Say Anything Blog

I wonder if they are aware that the not very Great Depression was caused by the government.  (According to Milton Friedman that is).

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

I’ve been wondering if they included people’s investments as savings.  I suspect they don’t.  In any case, why would people want to keep money in a bank, if the interest rate doesn’t even match the current rate of inflation?

Whistler, do you know where Milton said that?  I wanted to send it on to my father, who was a young child during that period and still thinks that FDR saved the country with his measures.

Carrick, that was my thought too.  I don’t believe investments are calculated as part of savings, especially given this from the article:

Economists have put forward various reasons to explain the current lack of savings. These range from a feeling on the part of some people that they do not need to save because of the run-up in their investments such as homes and stock portfolios

The current spending trends would make sense given how well the stock market is doing.  People are feeling really secure right now, financially.

PErsonally, I know I don’t keep a heck of a lot in savings.  I push as much of it as I can into my retirement IRA, mostly so that I can’t easily get my hands on it and spend it.  I’ve got a credit card with a big limit if some emergency comes up (need a new furnace or something), but I can pay that down right away out of my investment savings if I need to.

If you just looked at my bank accounts you probably would think I’m spending everything I make, but in reality I’m actually saving quite a bit.  I’ll bet I’ve got more saved now than most people my age do.

Rob’s recently listened-to songs:

Whistler, do you know where Milton said that?  I wanted to send it on to my father, who was a young child during that period and still thinks that FDR saved the country with his measures.

It was in his book and PBS show free to choose.  Apparently Google video took down the series again.  I had them all posted during Rob’s honeymoon.

I did download the video’s and if you I’d be happy to send you a CD with it on there.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Friedman argued that the downward turn in the economy starting with the stock market crash would have been just another recession. The problem was that some large, public bank failures, particularly the Bank of the United States, produced widespread runs on local banks, and that the Federal Reserve sat idly by while banks fell. He claimed that if the Federal Reserve had acted by providing emergency lending to these key banks or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did

http://en.wikipedia.org/wiki/Great_Depression

Woof, the larger thing from the video and book was that the Federal Reserve reduced the money supply by a third in 3-4 years.

That one factor lead to the Depression being so deep and lasting so long.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

I have a friend who managed to become a dot-com millionare, and who retired fairly young. He and his wife travels around the world when they’re not flying their helicopter up and down the coast of California or buying and restoring old cars. Too bad he cannot afford to retire:

Whatever the reason for the low savings, economists warn that it the phenomenon exists at a particularly bad time with 78 million baby boomers approaching retirement age. Instead of building up savings to use during retirement, baby boomers are continuing to spend all their earnings.

You see, since stocks don’t count as savings in Commerce Department figures--because they’re counted as an expense for something purchased rather than a surplus in income over money spent which is assumed to be put into a savings account at the bank--the millions that my friend managed to squirrel away in “savings” was actually squirreled away in stocks, not “savings"--which means he doesn’t actually have any money to retire on.

The sad thing is that stories decrying the terrible savings rate of Americans and the danger to individual retirement are as old as I can remember: I remember them during Reagan’s Administration when we started seeing more and more people buy stocks, and I remember them during Clinton’s Administration when the press kept asking him to “do something.”

Is the press that stupid? Or is there an agenda here behind the willful ignorance?

WOOF,

The foundation of nearly all of the Friedmans’ work in economics, and that of their successor monetarists, was that the money supply should remain in balance with the overall economy.  Too much money in circulation causes inflation.  Too little, and the result is deflation.

The Great Depression was really a combination of several events, the 1929 stock market crash, an ensuing economic recession, and a banking panic, or run, which started in NYC and quickly spread across the country as the Federal Reserve wrongly drained liquidity from the banking system and the economy rather than correctly adding more liquidity, that is, putting more money in circulation.

Incidentally, for all you “fair trade” protectionists out there, it was the Smoot-Hawley tariffs that effectively exported our economic and monetary calamities overseas, thus spreading even more misery.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

The Smoot-Hawley Tariff Act contributed to the Great Depression. Nd.’s three stooges in Congress would like to see it reinstated!
Also 401k’s, home equity and ROTH ira’s aren’t included in the savings rate.

I can see depression because the dems are in charge of government now.

Check out:
Goon’s North Dakota Red Neck
Goon’s World

I’ve been wondering if they included people’s investments as savings.  I suspect they don’t.  In any case, why would people want to keep money in a bank, if the interest rate doesn’t even match the current rate of inflation?

They don’t include investments in savings rate stats, and they shouldn’t.  Savings are different than investments.  People/Families need both. 

If some economic downturn or event would occur its savings that would be necessary to ride it out. 

On the flip side if the US dollar were to crash a person holding stocks/real estate would be able to protect their purchasing power. 

I think most Americans are over confident in the stock/real estate market, and there is no substitution for savings.

"All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit and circulation.”
- John Adams

From Nick Barisheff:

Many investors and their advisors subscribe to the buy-and-hold strategy, believing that equities always go up.  They like to refer to the past twenty years as proof that this is the case.  However, if you look further back and examine more than just the last cycle, you will likely develop a different viewpoint.  Imagine that you were 60 years old in 1968, and quite content with your buy-and-hold philosophy; the previous 20 years were good ones for equities and bonds.  But if you stayed with that same strategy for the next 20 years, you would have had a difficult retirement.  You would have lost money in bonds, and it would have taken 17 years for your equities just to break even.  After taking into account the eroding effects of inflation, the purchasing power of your investments would have suffered substantially.  Although eventually the buy-and-hold strategy would have worked, you likely didn’t live long enough to make up your losses in the next cycle.

"All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit and circulation.”
- John Adams

Troy, it seems that Nick needs a little more investment savvy.  The buy-and-hold stategy works with well-managed funds since they do all hard work.  If you like bonds, buying and holding until maturity reducss the market fluctuations to nil.  Gold and silver have also been good to me probably another no-no from Barisheff.

The Supreme Court is a bunch of black robed tyrants

Oops I didn’t link, Nick is actually writing about Gold.

Here is the link.

I included that short text because I think there exists a large percentage of investors who park their money in the market and do not actively monitor its progress and confuse saving with investing.

"All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit and circulation.”
- John Adams

Doc’s coment on gold made me think of a story I heard.

There was a stock trader in NYC who was young and confident both in his abilities and in stock market performance.  He spent alot of time with a particular client that had considerable precious metals.  An elderly gentleman that had escaped Nazi persecution in Poland and gotten to America where he had prospered.

The young trader explained many times how investing in mining companies and gold stocks could tap into the returns associated with gold while not holding the metal.

The client listened patiently, but after the third or fouth pitch, he shook his head and said, “Ahhh the young always believe they are right, but let me tell you this.  Sometimes it is a good thing to have enough gold on hand to bribe the border guards.”

I love old school wisdom.

The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.

Undoubtedly, you are right, troy, that people want to park their money in the market and then forget about it.  That is not only a huge mistake but also unworkable especially if most of your savings in IRAs from which you must be making annual withdrawsls That there are also tax factors goes without saying.  My tax considerations are in my non-ira monies which are mostly in tax exempt securities.

Playing the market can be both fun and profitable if you have the right consultants and information.  The markets are not static so investments must be periodically reviewed.

The Supreme Court is a bunch of black robed tyrants

I review my investments once a year.  At that time I usually diversify a bit, and modify the amount I put away.

I’m just now getting to the point where I have enough invested to really be able to consider a lot of options.

On the flip side of the buy-and-hold argument, day trading isn’t all that wise either.  Not for people wanting to play it safe anyway.

Rob’s recently listened-to songs:

gliby, my precious metal is all in bullion so I guess it could also be available to bribe ‘tha guards’.  Many of the worlds peoples carry around their gold on chains: neck, wrist, ankle.

The Supreme Court is a bunch of black robed tyrants

Just forget about the future and enjoy another sample of micro brew like Troy_Pineri does!

I just saw this link over on Instapundit.  It had this to say about our so-called savings rate:

The rate that does not include the $3.2 trillion Americans have socked away in 401 Ks and other pre-tax savings plans.

For the purpose of the discussion I think those investments are every bit a part of our savings rate as a passbook.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.