The Only Debate Topic That Matters

submitted by jwithrow.
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Journal of a Wayward Philosopher
The Only Debate Topic That Matters

September 29, 2016
Hot Springs, VA

Loading up the nation with debt and leaving it for the following generations to pay is morally irresponsible. Excessive debt is a means by which governments oppress the people and waste their substance. No nation has a right to contract debt for periods longer than the majority contracting it can expect to live. ” – Thomas Jefferson

The S&P closed out Wednesday at $2,171. Gold closed at $1,327 per ounce. Crude Oil closed at $47.12 per barrel, and the 10-year Treasury rate closed at 1.57%. Bitcoin is trading around $605 per BTC today.

Dear Journal,

Nearly one-third of all Americans – almost 100 million people – tuned in to watch the first presidential debate earlier this week. This represents an increase in viewership by nearly 40% from the 2012 presidential debates, and it almost rivaled television’s biggest draw – the Super Bowl – which received 112 million viewers last year. Apparently the debate was aired on television throughout Europe as well.

I see these numbers and the first thing that pops into my head is a question: how in the world do the ratings agencies know how many people are sitting on the couch in front of a given television?

I didn’t spend too much time with this, but all of the numbers I have seen reference “viewers” and “people”, not “households”. They are very specific about this.

I can’t help but think about poor Winston in George Orwell’s 1984 – he sits down in front of his telescreen and while he is watching it, it is also watching him… Continue reading “The Only Debate Topic That Matters”

Becoming Antifragile

submitted by jwithrow.

Journal of a Wayward Philosopher
Becoming Antifragile

September 16, 2015
Hot Springs, VA

The S&P closed out Tuesday at $1,970. Gold closed at $1,102 per ounce. Oil closed at $44.59 per barrel, and the 10-year Treasury rate closed at 2.18%. Bitcoin is trading around $227 per BTC today.

Dear Journal,

Wife Rachel cornered me the other day: “I saw what you did in your newest post!”, she said in an accusatory tone.

“Whatever do you mean, honey?”, I asked innocently.

“You talked about Madison buying me a walker when I am old!”

I couldn’t contain my laughter. It’s the little things that I find most amusing.

Last week I delved into global finance and speculated that a currency crisis in the U.S. was on the horizon. It is just unreasonable to create trillions of dollars from thin air on a regular basis and expect the world to accept those dollars ad infinitum. I observed that government has no intention of ceasing its monetary escapades, thus currency ruin is inevitable. Continue reading “Becoming Antifragile”

How to Insulate Your Portfolio from the Fed’s Financial Destruction

submitted by jwithrow.zen garden portfolio

Journal of a Wayward Philosopher
How to Insulate Your Portfolio from the Fed’s Financial Destruction

January 16, 2015
Hot Springs, VA

The S&P opened at $1,992 today. Gold is up to $1,267 per ounce. Oil is back down under $47 per barrel. Bitcoin is checking in at $210 per BTC, and the 10-year Treasury rate opened at 1.72% today. Famed Swiss economist Marc Faber went on record at a global strategy session this week saying he expected gold to go up significantly in 2015 – possibly even 30%.

Yesterday we examined the Fed’s activity since 2007 and we noticed $3.61 trillion dollars sloshing around in the financial system that didn’t exist previously. Then we put two and two together and realized the answer was four… not five as the mainstream media claims. We came to the conclusion that the entire financial system is now dependent upon exponential credit creation out of thin air and that financial destruction cometh once the credit expansion stops.

Today let’s discuss some ideas for insulating our balance sheet from the ongoing financial crisis and the inevitable crack-up on the horizon.

The first and most important thing to understand is the difference between real money and fiat money. The Fed (and other central banks) issue fiat money at will – created from nothing. Dollars, euros, yen… none of them are real money; they are all fiat. These currencies do not represent real work, savings, or wealth and they certainly are not backed by anything of substance.

Most of these currencies exist as digital units out in cyberspace but if you read one of the paper notes in circulation it is completely honest with you:

”This note is legal tender for all debts, public and private.”

That means central bank notes are really good for paying debts but that’s about the extent of it.

All of these currencies depreciate over time in terms of purchasing power because they have no intrinsic value and their supply is unlimited. Even when a currency is “strong” as the U.S. dollar is currently, it is only strong measured against other currencies. Measure the dollar against your cost of living and you will see the real picture.

The point is we can’t trust central bank money.

Which leads us to the first way to insulate your portfolio from the Fed’s carnage: convert fiat money into real money – gold and silver. Gold and silver were demonetized in the late 60’s and early 70’s and the establishment has been downplaying their significance ever since. But there is a reason every central bank in the world still stockpiles gold. Gold and silver have been money for centuries and that is not going to change in a brief fifty year time span. Maybe one day cryptocurrencies will take the torch from gold and silver but that day is not today.

It is wise to maintain an asset allocation of 10-30% in physical gold and silver bullion. Precious metals will skyrocket in price measured against fiat currency as the Fed’s financial destruction plays out but in reality they are just a store of value. Precious metals will skyrocket in price only in terms of the fiat currency that is depreciating so dramatically.

Energy and commodity stocks, especially well managed resource companies, stand to boom as the monetary madness plays out as well. This is not a long-term strategy, however, so any gains captured during the commodity boom should be converted into hard assets or blue-chip equities after they have finished falling in price. There is enormous risk in the stock market so equities should make up a smaller portion of your asset allocation: 10-15% perhaps.

Despite everything said about fiat currency above, cash should still make up a large percentage of your portfolio; probably 20-30%. Cash loses purchasing power over time but it is still the primary medium of exchange so it is necessary to remain liquid. Ideally you should keep 6-12 months worth of reserve funds in cash and any cash above that threshold can be used to acquire assets as they go on sale. And plenty of assets will go on sale when the credit expansion stops.

The remainder of your asset allocation should be in real estate, provisions, other hard assets, and anything else that improves your quality of life. With all of the unjust systems and institutions to contend with it is easy to forget most of us are far richer than the wealthiest individuals living at the beginning of the 20th century. We have central heating and air in our homes, reliable auto travel over long distances, affordable air travel to anywhere in the world, way too much entertainment, cheap access to the internet which opens the door to all manner of information/commerce/entertainment, pocket-sized computers that double as telephones, and many other modern comforts that would be considered futuristic luxuries by the wealthiest of the wealthy one hundred years ago.

After properly aligning your portfolio to weather the Fed’s financial storm, focus on aligning your life to maximize fulfillment, purpose, and peace of mind. After all, your most valuable asset is time and time cannot be measured in financial terms.

More to come,

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Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” and the fiat monetary system please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

The Case for Gold and Silver Bullion

submitted by jwithrow.Gold Bullion

While gold and silver prices have declined in 2013, the fundamental case for owning gold and silver bullion is still growing.

The mainstream media has been quick to pronounce the death of the precious metals as an asset class with their evidence being the recent price depreciation of both gold and silver. Theirs is a very short term and self-serving view; the long term fundamentals have not changed.

The Federal Reserve did taper its money printing, but guess what? The creature from Jekyll Island is still creating $75 billion new dollars every single month to purchase U.S. Treasury bonds and mortgage backed securities. Meanwhile, Congress has quietly done away with the sequester spending ‘cuts’ and will continue to spend gargantuan amounts of money in 2014 – money they do not have.

What’s so humorous about this is the fact that the sequester did not cut any real spending in the first place – it simply curtailed proposed future spending increases. We suppose the thought of curtailed spending increases kept the Congress critters up too late at night.

And it’s not just the U.S.

Japan has promised to continue to keep their central bank money printer on turbo gear. Estimates suggest that the U.S. and Japan together will create nearly $2 trillion over the next 12 month period. Meanwhile, the Eurozone experiment is still on the verge of blowing up and not one single G-20 country operates with a balanced budget.

Simply put, the economies of the developed world have run up massive amounts of debt that cannot possibly be paid back in full. The massive debt has been serviced primarily by central bank funny money up to this point, but we are quite sure that the funny money policies cannot possibly last forever. And the longer the printing presses continue to run, the less valuable our paper currencies will be.

That’s why we adamantly believe that gold and silver bullion will be a vital part of a diversified portfolio in the coming years as the economic endgame of central bank funny money policy plays out.

Now, we don’t think it would be prudent to hold 100% of one’s assets in gold and silver. We look at the precious metals more as insurance against destructive monetary policies. Oh, and we should probably clarify that we mean physical gold and silver bullion in your possession, not an ETF.

So if you expect the value of your paper currency to increase then you may not be interested in holding gold or silver bullion. But if you expect the value of your paper currency to decrease then purchasing gold and silver bullion may be very wise.  Given the long term fundamentals, we would suggest that the value of our paper currency is ultimately only going to go in one direction.

And that direction is back to paper currency’s inherent value…

Buy Gold Online

Steps to Self-Sufficiency

submitted by jwithrow.Finance-for-Self-Sufficiency

This list is certainly not comprehensive but it is our hope that it serves as food for thought.

1. Become money-conscious

Before you can begin to create self-sufficiency and build wealth, you must become money-conscious. Wealth does not come to those who are careless or lazy and it does not come overnight with a stroke of luck. You must begin to recognize that nearly everything that you do has an impact on your self-sufficiency and accumulation of wealth. You must begin to recognize the rules of the universe as it relates to money. And you must begin to take action immediately. Begin to track your expenses tirelessly and eliminate unnecessary spending where possible. This does not require you to become “cheap” but it does require frugality. Once you become money-conscious you will identify ways to reduce your expenses and you will free up additional income to use towards the attainment of self-sufficiency.

2. Consider contributing to a 401(k) if your employer matches your contribution

After assessing your income and expenses and getting your financial house in order, consider contributing to a 401(k) up to the employer match percentage each month. It is important to review the vesting requirements (time of employment required before you can cash out the matching contributions) and determine whether or not you will be at this company for that length of time before deciding to contribute to the plan. The employer match will serve to multiply your deferred savings and your 401(k) contribution will reduce your taxable income. We would not recommend contributing any more than the employer match rate as 401(k) plans are very limited and the rest of your income would better serve you elsewhere. Be aware of the fact that you will have to pay a 10% penalty to the IRS if you cash out the 401(k) prior to retirement but the tax shelter provided will serve to offset some of this penalty. With that said, we would suggest that a 401(k) plan is not a very strong part of a retirement plan and that the funds accumulated would probably better serve you as capital to be deployed once you have developed a more specific investment plan. The 401(k) will allow you to automatically put aside a very small amount of income for use once you are farther along on your road to financial freedom. This vehicle may not be suitable for everyone, but it may be useful if you are still working on creating a sound investment or business plan.

3. Develop a plan to eliminate all consumer debt

You must eliminate all consumer debt before you can effectively begin to build wealth and your first target should be credit card debt. The interest rate on your credit card, in all likelihood, will far outweigh any return on investment that you could consistently generate with your money. So develop a plan to pay all credit card debt off as soon as possible. The most effective way to do this is to determine exactly what dollar amount you can afford to pay towards your credit card debt with each paycheck, and to pay that amount immediately as soon as your paycheck is received. Do not leave yourself short on other bills but make sure that you are paying a sizeable chunk of debt down each month at the same time. If you have multiple credit cards then you should pay the card with the highest interest rate off first. Once all credit card debt is eliminated, move on to the next highest interest rate obligation that you have. The one exception to paying down the highest interest rate debt first is if you have a smaller obligation that could be paid off very quickly in order to free up additional cash flow that could then be directed towards the higher interest debt. While eliminating consumer debt may seem like a long and slow process, be patient and persistent. Imagine a world in which you have no consumer debt to pay and imagine how much extra money you will have at your disposal once you are free of consumer debt.

4. Develop a plan to eliminate or reduce mortgage debt

This step could possibly be interchanged with the next steps depending on your situation but the idea is to either eliminate or reduce your monthly mortgage debt significantly now that you have additional free cash flow from eliminating consumer debt. While the many possibilities cannot be described in this article due to the variety and complexity of mortgage types, we do discuss mortgages in more detail here. Broadly speaking, assess your mortgage and determine if an action can be taken to enhance your financial situation (reducing the LTV, refinancing, etc).

5. Build a six month cash reserve

If you have not already built a cash reserve then now is the time to do so (if you have dependents then you may want to consider making this step two). A cash reserve should be extremely liquid so that you have access to the money in a timely manner in case of emergency. A standard checking account would serve this purpose. Interest bearing savings or money market accounts are acceptable choices although you can rest assured that the interest paid on these accounts will be negligible. Cash under the pillow is another option. Gold or silver bullion could be a wise choice but you will probably want to have direct and immediate access to some cash. While six months is a good benchmark, you could consider building a one year cash reserve as well. Just make sure that you are prepared to sustain yourself and meet obligations in case of an emergency.

6. Set up an IBC whole life insurance policy

If you are unfamiliar with the IBC (Infinite Banking Concept) strategy then this step will require some research before you are comfortable with the idea. Now, do not be put off by seeing this recommendation for ‘life insurance’ – learning about an IBC policy will completely shatter your preconceived notions about what life insurance can do. The reason you have not heard about this type of policy before is because Wall Street would go out of business very quickly if the masses learned and implemented this financial strategy. An IBC policy is about building an ever-growing pool of capital in a way that is advantageous in both the tax and liability realms. The IBC strategy is not about death benefits and it is not about rates of return – these are just bonuses.

When structured properly, IBC policies allow you to funnel income into the policy rather than a bank account. Unlike your bank account, your life insurance cash value is secure from creditors, bail-ins, and bank runs. The cash value also generates a small rate of return without sacrificing liquidity – you can access your cash value tax free at any time for any reason. The implementation of this strategy does require a long-term commitment because it will take on average 8-10 years before an IBC policy ‘breaks even’ internally (cash value equals premium outlay).

Please feel free to email us if you would like more information on this concept.

7. Build diversified income streams in fields that interest you

At this point you have done your due diligence and are in a financial position that will allow you to work on pursuing income in ways that are enjoyable to you. If you are already engaged in work that is satisfying and meaningful to you then this step may not be relevant to you. But if you are like most of us who simply tolerate or maybe despise our job then now is the time to make changes. And even if you are content in your current profession it may be wise to build side businesses as economic conditions are tentative at best at this juncture in time.

Start by deciding what it is that you would like to do with your time and then develop a plan to generate income from your chosen field. While this is an embarrassingly simplistic statement, it is entirely possible to generate income from any good or service for which there is a market. Build a big business. Build several small businesses. Buy rental properties. Become a freelancer in your areas of expertise. Whatever your plan is, the important thing is to engage in work that is enjoyable and meaningful to you – income is useless if it comes with the sacrifice of happiness.

8. Convert income into real assets

Once you have developed a source or sources of stable income then it is time to convert this income into real assets. The most widely accepted choices would be gold and silver bullion, real estate, and/or farm land but you are not limited to these. Real assets could also be things that increase your household’s self sustainability such as alternative energy sources or a family garden. You could also choose more speculative items such as art work or a wine collection but these assets would be much less liquid and thus much more risky (well, the wine would be liquid but in a different kind of way). If you venture into the realm of these speculative investments then make sure that you have a portfolio consisting of the more widely accepted assets as well.

Conclusion:

Note that we wittingly omitted any mention of investing in paper equities (stocks, mutual funds, exchange-traded funds, bonds). The first reason for this is that the financial services industry has sold this type of investment as the only one suitable for retirement which is a lie. There may be a place for this type of investment within your portfolio but it will require much diligence and should serve only as one asset class amongst several within your portfolio. Holding a mixture of stocks across different industries is said by the experts to be the key to diversifying your portfolio. We would suggest that holding a mixture of stocks, real estate, gold and silver bullion, etc. would be the key to a diversified portfolio and that holding only paper equities would be terribly risky. So if you do choose to include equity investments in your portfolio please make sure that you do your research and that you also diversify amongst other, more tangible asset classes as well.

Think of real assets as a ‘backing’ to the cash value of your IBC whole life insurance policy that we discussed in step 6. By building a significant pool of capital (IBC policy) and solidifying it with real assets you are doing exactly what the elite central banks do – except without resorting to fraud. The central banks, Wall Street, and the power elite in general have done a wonderful job of convincing the masses that the key to success is to accumulate exclusively stocks and bonds. And this is true. But what they did not disclose to the masses is that such a strategy is key to the success of the central banks, Wall Street, and the power elite, not the masses themselves.

We hope that this brief article serves as a guide towards maximizing your personal liberty, resiliency, and self-sufficiency.

Always remember that happiness, fulfillment, and calmness of mind and spirit are the most precious of commodities and be mindful not to lose sight of these ideals on the road to building wealth and obtaining self-sufficiency. Also, never be afraid to follow your heart and stand on your principles; this life is but a journey in search of experience and wisdom, and that journey is best undertaken to the beat of one’s own drum.