Feb 19 2009
Robbing Peter To Subsidize Paul
When you take out the government-speak and insert common sense language, stimulus simply means “create more money out of nothing.”
More on this in the video below:
What this all amounts to is a growing inflationary risk. The negative headlines you see today are primarily deflationary driven. Eventually the massive amount of money created by the Fed (an effort to avoid deflation) will spread throughout the economy thus devaluing all existing dollars in your pocket.
As the U.S. dollar makes its downward plunge, gold and other assets NOT created out of thin air will likely be the winners. But one should not get in over their head with this precious metal or any other non-dollar asset class since it’s obvious the economy is becoming more saturated with Washington’s policies.
And if ever you have felt that our financial lives can be improved with politics, here is a must-see video for you. In it Congressman Pete Stark attempts to explain how America’s wealth grows as the national debt grows.
*Note: The Congressman quickly becomes angered with some of the reporter’s basic questioning and uses foul language so view with caution.
Now back to the main point …
As a long term investor, you cannot eliminate investment risk but you can manage it and the only method to accomplish this that allows me to sleep at night is broad diversification. We can’t control the daily happenings on Capitol Hill but we can be informed about the financial consequences that stem from political actions.
Bottom line, these stimulus packages we’ve seen are nothing more than crafty smoke and mirror programs. Unfortunately the typical citizen thinks the government is the one cutting the check.
LESSON OF THE DAY: Governments have debt, not capital.
It’s you and I who are covering the bill and we will pay dearly in the years to come by way of increasing taxes and constantly depreciating dollars.
“Sometimes I wonder whether the world is being run by smart people who are putting us on…or by imbeciles who really mean it.” – Mark Twain
Related posts:
This Glenn Beck said yesterday on his show to get out of stock market?!?
where would you go then he was not very specific
perhaps he is ignorant??
Jj
Jeff,
Thanks for the comment.
I don’t know where Glenn would put his money for long term safety because if he puts it in cash or cash equivalents he risks a huge loss in buying power over time. All this money the Fed is creating through these stimulus packages signals more inflation so I want my money that is a position that should outpace inflation. Historically over long periods of time, the stock market has been that place.