The Great Depression Online




Great Depression Online Archive Issue:

Showered with the Riches of their Genius

Great Depression Online
Long Beach, CA
August 04, 2009

Inside This Issue You Will Discover…

*** The Tried and True Way to Build Wealth
*** Learning from the Past
*** Showered with the Riches of their Genius
*** And More

The Tried and True Way to Build Wealth

“I’m praying, ‘God, please don’t encourage American households to save a lot more just yet,’ said Nariman Behravesh, chief economist at IHS Global Insight.”

The man was quoted in an AP story last Friday titled, U.S. Economy Appears Poised to Start Growing Again, and was commenting on the economy’s prospects for recovery.  Once again, to mainstream economists, it all comes down to consumer spending. 

In their shortsighted view of the world, because consumer spending accounts for 70 percent of the U.S. economy, consumers must spend money – and lots of it – to grow the economy.  If consumers don’t spend…the economy doesn’t grow.

Still, in spite of what some dismal economist tells you, we’d recommend against buying stuff at the moment…even if you’re told you’ll be doing your part to help grow the economy.  There’s a good chance you’ll go broke before the economy grows enough to bail you out.

~~~~~~How to Buy Gold Low~~~~~~

Gold closed yesterday at $957 an ounce.  With all the monetary and fiscal shenanigans going on it’s fulfilling its role as a safe-haven for investors.  But before you run down to your local coin shop and trade in your cash for Krugerrands you should take a moment to learn about the spot price and the premium you’ll pay.  Learn form an expert with 20 years of actual experience buying gold low, how to acquire it below 50% of spot price.  How to Buy Gold Low.

~~~~~~~~~~~~~~~~~~~~~~~~~

The tried and true way to build wealth is to save more money than you spend; not spend more than you make.  And in a depression, spending money is an especially foolish thing to do.  To the contrary, the prudent thing to do is to save money – and hoard it too – particularly since unemployment is still rising.

If you lost your job right now, finding another won’t be easy.  Just ask anyone who’s tried looking for a job lately…no one’s hiring.  Should you lose your job, you’ll be glad you stuffed some cash in your mattress rather than charging a flat screen to your credit card to help boost the nation’s GDP.

Learning from the Past

Just ask Carl Rupp and his neighbors who “…follow the old rancher’s creed: ‘Keep your money in your pocket.’”

“Rupp has farmed his whole life,” reported an AP story on Sunday.  “He lives in Goshen County, a rural spot along the Nebraska line where cattle outnumber humans 16 to 1 and you can still see the ruts cut by wagons that hauled pioneers along the Oregon Trail.  ‘“We’re very conservative,”’ said Rupp, 62.  ‘“We don't go out too far on a limb.’”

“That prudent financial bent, matched with the high prices paid for crops and energy in the past few years, has largely protected Goshen County and a core group of several hundred other counties in 10 states from the recession’s chokehold.”

Traditionally, farmers are particularly adept at amplifying boom and bust cycles.  When demand increases, and prices rise, it only takes a grow season or two for them to borrow money, increase production, and have an abundant harvest.  Then, with a glut of grain, prices inevitable drop and the loans go bad.

But, it seems with this cycle, farmers and ranchers, as apposed to land developers, have learned from the past…

“As the rest of the nation was riding the mortgage bubble, many farmers and ranchers … who suffered through the agriculture crisis of the 1980s took on comparatively little debt.  And when the recession hit, it didn’t dampen demand for the row crops grown on the Great Plains.”

Let’s hope during the next housing boom – if there ever is one – developers learn from the past, and don’t go broke cultivating houses like row crops as they did during this latest boom.  For the fields of these repetitive dwellings that were planted across Southern California’s Inland Empire are as offensive to the eye as they are to the soul.  What’s more, people will have to live in them for a long time…for some, it’ll be forever. 

Showered with the Riches of their Genius

For the now, consumers aren’t spending.  They’re saving. They’re building real wealth.

“With people spending less,” said AP, “Americans’ savings rate rose sharply -- to 5.2 percent in the second quarter, the highest since 1998.”

And while this increased savings may limit the prospects of a quick recovery…in GDP terms…ultimately the country will be all the better for it.  For future economic growth will be founded on a solid base of accumulated savings rather than the easy consumer credit that has fueled the economy for the last two decades.  Remember, it was this easy consumer credit and its flipside – debt – that got us into this mess to begin with.

Until the economy recovers, however, the government, through their omnipotent genius, will continue to spend the tax receipts of future generations to somehow bring about prosperity.  They believe if consumers aren’t spending, someone must make up the difference…and that’s what massive deficit spending is for.

“When we have recovery established, led by the private sector, then we have to bring these deficits down very dramatically,” said Treasury Secretary, Timothy Geithner on ABC’s “This Week” on Sunday.

Until then, however, we’ll be showered with the riches of their genius.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  This economy stinks.  But that doesn’t mean you should just hang your heard mope about waiting and hoping for an eventual recovers.  Instead you should redouble your efforts and shoot for the stars.  In fact, one ambitious fellow, who’s a mentor to 4 billionaires has gone as far to swear under oath…  “I Can Teach You to Attract Wealth – in as Little as 30 Days!  Guaranteed!”  We’re a bit skeptical ourselves.  But heck…it’s at least worth a read:  The Billionaire In You.

 

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