Inflation Blindfold Conspiracy

Right now we have at least 14 million unemployed and growing. There is a high probability that unemployment could exceed its historic norm of 5 percent to 6 percent for several more years.

Our consumer price index (CPI) is way up. Our consumption of food, energy, clothing, recreation, education, transportation, toys, cosmetics, etc. makes up 58% of the Consumer Price Index with the housing market making up the other 42% and we know housing is down.  I don’t know if our leaders have gone to the grocery store lately or do a family budget and look at food as a line item but my family does  and what we are seeing is that prices are going up.

Everything is going up as we track our budget whether it’s education, health or life insurance, medical care, or our most precious groceries and water.  Yet the government keeps telling us there’s no inflation. Where are they shopping and are they doing it blindfolded?

The formula is quite simple and no wool pulled over your eyes should be able to keep you from the truth; even if media assists our government in this blindfolding experiment. First, our government borrows money from the Federal Reserve.Then the Federal Reserves says “sure we can help you out” and they loan the government some money. However, the Federal Reserve does not have any ‘real’ money but have control of the monetary system in this country and get the Treasury to fire up the printing presses and manufacture some money; or debt notes if you prefer.

The final stage is is where these dollars (debt notes) are created out of thin air and it gets its value by draining from existing money. Every time this new money or debt notes are manufactured and released, it takes away some of the value of the current money you’re holding; in essence it is stolen.

An example of how this effects you would be; you have $10,000 in a CD or the bank and most prognosticators agree the real effect of inflation is about 9.6%. Some even believe inflation it is running as high as 13%. However, we’ll stay with 9.6% to be conservative; perhaps even naive. So if you have this $10,000 in a CD or bank it would look like this

The Value of $10,000 with 9.6% inflation imposed on it for 5 years.

Ultimately the purchasing power of your savings; never mind the little interest it might acquire as it would have taxes to lessen it out. The purchasing power would be reduced by 36.8% in just five short years. By 2016 you will be left with just $6,323 out of your original $10,000 and have lost $3,677 just by doing nothing. This means things are not always about return which is nice and should be sought in tax-free environment going forward. But equally important is to consistently add to what you have and not lose anything. In other words, you need to protect principal, consistently and regularly add to your pot and try to eliminate as much tax imposed on it as legally possible. This 3 step process is a simple formula for wealth but many will not take advantage as it requires self-discipline and “know-how” on protecting principal and eliminating tax.

We teach seminars on smart money management and how to acquire corporate credit to fund your business aspirations and really succeed in what is now some of the toughest years in our country’s history. You have to ask this question – am I taking the right steps necessary to be able to retire? If you are not you will be working for the rest of your life and never taste true freedom which is to work on your own terms and time frame or choose to not work at all and know your family. Know  your family folks; how many of you can truly say you spend quality time with them and “know” them. I bet the number is resoundingly LOW.

We can help you as it is our life’s mission to reduce retirement poverty in this country and get those on track who will take the ” RED” pill rather than the “BLUE” pill (“ignorance is bliss”) and choose to not stay blindfolded in the dark but wake up.

James Burns

(866) 544-8825 Ext. 1 Office

Domestic Financial Terrorism – How do we defend?

The level of destruction on our financial system is incredible compared to what even Timothy McVee did as a domestic terrorist. You have to ask yourself who do some of these bankers and investment firms work for when you look at what they’ve done to the once wealthiest nation in the world.

Right now we’ve got $2 trillion in short-term debt that has to be refinanced this year of 2010 and China, India and Russia are not buying. This is not counting the extra deficit spending which should top $1.35 trillion this year…more or less. The fact the countries we’ve relied on are not buying means we have to fire up the printing presses again. We would already acknowledge that we are at a 10% inflation but the money folks have been using tricky phrases like “core inflation” which ignores half the things we spend money on so that way they can keep the numbers looking low.

A great book called This Time Is Different: Eight Centuries of Financial Folly by Carmen Reinhard and Kenneth Rogoff shows that EVERY TIME a nation’s debt went above 90% of GDP or Growth Domestic Product…the nation failed. The book studies 25 countries over 800 years and there were NO exceptions to the 90% rule. Every nation that ran their deficits to this 90% ratio is now off the map or turned Third World.

Right now, the US is above 90% and there appears no way to bring it down for decades unless some obscure genius comes out of the woodwork as they are not in the White House, Treasury or Fed.

It is unclear what Americans will do, especially for their retirement as the very tool our bankers use against us (stock market) they expect us to hand over our life’s savings and just be ok with negative 30 or 40% loses. You know, its just the market reacting and it goes up and down. Why is that Ok? Why should we accept losses that take us forever to recover just to get back where we started be considered alright?

We need to redo some of the Healthcare Reform Act that President Obama so valiantly promoted before 2013 when our investments could be ravaged with a sur-tax just because we are in a certain income bracket and that bracket is not hard to be in if you live in a state with a high cost of living. Where is Sarah Palin and the Tea Party when we need them.

It is time to look at guaranteed opportunities that does not go down when the market goes down. When Wall Street was once honorable a man named Benjamin Graham (mentor to Warren Buffet) extolled what was an investment. It preserved principal and gave an adequate return. We need to get back to this simple idea and quit trying to find home runs since base hits get you to home plate just as well.

We also need tax-free strategies to weather the storm our own government and their brainy bankers have left before us. It was like turning on the gas to an already smoldering economy.

James Burns

“The Sensation with Inflation”

There is a lot of confusion as to where we are headed right now so I thought I would break down the different flations and maybe we can all decide which one is the fit right now.

Inflation is a where your currency buys less due to a rise in the price of goods and services; accordingly, inflation is the erosion in the purchasing power of money. Over time, as the cost of goods and services increase, the value of a dollar is going to fall because a person won’t be able to purchase as much with that dollar as he/she previously could.

What cost $29,900 in 2000 would cost $37031.75 in 2008. Also, if you were to buy exactly the same products in 2008 and 2000, they would cost you $29900 and $24235.11 respectively.

As a harbinger, gold recently rallied above $1,000 an ounce and many experts think that this is partly due to the Fed’s continued money-printing campaign over the past year will cause the dollar to weaken even further than it already has.

That’s putting upward pressure on other commodities. Oil is trading around $71.50 a barrel, an increase of about 20% over the past six months. The prices of sugar and copper have shot up.

Deflation: A decline in price levels caused by a decline in the supply of money or credit. Deflation often includes the side-effect of enlarged unemployment because of the lower demand for goods and services in the financial system.

Stagflation: High inflation and high unemployment occurring simultaneously.

Taxflation: aka bracket creep the gradual movement of income into a higher federal income-tax bracket as a result of wage and income increases intended to help offset inflation. It can also affect the liquidity of an estate by increasing the estate tax burden.

Example – single person with estate worth $5,000,000 and in 2009 that would cost the estate $1,200,000 or represent shrinkage of 24%.

If they pass away in 5 years or 2014- and was growing at 8% per year. The estate will have grown to approximately $7,346,640.38 the federal estate taxes would be $3,893,719 and represent shrinkage of about 53%.

It looks like we have a combination of them all but I would say Taxflation and stagflation are a good fit but it really is anyone’s guess.