where to find profitable products and services
• How to do your business with little risk and NO COST!
• How to easily sell other people’s products and services with no hassle
• How to make money on the internet…even when you are asleep or on vacation!
• Zero-cost marketing strategies that Paul has used for years
• Search engine and traffic generating strategies that are free
• Case studies of actual students that made six-figures…a month!
TO GET THE PROGRAM INSTANTLY, CLICK HERE
This information (and more!) are packed in my full 2 ½ hour live seminar (instantly downloadable). But I won’t stop there. I WANT YOU TO SUCCEED. Here are the free bonuses I have added for you…
Free bonus #1:
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Free Bonus #2:
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Free Bonus #3:
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All in all, you get over 5 ½ hours of information, guidance and resources on audio with a treasure trove of money-making bonuses. Top it off with an instant affiliate business with my company! This is a fun and inexpensive way to build your personal prosperity.
Is the economy bad? Yes...but you can do something about immediately and in your spare time.
To order and download your copy of ZERO-COST INCOME FROM HOME and the free bonuses… CLICK HERE.
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