The Doomsday Scenario for the stock and housing bubbles is simple: the Fed’s magic fails. When dropping interest rates to zero and flooding the financial sector with loose money fail to ignite the economy and reflate the deflating bubbles, punters will realize the Fed’s magic only worked the first three times: three bubbles and the game is over.
So what happens when punters realize there won’t be a fourth bubble? They sell. Bids disappear because who’s dumb enough to bet (with Japan and Europe as lessons) that more liquidity and negative interest rates will magically work when zero interest rates didn’t move the needle?
I came across a Zerohedge article yesterday, which was just a repost of a Charles Hugh Smith article titled, The Doomsday Scenario for the Stock and Housing Bubbles. Mr. Smith is convinced that this latest round of monetary policy will not work and that the fourth time will finally look like desperation. This time, he is sure the stock and housing bubbles will pop. However, employing the argument from incredulity and extrapolating data using the gambler’s fallacy doesn’t make it so.
Concluding that because you can’t or refuse to believe something, it must not be true, improbable, or the argument must be flawed. This is a specific form of the argument from ignorance.
Argument from incredulity
The gambler’s fallacy refers to the tendency of individuals to erroneously believe that the onset of a particular random event [in this case the Great Buying Opportunity of 2008] is more or less likely to happen following another event or a series of events [another crash modeled after the previous one]. Logically, this line of thinking is incorrect; past events do not affect the probability that certain events will occur at a later time.
To keep apprised of the many poorly constructed alt-financial writings, I prefer to scan Zerohedge’s condensed bucket list of gloom and doom, because their editors purposely choose all the terrible writings that populate the alt-financial media. Any writer who receives traction on Zerohedge has been a dispenser of the worst financial advice, but it conforms to that predetermined confirmation bias. These writers get their notoriety, because of the gloom and doom they bestow on their readers. Each of these writers jumps the shark, continually upping the ante and displaying the backfire effect.
The GDP numbers that came out this morning seem to imply that the economy, which is on a permanent IV-drip, still continues to receive support. I see the U.S. Fed policy continuing to work. Imagine if rates go negative; asset prices will climb higher. The more dovish the Fed sounds the higher stocks climb. They have already broken out of their resistance channel and despite all the collapse talk, look ready to take out their old highs.
As rents continue to escalate, gratis government social policy, prices continue to creep up. The latest NAR data confirm that the recent drop in mortgage rates has been felt around the nation and pending home sales have perked up.
Latent demand is much stronger than most economists theorize and a decade of severe under-building is taking its toll on buyer sanity.
Renters and those shut out of investing prefer Zerohedge
I am sure a higher than normal percentage of Zerohedge readers are renters and they are hoping Mr. Smith is correct. He conflates with that hard-wired gloom and doom confirmation bias. I have been following his writings for almost 15 years and this article could have been written over ten years ago. It makes for interesting reading, but the gamblers fallacy and argument from incredulity never make for profitable investing or correct predictions. He’s been wrong the past three times already and those who listened to him have their glass half-full… with tears.
I see no reason why these central bankers are losing control. Last decade’s manufactured crisis provided all the ammunition the elites needed to effectively gain control of the monetary system and global economy. Here’s where understanding the conspiracy for world government comes in handy. The elites would gain nothing if the system collapsed as their power base would be eroded. I reason that they gain much more by keeping this system intact until war and the dispensers of gloom and doom only assist in the agenda.
Is socialism the cause or is socialism the result?
Note: In the new world order, there are no “fair weights and measures” aspects to the monetary system. If this system is to be viable longer-term, the elites need to conceal the true rate of monetary inflation by promoting the concept of free trade; the arbitrage of manufacturing and labor inputs between high-cost and low-costs nations. The elites also need to promote the technologies that assist in reducing manufacturing costs. Furthermore, asset prices that collateralize debt must continually move higher.
I came across a Zerohedge article this morning titled, Why Socialism (And/Or Big Government) Sucks In One Simple Chart, which was just a repost of a January article titled, Chart of the day…. or century?, from the American Enterprise Institute, and wanted to comment on its line of reasoning.
While I do not disagree with any of the data, I do have a contention with its logic. Free trade is not the answer and socialism is often not the cause of the author’s findings. Rather, socialism often results from something else – it’s the government’s response to the nightmare of excessive monetary inflation.
We have discussed in the past that whenever the government intervenes in any economic sector, it distorts the supply/demand equation. We can all agree on this. If we observe the chart above we can clearly see that the sectors that cannot be imported are under tight government control. Thus, at first blush, we may conclude that government intervention is the cause of higher prices and restricted supply. However, I conclude that government intervention is the result of high rates of monetary inflation and massive deficit spending. Socialism is the outcome, rather than the cause.
Government intervention is the result of inflationary monetary printing
In some sectors, government intervention has become a necessary evil. Monetary printing over the past 40 years has been so great that if the governments did not intervene in the marketplace in certain sectors, the direct costs to the consumer would have exploded even higher.
Socialism and government intervention is the result of inflationary monetary printing and deficit spending. We cannot complain about socialism in isolation, thinking that by eradicating social programs and social spending we will somehow return to a freer market. That ship has sailed. In some sectors, government intervention has become a necessary evil. Monetary printing over the past 40 years has been so great that if the governments did not intervene in the marketplace in certain sectors, the direct costs to the consumer would have exploded even higher.
Thus, we see how the supply/demand dynamics in healthcare and housing (government control in the owner-occupied mortgage market) have been distorted with government intervention. Supply is restricted and the marketplace is subject to massive regulatory action and bureaucratic red tape. However, given the high rate of monetary inflation over the past 40 years, I wonder what the marketplace for housing and healthcare would be like if there were no social programs. We cannot arbitrage these costs with lower-cost nations. Their explosive rises are just a direct reflection of our government’s profligate ways.
I can say this. If the government did not intervene in the mortgage market, the banks would not lend at prevailing rates and mortgage yields would be much, much higher. In a free market the banks would charge much higher levels of interest, but that would have resulted in much lower housing prices. I also think of all the IRC changes over the decades to promote house prices. Imagine if the federal government rescinded all those tax benefits. I think we get the picture.
In the new world order, asset inflation is also a necessary ingredient to support monetary inflation. If assets collapse, the collateral that supports the debt would collapse as well and the system would unravel. So, get used to growing government intervention and that is only the result of the rising levels of public debt outstanding. Asset prices must inflate if this system is to continue and the government (and central banks) will do whatever that takes to make certain it happens. Wages will fade as asset prices rise. Socialism will fill the void. The public will rejoice.
This may be pointing to crisis, but not for existing home owners
Note: Much of this data does not reflect the recent sharp +50 basis point drop in mortgage rates, so we will have to wait until further data come out to see how the new home data has been affected. This release was delayed by the government shutdown.
Housing starts proved unexpectedly weak in December and will pull back residential investment in Thursday’s GDP report. A strong offset, however, is steady strength in permits which are less impacted by weather or similar one-time effects.
Starts fell 11.2 percent in the month to a 1.078 million rate, which was far below consensus range. This compares with a long trend in the 1.200 to 1.300 million range and is the weakest showing since September 2016. Keep in mind that the longer-term trend is still below the rate with what Freddie Mac considers to be supply/demand equilibrium.
The supposed good news was that permits rose 0.3 percent in December to a 1.326 million rate. That rate is still too low for helping to build supply.
In a managed economy there is no such thing as market equilibrium
As soon as the housing starts data were released this morning, the CNBC shills were in high gear, trying to understand why the numbers were so weak in December. Of course, the data has been delayed in the wake of the government “shutdown,” but it is clear that higher interest rates were taking out rising secular demand.
I have to believe the U.S. Fed had some idea about the anecdotal evidence in real time. This was probably one of the reasons for their change of policy statement.
But the CNBC experts were at a loss to explain why the numbers continue to sink. They theorized that millennials are less interested in buying houses. But we know the answer. Government restrictions on zoning and especially access to credit has tremendously impacted prospective home buying.
While rates are low by historic standards, obtaining a mortgage is still difficult. Since the federal government has assumed effective control of the mortgage market, virtually all owner-occupied mortgage underwriting is guided by the strict guidelines of Fannie Mae and Freddie Mac. There really is no sliding scale for mortgage origination anymore. In order to buy a house, home buyers need to conform to strict federal guidleines. Even hard money lenders have begun to conform to federal underwriting restrictions.
There is a lot of demand, but many potential home owners are now permanently shut out.
The bottom line; the grim numbers will do little to drop home prices. In fact, I see the opposite. In a managed economy, supply is always restricted, prices continue to stay at permanently elevated levels, and existing home owners like it that way. If you are not part of the home owners club, good luck.
The government only pretends to screw up, so it can invent more control
I received an email from a reader who sent me an article regarding the growing income disparity of the United States middle class and the high income earners. Though it is a few years old, I doubt much would have changed if it had been written yesterday.
Indeed, the article from the Economic Policy Institute (EPI) paints a gloomy picture for the average wage earner. But, notice their conclusions. The answer lies with more government intervention and public policy changes.
You get the picture. I responded to the reader that every time the government intervenes, the disparities widen. Every program the government promulgates only distorts the supply/demand equation and results in less equilibrium. The reader agreed, and said that the government only screws things up more.
My response was that this “screwing up more” is actually the intent. Perhaps that’s the government’s plan all along; continual intervention until we get one big socialist-communist state. And the people will rejoice. This goes back to the stated Communist ambitions of the 1930s and ’40s. The Communists back then said they wouldn’t be able to implement their goals through bloodshed, but would be able to establish their Marxist plan with disingenuous sophistry and through the back door with cunning. I see it going exactly and according to their well-known script.
Socialism will not fail; it’s the end goal
Today, we have an immense socialist bureaucracy in just about every nation-state. These nation-states are heavily dependent on massive deficit spending. Those not versed on the one-world government conspiracy continually get this wrong; they believe that socialism is doomed to fail.
I say that Socialism is the end goal of the Satanic globalists. It really is Communism with the illusion of private ownership. For instance, we may own real estate, but there are now so many costs and restrictions that the government effectively controls this sector. Government policy manages every sector of our lives and there is absolutely no escape. We may “own” our children, but the government has complete control over how we manage them. The worst part is that freedom loving Christians look to the government for change. They continually vote for their choice, support Trump, or seek government help to turn things around.
I say the best we can do is avoid government as much as possible. Don’t depend on them. Of course, pay your taxes, but use their tax codes against them to pay as little as possible. Every time a person looks to the government for action or for a benefit, it only empowers the ruling authorities. We get the government we want, not what we deserve.
The system is working as planned.
Anyone who does not understand the larger conspiracy will refuse to believe this system can sustain itself. I continually read all the time in the alt-financial media that the system is ready to crash. These people were telling us to short the markets all last year down into Dow 22,000. Of course, they forgot their recommendations once again. I tell you something completely different.
Why is this? Let’s contemplate central bank monetary policy in the wake of the Great Buying Opportunity of 2008. If the owners of the central banks, with their controlled governments, wanted to really turn things around, they would have written down or discounted the typical person’s debt burden. It really is not difficult to engage such policy, but that would have only empowered the average wage-slave and that would have been anathema to their long-term plan to enslave humanity.
Instead, they embarked on another path. They chose to place humanity on an indefinite IV-drip that they control. They could keep it in place or remove it at will. In essence, these central bank owners now have complete control over the direction of the global economy. By keeping interest rates low and providing credit as needed, they have allowed the socialist governments (virtually all nations, including the U.S.) to stay in business and become more socialist.
These elites have clearly chosen this well-publicized route. They have walked down this path for a full decade and the global investors all know that the central banks control the show. So, why would the central banks stop the IV-drip now? They will only get the blame for the collateral damage. I submit this IV-drip can last forever, so that a massive global socialist state can emerge from the fear mongering and ostensible uncertainty. The godless, global citizenry will rejoice at the prosperity and peace.
When it comes time and the global economy weakens further, the elites will embark on more stimulus. As of now the Federal Reserve is not reinvesting funds in securities that mature, but it will again by early next year. Instead of a roll-off, the Fed will embark on new QE and the globe will rejoice. The citizens will thank their captors and the system will sustain itself as the average wage earner sinks further into the abyss.
The business and asset cycles are dead. This has nothing to do with “insanity” or “cycles” or “craziness” or “haphazardness.” People who read my blog and posts know better. It’s all part of a well-oiled machine. It’s just the normal routine of the new world order.
My warning about the end of the business cycle goes back to 2013
Note to reader: There is no going back to the way things were. We are too far past that point.
The New World Order does not want us owning assets outside its satanic tracking system. It will eventually consume everything, so gold and silver are in the globalists’ cross hairs.
The contrived economic collapse of 2008 allowed the globalists to assume control of all the financial markets. Prior to this, the markets were more free and subject to natural forces. One could use economic principals and simple deductive reasoning to formulate investment theses.
Since 2008, a brand new set of synthetic economic and financial laws have arisen. Now success in investing and trading relies primarily on a person’s ability to anticipate and interpret official intervention in the marketplace.
[Gold was 1,550 and silver was 28 at the time of the writing]
I received an email yesterday from a reader asking me if the business cycle was dead.
Question. With all this unconventional monetary policy, do you think market cycles are dead as we have known it?
Here was my response (edited for grammar and spelling)
Thanks for the email.
The elites are not just keeping themselves intact, but with their central bank money that is printed out of thin air, they are consolidating their wealth.
This next point is important to keep in mind. Recall from my prior posts that the interest that is generated from the Central Bank sovereign debt holdings is transferred back to the Treasury. Even though the central banks won’t make money on the interest, the money was conjured up from nowhere and they now own those assets free and clear. They can keep the scheme going a long time.
As long as inflation remains low they can continue this scheme. It may last for years. When inflation becomes out of hand, they will no longer be able to do any QE. But the more debt that’s generated and hoisted onto the economy’s balance sheet, the more of a deflationary drag the debt burden becomes. This is why we are seeing little inflation on the consumption level. A greater percentage of the economy’s output is devoted to servicing outstanding debt. There’s just so much money left over to bid prices up.
That’s very important to think about. The elites are using this terminal phase of the fiat monetary system to gather up as much of the world’s assets as painlessly as possible with no real money out of pocket. They hoist the assets on the central banks balance sheet and they use the cheap leverage [of low interest rates] to buy up more. [All this debt creates ever-larger pools of monetary equivalents that are used to buy up more assets; only a tiny amount leaks out through higher consumption].
This is why I keep pounding on the table for people to buy income-generating assets. This is the only thing that will keep us intact as the scheme unfolds further.
As for the asset cycle and the market cycles, that has been revoked for about a decade now. As long as the central banks continue to intervene in a ham-handed way the business cycle that you and I have grown up with is dead. We can no longer look to the asset cycles and to the natural rhythm of the marketplace for ideas about investing.
It’s all about interpreting central bank policy now. This is a sad time for humanity, but it will be saddest for the vast sea of humanity that have not planned accordingly.
The world’s economy is now on a permanent IV-drip and economists are relegated to interpreting central bank actions and acting upon the likely outcomes. Gone forever is the normal business cycle.
If the central banks did not intervene this past decade, the economy and financial system would have already collapsed. There is simply not enough aggregate demand for the growing global debt pile at prevailing interest rates. The central banks are buying up the substantial demand shortfall and this has kept things afloat.
This central bank intervention can essentially grow forever and the worse the economy performs, the better it is for the elite. The elites could have already collapsed things, but it is clear they have other intentions.
Keep in mind that this is part of the conspiracy for the global financial dictatorship. Anyone who discounts this harsh reality or believes that the elites are losing control needs to be discounted heavily.
In a sign that the U.S. Fed wants to “support the markets,” there are conversations that it may begin, as soon as early next year, to add to its asset balance sheet. The amounts some analysts are mentioning look to be about $20-25 billion/mo.
However, many in the MSM do not look at this as QE, but rather a sign that the Fed wishes to support the asset markets and bank lending facilities. Shortly after the 2pm FOMC minutes were released, members of a CNBC round table, which included CNBC’s Senior Economics Reporter and Chief Fed Shill, Steve Liesman, discussed this likelihood and they all seemed resigned that the balance sheet would begin to grow again. (Take my word for it, these people are excited at this prospect as they own many of the types of assets that will benefit).
I have been observing that Bloomberg and the other mainstream financial outlets are running cover for the Fed and are concluding that the recent stock and bond market strength has more to do with trade and budget negotiations than anything else. I am telling you that this has all to do with the change in Fed policy. If the Fed loosens, then all the other central banks can begin further easing programs as there will be less upward pressure on the U.S. dollar. The euro won’t sink further into the abyss.
When taken with the sudden rebounding growth of the ECB’s, BOJ’s, and PBOC’s balance sheets, the prospect of the U.S. Fed’s actions to add Treasuries to its balance sheet, provides investors with all the reasons they need to once again go long everything.
In hindsight, I suspect that last years’s Fed tightening was done with the intent to see how far it could go before the markets folded. The answer was clearly evident; the Fed cannot tighten anymore even though the Fed funds rate is at historic lows for this point in the asset market cycle. The Fed may try to increase the Fed funds rate once more this year, but I see that as the end of this round. Moreover, I see an increasing probability the Fed will once again grow its balance sheet in order “to provide liquidity” to the market place.
Gird your loins and be prepared, Dow 30k? How about Dow 40k?
I have been warning my readers that any asset bust would be short lived and that the central banks are going to do whatever it takes to keep prices moving north. If you are bearish on any asset sector I would advise you to reconsider.
I am positioned to take advantage of this prospect. I have a short-term cash position and a portfolio of income generating assets, including real estate and day-trade stocks, as well as my long-term gold and silver. My leverage continues to shrink. There will be many opportunities in the future. Never underestimate the peoples’ desire to sell their birthright for a bowl of soup.
Look, we may think this economy looks like a sham and is manufactured, but never underestimate in the ability of the elites to keep asset prices climbing. Imagine not having the assets and being dependent on the government. As the global economy begins to accelerate to the down side and QE begins to ramp up again, the vast majority of humanity will come out the losers. Don’t be on the losing end.
The average home owner in a nice area may be worth more as prices climb, but at the end of the day he still only owns the same house.
-Trump folds on the wall and spending, and the U.S./China outlook ostensibly brightens. All the government officials are saying market supportive things. I just observe how they are all speaking with one mind. Their intention to support asset prices is remarkable.
-The RBA discusses dovishness. The PBOC is injecting massive liquidity and undertaking their own unconventional policy.
–The Fed adds to its balance sheet last week. That is truly dovish.
-If things roll over and the Fed begins to add in earnest, and the other central banks like the ECB and PBOC add to assets and inject unprecedented liquidity, the Dow could blow through 30k.
-AMZN still looks poor. Is something wrong with them?
-In order for that to happen, the total balance sheet level would have to move from $20 trillion to about $25-27 trillion
-All the ingredients for unconventional policy formation are present; low inflation (despite strong employment), low interest rates, and weak economic growth worldwide are all prerequisites for the promulgation of hyper-growth in the central banks’ balance sheets.
-The relatively strong U.S. economy is what is keeping the ECB from resuming further easing. If they eased now the euro would sink into the abyss.
-If dovish policy grows, look for residential real estate prices to further disconnect from economic fundamentals.
–The 10-year UST futures COT is pointing to a floor in yields here and a resistance in UST prices. This is shorter-term and not a change in the secular trend.
-Gold looks good, according to the latest COT report. Silver and Pl need to catch up. If we test 1,362 again, we should take it out. This price has been longer-term resistance over the past few years. Once in 2016 and again last year. If we take it out on close, 1,400 could be in the cards.
-Keep in mind that oil and gold have been doing well despite a very strong dollar.
-Oil has responded well and is up against the 100-day mva.
Take therefore no thought for the morrow: for the morrow shall take thought for the things of itself. Sufficient unto the day is the evil thereof.
Mattherw 6:34 – KJV
I received an email yesterday from a reader in London, England, in response to my prior blog post. I wanted to put Matthew 6:34 into its proper perspective. This site is dedicated to this passage as I tell the reader how not to worry. It takes work and planning. It takes overcoming dependency and confirmation bias toward the alt-media. But many read Mathew 6:34 and think that we should not bother.
Dear Mr Pirnak,
I follow your site with interest, however, I find your repeated references to being “a Christian”, reading the Bible etc. somewhat incongruous on a site mainly dedicated to financial matters (mammon).
For example, I believe it would be hard to reconcile what Jesus is reported to have said in his Sermon on the Mount, where he exhorts his listeners to “Take therefore no thought for the morrow…” etc, with the underlying theme of your articles and podcasts which seem to be advocating precisely the opposite.
Equally, I find your comments about charging low rents to some of your tenants because you are “a Christian” (most recent article) not in the spirit of the New Testament where there are several passages specifically telling people not to speak of their good works – e.g. Matthew 6:1 “Take heed that ye do not your alms before men, to be seen of them: otherwise ye have no reward of your Father which is in heaven…”.
Finally, it is not clear what you mean by being “a Christian”. The only insight into this that I have come across is in your ‘About Chris’ section where you write that you regard “the Bible as the best psychology textbook ever written”; but this is perhaps not what many people understand as Christianity (although it is very possibly the case that no one has a clear idea of what ‘Christianity’ actually means).
I hope you do not take my comments as an indirect criticism of your articles, which I find interesting and helpful, but I can’t help feeling that your references to Christianity do not add anything to the subject matter of your articles and, in fact, might detract from important points you make for people who do not share your ‘religious’ beliefs (whatever they are) or at least do not feel the need to make them public.
Charles- London, England
Here is my response (edited for grammar, etc. Voice to text is a pain).
Thank you for the email and interest in my site.
The only reason why I have my blog is because I am a Christian, or at least aspire to be a better one. I can’t be a pastor or preacher, because I do not have that expertise. I would not want to come across as an expert on the Gospels and lead people astray. But I do study a lot about what the Bible says with respect to economy and money and it says an awful lot.
For some strange reason, most Christians view money and economy as incongruent with scripture, but how we handle money and such is very important. We need to get through the day, we need to persevere, and we need to make money, because we are not supposed to live in a communist or socialist society.
Most western, formerly Christian nations are now socialist and most Christian citizens are hopelessly dependent on government. I find that very evil. They’re dependent on the government for healthcare, pensions, education, retirement, and a sundry list of other subsidies. Most Christians today worship government, even if they don’t think so. They don’t have to worry about working and saving money, because most of them now rely on Big Daddy government.
When we deal fairly with everyone we work with and interact with that’s a very Christian thing. Believe me on this one, that is rare. I don’t trumpet my works to people. But quite often my tenants are concerned, because they go month-to-month and are worried that the rents will increase or are worried I will kick them out. I tell them not to worry. There is another reason why I keep my rents low. I tell I tell them as long as I can cover my costs and make some money to live, they do not have to worry. I tell them it’s because I am a Christian. Then they thank me, shake my hand, and appreciate what I do. In today’s degenerate society I think it’s important that we tell people why we do what we do.
I find a problem with many of the Christians today, especially of the so-called remnant type. Many of them are not involved in the day-to-day that I have to deal with. When they are down in the ditches working like I am, it takes another perspective. There are a lot of deceivers, liars, thieves, and disingenuous people in my line of work. I have to interact with government and dishonest people every day.
What happens if I don’t have these properties? I am 53 and would have to look for a job. I talk about what I talk about all the time and would never be hired. My back hurts a lot now. Without these properties and the income where would I go? I have no retirement money. I haven’t paid social security for 18 years. England has universal health care. I have not had health insurance for 18 years. Most Christians are hopelessly dependent on government, so they have less worries about money. I have no dependencies at all.
I don’t put my comforts in mammon, but I don’t expect government handouts. Plus, what I do takes a lot of work and knowledge. I think many people read what I talk about and just think I’m greedy. But what I do is the culmination of over 30 years of work, experience, a lot of mistakes, a lot of lost money, and a lot of trial and error. I am not a pastor nor do I claim to be. I repeatedly tell my readers that if you are going to make your life manageable in this satanic hell hole you need to become more independent.
I have discussed Matthew 6:34 quite often on the blog. Jesus instructs his followers to just worry about today’s problems today; there’s plenty of time to worry about tomorrow’s problems tomorrow. But that doesn’t mean Jesus is telling us not to plan for the future. He tells us not to get too comfortable about the future but that doesn’t mean we can’t plan. Work toward goals, plan for goals, and if we are taken out early, so be it. But he tells us not to get too wrapped up into problems in which they may never appear.
Life is full of tragedy, most of which never happens. We have to plan for marriage, we have to plan for family, we have to plan for raising our children,. Why is money somehow mutually exclusive to planning? The Bible talks an awful lot about economy and money. Paul is careful to tell us not to fall in love with it. I totally agree as it is only a tool in the carpenter’s tool chest. If you think it’s evil, then it’s evil. If you think it’s just like anything else, then it’s like anything else.
With respect to the Bible and psychology; the vast majority of Christians have no idea what Christianity and its concepts really are. My wife is a school psychologist and I think the stuff that she teaches is complete bunk. I know enough about psychology to know that it is bunk, but it works for the Evil One. The Bible is a much better source of the human mind and its condition than anything else man can conjure up. Or should I say Satan? I talked about this in the past that psychology is a science of Satan. It works because it preys on human weakness and it treats us like animals. Look around us today. People really are like animals. That’s because they’ve been told they are. If they read the Bible they would believe something completely different. Animals look at money completely different than God’s people.
Most contaminated Christians today view money and the economy and Christianity as a false dilemma. They somehow see the Bible and money as a mutually exclusive analysis. They see it as a false dilemma.
My life is easy. This is why I have ample time to study, research the Bible, and research my expertise and relay it to others. I am not wealthy, but I am comfortable, and I have enough to live off of. I am as self-sovereign as you’re going to see. I have enough money to pay cash for a house. I have enough money to pay cash for a new car. I don’t have the concerns that 95% of the population have. I live a life of austerity and frugality, which is why I have money in the first place (most Christians spend money like it’s burning a hole in their pocket) and I know that when tomorrow’s problems appear I can easily handle them. I have plenty of time to go to the gym everyday, so i stay out of the doctor’s office. Christians have become government-dependent moral hazards. I am self-sovereign.
If I didn’t care about the Bible, I would not waste my time with my blog. I derive no benefit from this website. I only receive mostly criticisms anyway. My thorough understanding of Economics, finance, scripture and, especially, our adversary has allowed me to put my writings and podcasts together with confidence.
Satan will wear out the patience of the saints and the most high. Daniel must have seen the alt-financial media and the garbage they spew (Daniel 7:25). Perhaps if I can temper people’s expectations I can get them to think more pragmatically. I can help out in some way. God has afforded me plenty of time and enough money that I don’t have to worry about things of this world like others. I listened to Matthew 6:34 and took Jesus’s advice. I live a life free of worry. I only worry about the judgment. I think about that all the time.
I will continue writing and podcasting to my blog and dispensing my timely recommendations and advice until I have no more visitors to the site. Then I’ll hang it up.
I see no false dilemma between Christianity and money and economy, unless, of course, you choose to make one. I don’t ask for money and would never take it. I just request that you put up with my Christian worldview.
Financial Independence is important to those with peculiar views
It’s always a good thing when I hear from a young person. I am sure you already know that there are very few people who share our views on life, money, and the reason why we are here in the first place.
Our financial system was developed to keep the vast sea of humanity in a state of perpetual worry and overwhelmed with the immediate tasks of the day. If we are too preoccupied with paying the bills, how can we ever have self-awareness to contemplate our existence? If we are always working to pay our rent and necessary expenses, we won’t even have the time and energy to look up in the sky to observe the weather. Satan likes that most will never be conscious enough to question things.
Moreover, Satan looks favorably upon the alt-financial media as it spreads hopelessness, despondency, and despair. Why bother working for the future when it’s all coming down anyway? I come across dozens of videos from Australian TV, like 60 Minutes and ABC News, that pound on the calamity concept. For those who have no idea what they are doing and follow the crowd, it is a calamity. We need to tune out this garbage and bunch of half-truths. We need to move forward.
At 53, the one constant I can say to those who share our peculiar views is this; if we are dependent on others for money and wages we will always struggle. This is why I try to relay to others that we need to be independent-minded and look for ways to be free of dependency.
I wish I had developed this mindset in my 20’s, rather than waiting until my late 30’s. Regardless, it is never too late to start. Here is an email I received for a reader in Toronto. (80% of my bandwidth is from the United States, yet I receive a ton of emails from Canada).
I am 24 years old and trying to best position myself to succeed financially in the current economic climate. I want to thank you for all of your insights, I’ve learned a tremendous amount.
I appreciate your perspective on investing in real estate, but don’t know where to start. I was wondering what books/websites/etc. you would recommend reading to learn the requisite skills to begin. For instance, I don’t even know whether I should learn to invest in the Canadian real estate market, the US market, or any of the implications or prohibitions that are tied to either.
Thanks in advance,
Here was my response (edited for spelling and grammar).
Thanks for reading my articles and for the email.
Investing, especially in real estate, is essentially a relationship between money and time. The less time people have, the more money they need. The more time they have, the less money they need. Okay. With this said, I didn’t start investing in real estate until my mid 30’s. So now, I’ve been investing in real estate for about 18 years. I invest in real estate, not because it’s something I grew up with and know, it’s because I saw the advantages of owning rental properties [especially after I “woke up”].
In the United States I can generate up to $100,000 in rental income and pay little income taxes on the federal level. For some reason I always have to pay some on the state level. What I’m trying to get at is that I identified rental properties as the most efficient way for me and the average person to stay ahead of what we discuss everyday on my blog.
At 24 years old you are ahead of the game by at least 11 to 12 years from where I got started. Given this, I can imagine a scenario that if you manage your time and money the right way you can own three or four rental properties by the time you are 30. By the time you are in your mid 30s you can own a bunch of them. I didn’t start until my mid-30s.
It all starts with the first one. It’s never a bad time to get involved in real estate, however there are better times to get active than others. Obviously, I research Toronto and such, and I would stay clear for now. This is okay. You don’t have to own your place where you live to invest.
I will let you know a secret, until I moved in with my wife I rented every place I lived. I devoted all of my resources and capital that I could devote into rental properties. I rented and I invested. Don’t make the mistake of tying up your precious capital with an owner-occupied property. Rent in Toronto if that’s where you want to live and invest elsewhere.
At 24, you have a lot of energy. I would look to buy my first property where I could find positive cash flow. This means that you may have to go outside into larger concentric rings. If you stick to Toronto you’ll be competing with all those investors who don’t care about negative cash flow. Unless you’re a trust-fund kid you should care about not having negative cash flow.
I don’t know the advantages of Canadians investing in U.S. real estate, but I know that there are plenty of cash flow properties around [even on Ontario, but mathematical analysis will go a long way to help where to concentrate]. I know in Upstate New York there are tons of places that cash flow. When I first got involved in real estate investing I was investing in areas where people were laughing at me. That was the height of last decade’s bubble and the properties doubled in like 2 or 3 years. That was auspicious timing, but you have to be very more prudent in this cycle as it is in late stage. I am concerned however that with monetary policy being as it is, assets may continue to climb in certain areas, including Toronto. But that doesn’t mean you should invest there at this point.
There are plenty of books in the book stores that talk about the fundamentals of real estate investing and what landlords and real estate investors look for. When I first got involved I read many of these books. I went into the bookstore and just picked up a few of them and went through them.
But I am here to tell you that if you want to survive financially and get ahead, especially with this endeavor, you need to understand the math behind investing in real estate. This is the most important aspect, because it is all about time and money and the formulas and the math behind it reflect this. Unless you are well-versed with the math behind real estate investing you will probably make most of the mistakes that other real estate investors make and result in their undoing. So, I would pick up books that emphasize the math behind real estate. The math isn’t very complicated, but it’s something that you need to keep in your mind when you locate potential properties. Real estate investing has nothing to do with what we see on the television shows. That doesn’t make for good programming.
I would also learn how to rehab the houses. At your age you can develop a skill set in which you can do much of the work yourself. I had no experience with carpentry when I first bought my first property. But I saw how important it was when it came to saving money. You will be shocked to see how much money you can save by learning to do the work yourself. As you get older and acquire more properties and develop a higher cash flow you can then begin to turn the work over to other people.
The advantage of this is that you already know what needs to be done and can keep your costs within reason. It’s very easy for costs to spiral out of control. So you need to understand the math and you need to understand the carpentry and rehabbing; two vital skill sets. There are a lot of first-time type of repairs and have learned a lot by watching YouTube. There really isn’t any reason to buy books anymore about real estate when there’s so much free content on YouTube. Maybe do a YouTube search on real estate math and see what comes up. [I just did and there is plenty].
I wish I could say there were a couple books that you could read and get a thorough understanding, but there really is no replacement for experience. And at 24 years old you have your whole life in front of you. At twenty-four I had my head up my ass in grad school, and was completely oblivious about what I discuss on my blog.
Like I said, I don’t know the advantages of investing in U.S. real estate versus your home area. I would look for former Rust Belt areas [in Canada and the U.S.] that you could easily get a positive cash flow. These are not houses you would want to live in but, that doesn’t matter. Don’t buy real estate to invest in places you’d want to live. As long as other people want to live there then that’s a good decision. Just don’t invest in crime-ridden ghettos. I never invested in Baltimore City for instance, but I bought around the area.
I think you get the picture. It all starts with the first property. If prices fall on that first property, but you made good math analysis, then your cash flow will ride any cycles out. Real estate is all about money and time. If you do a good job in investing, other people will notice and they may give you money to invest as well. Just don’t spend too much time behind the computer trying to figure things out.
Good luck and if you have any questions just shoot me an email.
A message to Christians about real estate investing
Note: Since I discussed the end times on my blog, my bandwidth has dropped about 30%, so I don’t care anymore about attracting more readers.
Here is one final thought to my Christian readers who think that money is evil and the real estate investing is a sign of greed.
My properties are in much better shape than those of my fellow landlords. I take great care of my residences and perform the repairs myself, unless I need licensed experts to perform the work. I can put money into my properties and charge less rent, because I learned how to invest and rehab, and I know when to buy. Besides, it’s a lot of work and it can be risky as we need to overcome all the apprehensions from those around us who say it cannot be done.
I only purchased two properties ever that were not foreclosures. That means 90% of all my purchases were either REO listings or bank auctions. I stay away from standard transactions, because I do not want to get over on homeowners. Working with banks and the government is entirely another matter.
I can time the market cycles to my benefit as well. As a result, most of my properties have no mortgages. What this means is that I can attract excellent tenants and charge them rent that is anywhere from 10-30% below market. For instance, I purchased a home in 2002 and paid off the mortgage a couple years ago. This 4 bed, 2.5 bath would normally rent for 2,000, but the family that lives there is the only tenant I have ever had there. They essentially paid my mortgage and I thank them. I thank them by only raising their rent $200/mo. in 17 years. That’s right, they pay $1,400/ mo in Fort Washington, MD.
I do this, because I am a Christian and I tell them so. Never forget that a man is worthy of his wages. We can spread the good news in so many ways.
It’s about consolidating the world’s wealth and power
We have spoken about this for a long time and the economic data coming across the tape still confirm this. Despite all the monetary and fiscal stimulus, consumer price and economic growth are still anemic. While most observers will conclude that quantitative easing (QE) has been a failure or at least relatively unsuccessful, you and I know better.
If an economic “guru” like Martin Armstrong refuses to believe that there is a conspiracy for a global government and maligns the Bible, I would discount much of his analysis. It is obvious to me that there is a guiding hand, which is moving this agenda forward. What I see continuing to unfold transcends cycles and ad hoc management. This system is working as intended.
QE and the more recent types of unconventional monetary policy were specifically designed by the elites to consolidate the world’s wealth and power. In order for QE to move forward, we need an economic dynamic with little inflationary growth, fading bond yields, and subdued activity.
I see the table being set once again.
In response to yesterday’s article, I received an email from another reader in Canada.
I agree, that we are going to see a deflationary scenario. Unemployment rates in the U.S are at pretty much record lows. Pretty low here in Canada and Australia, and still we have low inflation for most items except housing and food. You talk about that in one of your podcasts.
I believe he is correct. If the money is not getting down to the end-user, the consumer, prices can only rise so much. So far, only asset prices and government subsidized sectors (e.g. housing, healthcare, education) have seen prices increase. Let’s look at the leading edge U.S. employment data.
Let’s take a look at the most recent consumer price data here in the United States.
Let’s take a look at the 10-year US Treasury yield
I have to conclude that when things turn down again, inflation data will follow suit. The debt obligations continue to grow and its servicing burden sucks the life force out of the economy. There is never a good time for tax cuts and higher fiscal spending when it grows the government deficits. Sorry, supply-siders and socialists.
Going forward, I look for the U.S. dollar to be well supported at these levels. As the global economy ebbs further into the abyss, the dollarized global debt markets and large domestic oil sector will place a floor under the greenback.
Don’t worry, all this anemic activity is great news to the central bank owners and to those who own the assets. The elites can continue to buy up the world.