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It’s time to start preparing yourself

I debated on whether to post the following interview, because if you haven’t heard these views espoused before it can be troublesome.  I first discovered Peter Schiff a few months ago.  I have since read many of his commentaries, listened to the archives of his weekly broadcasts and have seen him several times on CNBC.  Interestingly, the first time he was on CNBC everyone looked at him like he was a three headed monster, but the last time most of the panelist and hosts were agreeing with him.

His opinion is that inflation is out of control and there is nothing the Fed can do about it.  A recession is on the horizon.  I hope that there is a middle ground and that his forecast doesn’t come to fruition.  However, just in case it does – it’s time to start preparing yourself.

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Bernanke on the Hill

If you didn’t have a chance to hear Fed Chairman Ben Bernanke’s testimony to Congress this week, listen to Jim Puplava’s review on his 7/22 3rd hour Big Picture segment.  The Senators and Representatives are fed up with rising interest rates and the weakest “strong” economy in history.

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Have you wonder why so many posts on economics?

I personally believe that over the next decade the best place to obtain financial freedom will be through investing in commodities and commodity related stocks.  No, this is not the only path.  Some will find it thru real estate as well as entrepreneurship.  However, until interest rates start falling – it is going to be difficult times in the real estate patch especially if you are playing the flipping game.  Affordability is under pressure from rising interest rates and inflation, so the number of potential buyers have been greatly reduced.  Landlords will have pricing leverage over the next few years.  So, if you already own real estate these will be good times for you. 

I may have made my point, before I started rambling about triple deficits and such. As a real estate investor, how are you going to make sound decisions without considering interest rates?   If you don’t understand the basic elements of the economic landscape your journey to Financial Freedom will be more difficult.  I was going to talk about how interest rates, inflation, and the deficits – budget, trade and current account are all related to the US Dollar and Gold, but will save that for another post.

I must admit that I didn’t study economics very closely until I started investing in Gold. I now struggle through articles and books on economics, because I realize that it is one of the commitments for Financial Freedom.  You may recall, the big three commitments:  make time to become free, know your business and buy assets.  Understanding economics is a part of knowing your business.

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Inflation Tax

source: http://www.house.gov/paul/tst/tst2006/tst071706.htm

by Ron Paul, US Congressman

July 17,  2006   

All government spending represents a tax. The inflation tax, while largely ignored, hurts middle-class and low-income Americans the most. Simply put, printing money to pay for federal spending dilutes the value of the dollar, which causes higher prices for goods and services. Inflation may be an indirect tax, but it is very real- the individuals who suffer most from cost of living increases certainly pay a “tax.” Continue reading “Inflation Tax”

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Pay No Attention to the Man Behind the Curtain

I love hearing Peter Schiff take on the mainstream economists on CNBC.  He tells it like it is and most of them can’t handle the truth.  He has a weekly webcast every Wednesday at 8PM EST that is worth listening to.  Here is his latest commentary.

“Despite the rosy numbers, today the typical American family pays for groceries with a Visa card, utilities with a home equity loan, has a six-year loan on their SUV, has no savings, and has both parents working just to keep the family one-step ahead of its creditors. “

Continue reading “Pay No Attention to the Man Behind the Curtain”