Are you as prepared to deal with inflation as the BG who might attack you?

This is a discussion on Are you as prepared to deal with inflation as the BG who might attack you? within the Off Topic & Humor Discussion forums, part of the The Back Porch category; Most of us here I would consider pretty well prepared to deal with a BG that might attempt to rob you. But IMHO we are ...

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Thread: Are you as prepared to deal with inflation as the BG who might attack you?

  1. #1
    Senior Member Array Chevy-SS's Avatar
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    Are you as prepared to deal with inflation as the BG who might attack you?

    Most of us here I would consider pretty well prepared to deal with a BG that might attempt to rob you. But IMHO we are MUCH more likely to be robbed of significant wealth by something like inflation. Bernanke is promoting inflation (in most of his recent speeches) and he is certainly facilitating it with things like QE2.

    If a BG steals $1,000 and a TV set, well, most of us can easily recover from that. But if the Fed (through inflation and hidden taxes) steals most of our savings, well, then we may be 75 years old and find ourselves back at work.

    I have been reading a fascinating (and FREE) mini-course by a guy named Dan Amerman. The course is called 'Turning Inflation Into Wealth Mini-Course'. (EDIT: The links to the 12 pdf's are included in Post #6 below). Read the first one or two and see what you think. I am not promoting this guy, nor am I affiliated in any way, shape or manner with him. I am simply interested in preserving my assets.

    I would be curious if other members here are taking any actions to acquire financial knowledge and perhaps re-position their assets. Have you maybe found some good info? If so, please post the links.
    Last edited by Chevy-SS; November 24th, 2010 at 02:52 PM.
    'Be careful, even in small matters' - Miyamoto Musashi

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  3. #2
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    The member is asking legitimate questions and asking for additional sources of pertinent information related to his topic that is posted in the correct forum area.
    The DC forum moderators will decide what is SPAM and what is not SPAM.
    Merely providing a link to a website that is directly related to the original thread topic is not SPAM.
    The member (obviously) is not selling the course since it's free.
    If you click on the link and it's not your cup of tea then don't enter your E-mail address and click off.
    If anyone is not interested in this thread then pass it up & just move on.
    Do not post off topic personal opinion Smilies that just need to be deleted and add nothing constructive to the thread.

  4. #3
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    Always some good up to date info here: http://www.theblaze.com/
    Like the fact that Russia & China just dumped the dollar.

  5. #4
    Senior Member Array Chevy-SS's Avatar
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    Quote Originally Posted by QKShooter View Post
    The member is asking legitimate questions and asking for additional sources of pertinent information related to his topic that is posted in the correct forum area.
    The DC forum moderators will decide what is SPAM and what is not SPAM.
    Merely providing a link to a website that is directly related to the original thread topic is not SPAM.
    The member (obviously) is not selling the course since it's free.
    ......

    Yes, all true. Thanks for the support, and the link to "theblaze"!

    -
    'Be careful, even in small matters' - Miyamoto Musashi

  6. #5
    VIP Member Array ExactlyMyPoint's Avatar
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    Well, I went to the site and it is cheaply made, poorly constructed and phony testimonials. I build websites for a living and I recognize a phishing site when I see it.

    I agree that you can steal more money with a pen than you can with a gun, but this site is, IMHO, unworthy of posting on this forum. Just sayin'.
    Preparing for the Zombie Apocalypse or Rapture....whichever comes first.

  7. #6
    Senior Member Array Chevy-SS's Avatar
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    Quote Originally Posted by ExactlyMyPoint View Post
    Well, I went to the site and it is cheaply made, poorly constructed and phony testimonials. I build websites for a living and I recognize a phishing site when I see it.

    I agree that you can steal more money with a pen than you can with a gun, but this site is, IMHO, unworthy of posting on this forum. Just sayin'.
    Well, look, this thread is not about the guy building a pretty web site. He has some VERY interesting economics to teach. I found them quite informative. Here are the links to the readings, in order. Plus, I have hosted the pdf files on my own server space, thus you can rest assured, there is no 'phishing' going on. The only thing I'm 'phishing' for is knowledge.

    Humor me and just take 5 minutes to read the first one, then see what you think.

    Happy reading:
    Last edited by Chevy-SS; November 25th, 2010 at 01:25 PM.
    'Be careful, even in small matters' - Miyamoto Musashi

  8. #7
    Senior Member Array Devilsclaw's Avatar
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    Well, I still don't know what he is selling, but his basic principles are true. Basically saying, in a hyper inflactionary period, you don't want to be caught holding a bunch of cash, or worse yet, relying on fixed income producing assets such as annuities and crap like that. Cash would still return a good interest rate, but the cash itself would be eroded, and add in inevitable increasing taxes, and you'll be worse off, than someone that has actual assets, now inflated, but paid for with deflated dollars.

    He is saying to use long term fixed rate debt, to purchase solid assets like land, or income producing stocks or other assets, that will ride up with inflation, while your debt is decreased by it.

    Like I said, I still wonder what he's selling, and don't think I would be buying.....BUT, he does have it right, in terms of economics, and what will happen.

    I've been saying this for a couple years now.....don't be buying bonds, or any kind of retirement "plans" or stocks that are based on simple appreciation. If you have money now, use it to leverage the buying of land, income producing stock, and other things, maybe even gold--in other words, things that are actually worth something, not just on paper.

  9. #8
    Member Array Random's Avatar
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    Website aside, inflation is a BIG problem we're most likely going to be facing in the near future. We've got $600B going now - but what's to stop the fed from printing even more? Why not just monetize the entire $14T debt?

    $1000 for a loaf of bread, anyone?

  10. #9
    Senior Member Array Devilsclaw's Avatar
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    I have heard it on the radio, certain movements, and seminars across the country, touting "debt-free living". People all happy with themselves over not owing anything on their houses and on and on--which, as a rule of thumb is a GOOD deal, escpecially for many folks. But....I think it is not 100% true, if people have spending discipline and an income. Depends on what they are doing with their extra income (if any). This is his "right hook" example, if they take the extra money each month and purchase appreciable assets with real world value.

    Trouble is, you really can't buy anything of real value with an extra $500-$800 per month. BUT, if they took out a loan on their assets, for long term fixed rates at the very low rates available now, and bought up good quality assets, they'd build much more net worth than just being debt free. As long as the debt was serviceable, with extremely high chances that those assets purchased wouldn't drop significantly in value, it might be a workable plan.

    People that are debt free most of their lives end up with decent net worths, but the folks that get the really really big net worths, are the ones that carry 20%-25% debt load most of their lives, and use that debt to buy assets that appreciate far more than their interest expense.

    Trouble is, most folks aren't that disciplined, and end up using debt to live a life above their means, with cars, boats, vacations, Harleys, fancy restaurants, etc. all things that almost always depreciate, or are just consumed.

    If we get some inflation, it is a good sign, it means things are actually being sold and services used. But--I do think the inflation that is coming, is going to be a monster, at least that's what it is going to take to help fix this mess we are all in. It is going to put lots of folks into poverty, that have investments based in dollars, like cash, fixed rate investments, mutual funds, etc. People that don't have anything, but have a job, will actually be almost as well off as those that have huge bank accounts but no income.

    My take away from his papers is "don't park your money in anything that is valued solely by a dollar sign in front of it", but instead, put it into something of real value, that will continue to be of real value.

    It is good reading, and I appreciate the OP for posting it. He's got it right, but I'm just leery of what he's trying to sell or talk people into doing....I will reserve judgement until I figure that out.

  11. #10
    Senior Member Array Chevy-SS's Avatar
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    Quote Originally Posted by Devilsclaw View Post
    ...... take the extra money each month and purchase appreciable assets with real world value.

    Trouble is, you really can't buy anything of real value with an extra $500-$800 per month. BUT, if they took out a loan on their assets, for long term fixed rates at the very low rates available now, and bought up good quality assets, they'd build much more net worth than just being debt free. As long as the debt was serviceable, with extremely high chances that those assets purchased wouldn't drop significantly in value, it might be a workable plan.

    People that are debt free most of their lives end up with decent net worths, but the folks that get the really really big net worths, are the ones that carry 20%-25% debt load most of their lives, and use that debt to buy assets that appreciate far more than their interest expense.

    Trouble is, most folks aren't that disciplined, and end up using debt to live a life above their means, with cars, boats, vacations, Harleys, fancy restaurants, etc. all things that almost always depreciate, or are just consumed..........

    It is only in the last year or so that I have started re-considering all my positions. I was always under the impression that it was better to be debt-free. I own my house and a couple of investment properties with no mortgages, plus I have some cash in the bank. I thought I was in great shape UNTIL I started reading and listening to some financial gurus (Marc Faber, Nouriel Roubini, Peter Morici, etc), and then I started getting concerned.

    It seems to make a lot more sense to buy rental property, using cash on hand, and also take advantage of low interest rates on a mortgage, and then let inflation work FOR me instead of simply wiping out the purchasing power of my cash.

    But it's easy to see why the price of gold is going up.......
    'Be careful, even in small matters' - Miyamoto Musashi

  12. #11
    VIP Member Array glockman10mm's Avatar
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    Pay off what you owe, dont make new debt, have some emergency cash, and observe. Be as able to be self sufficient as possible and dont blow in the wind with every scheme and financial fad that comes along, and you will be fine.

  13. #12
    VIP Member Array shockwave's Avatar
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    There is currently no risk of hyperinflation. However, you can always frighten a certain number of people into buying gold and other silly things.

    Right now, the danger is deflation. It is the business of the Fed - via their mandate from Congress - to create a stable monetary supply and promote job creation. Because interest rates by the Fed are effectively zero, the only tool they have left is to create a slight amount of inflation, which spurs job growth.

    In other words, the most important, single best thing Bernanke can do right now is to add about 2 percent inflation to the economy. We don't know yet if the current try at quantitative easing will do that, but they're releasing the funds in tranches and gauging the effect of each, and can recalibrate as they go along.

    The above remarks are what you can learn if you study the financial press and economic policy. Of course, you're always free to visit some scam artist's website. You be the judge.
    "It may seem difficult at first, but everything is difficult at first."

  14. #13
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    Nothing is safe. If you hold cash or equivalent you lose from inflation. If you hold real estate you are going to be paying hefty taxes in many instances. If you leverage -- buy with borrowed money at low interest rates-- you can't be sure the item bought will appreciate. Worse, in apparent crisis times and mode, folks buy things at way above a realistic present value and they do it on margin-- with money borrowed.

    By and large the swings favor the super haves, and always disfavor the 95-98% of the rest of us. Don't know what can be done about that, but I do know anything I might support would be heavily opposed.

    Follow Glockman's advice. Stay out of debt, have emergency cash and observe. I'd add, life and economics are a big gamble and subject to trends and whims beyond our control or ability to foresee. When I had no money bank CD interest rates approached 13%, my mortgage was 9%, and I was happy to get it. When I had accumulated money, interest rates dropped to less than 1%, mortgage rates to below 5%. Somehow I'm always on the wrong side of the swings. And that is where most of us will be most of the time.

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