Of course you can’t just walk into a store and buy a gun. You need a permit and special training and appear to be an upright citizen. At least that’s the way it was, in Arizona they just passed a law to make it so that anyone can buy a gun without a test, course or permit.

Now this is really odd! Why in the world would they let just anyone carry around dangerous weapons?

The running suspicion is that the economy could get uglier. If things to get uglier there could be more civil unrest and although it seems bizarre to pass such a law, maybe it’s so people can protect themselves in case things get that bad.

It still doesn’t seem to me make sense, so far the economy hasn’t caused any riots in the US at all, as far as I know.

It was interesting to read because I had never heard a comment like that before in the future of the dollar discussions. One of the foremost authors on the issue of the dollar collapse is Richard Duncan, who wrote a book called, “The Dollar Crisis” several years ago. I actually read half the book a while back but never finished it. It is very heavy into economics, not an easy read at all for the average person and had to read some parts several time to understand it.

Getting back to the military comment, according to this reader, the US has the strongest currency (I don’t agree with that part.) because it has the strongest military. He says currency is ultimately defended by military force and will be in the future if necessary. He says that economic competition will be destroyed to keep the US’s superiority. Ergo a strong US military will hold up a strong US dollar.

While I agree that military events often have much to do with money and economic power, I don’t agree that the US military power can do anything to stop the decline of the US dollar. Sometime, sooner or later, all the money printing, bond issuing, treasuries and overall debt will come home to roost and massive inflation will kick in. At least that’s the only logical conclusion I see for the future.

There are 2 kinds of money problems:

1. Not enough money
2. Too much money

Which problem do you want to have? It’s amazing to think that having too much money could be a problem but it is a problem. What do you do with it? It can become a huge responsibility.

• Do you leave it in savings?
• Do you invest it?
• How do you invest it?
• Is it losing value or growing in value?

Imagine the stress of having millions to manage. You could just drop it into bank savings accounts if you really didn’t want to be bothered with it. But then your wealth may be losing value to high inflation, especially in current economic conditions, and who wants to lose wealth?

Even having it in savings is an investment choice because you are investing in US dollars if you live in the US or investing in Euros if you live in the EU. If the currency losses a lot of value or becomes worthless, you get wiped out.

If you invest it you can risk losing it or parts of it. Maybe the best thing would be to invest in several different asset classes and probably re-invest in whatever business you are running to generate the income.

I imagine having a lot can comes with a lot of pressure, especially if you fear losing it. For me, I don’t want to be rich or poor. Financially free with a good earnings to enjoy life, that’s enough for me. I’m more concerned with doing something fulfilling and being good at what I do.

When the price of energy goes down, our wealth goes up. For most people (unless you won energy sources), when the price of energy goes up their wealth comes down.

Economist Stephen Leed talks a lot about the relation of wealth to energy also, especially in his book, “The Coming Economic Collapse” and even more so in its sequel where he says we won’t have the energy to run the machinery necessary to extract more energy.

Basically our whole society is based on sources of energy and heavily dependent on oil and things like this. I remember a couple years ago when oil was surging past $100 a barrel and it had a big effect on business expenses. A lot of businesses were having trouble because transportation of products and goods and become to expensive because of gasoline costs.

Leeb believes that in the not so distant future we will have an energy shortage, more specifically an oil shortage because oil reserves at this point are no longer growing and now shrinking. More importantly, the east is growing into a modern comfortable lifestyle owning more cars, nicer houses and energy driven products.

So far, governments haven’t taken any serious measures or given any real incentives to start building a new infrastructure for alternate energy sources. If we did hit an energy crises, in other words, a shortage of oil, it would take years to setup the infrastructure, even if the technology was ready for alternate energy sources like solar and wind.

Here are some tips elaborated in the book:

• Never show emotion. Be patient and work hard.
• Listen to yourself
• Think ahead and believe in yourself
• Keep an upbeat attitude
• Proceed with passion and integrity!
• Work hard and follow through
• Make integrity your reputation

Even though it’s supposed to be real estate advice, this book is so ‘Trump’, filled with motivational messages. He loves to write motivational material which probably means he loves to read it as well.

I like learning about success or getting success advice from successful people and I hate hearing success advice from people who just want to be successful!

Of course, there are several mini-chapters (The whole book is mini-chapters of stories from people he knows) on concrete real estate related topics:

• Target growth areas and try not to sell what you own
• Never sell investment real estate, trade it.
• Focus on location and integrity
• Know your exit strategy before buying
• Seek out good architecture
• Don’t judge a book by its cover
• Fit Buildings to the community

When you actually dive into investing or a certain business reading these type of books are more useful because you understand it better and can apply it or relate it to your experience and actual situation. This is a nice little book for some upbeat encouragement, and business and real estate tips. I’ve never been disappointed with any of Trump’s books although he does sometimes repeat the same stories.

Today’s new term is “real negative interest rates”. First of all let define “real interest rate”. It is the ‘nominal’ rate minus the inflation rate. Nominal is the actual number, let’s say it 6%. You earn 6% interest. But if inflation goes up 2% then your “real interest rate” becomes 4%. In reality you’re only earning 4% on your money since it loses vale at 2% per year.

So a real negative interest rate is simply when the interest rate being paid is lower than the rate of inflation. This can happen with the government for example when it makes the cost of borrowing very cheap to stimulate the economy. This ‘Federal Funds Rate’ can be so low that they actually lose money lending it at such a low rate because the money they get back is less than he value of the money they have because of inflation.

In a business you have to spend less than you earn to stay in business, right? In a household you have to spend less than you earn to keep from going bankrupt. I mean, it’s pretty basic, yet governments don’t do it.

When one of these overspending governments issues bonds in foreign currencies (to obtain capital) it’s called a sovereign bond. These bonds are often issued when the country’s currency is unstable and therefore offers higher yields (higher payments to investors). The total amount of these bonds issued is known as sovereign debt.

On the flip side you have ‘sovereign wealth funds’. This is an investment fund owned by the state including any kind of financial asset including stocks and bonds, properties, precious metals, etc. The investment funds work like any other and invest globally.

These funds also include “foreign exchange reserves” which is foreign money held by the fund.  Ever since the world came off the gold standard the US dollar has been the world’s reserve currency, so many countries have a large part of the ‘exchange reserves’ in dollars, although that is starting to change now because of the US’s increased indebtedness. The US is now the biggest debtor nation in the world.

Well the first half of the book for me was just plain boring and off the point. It’s not my intention to criticize, that’s why I say ‘for me’ because it maybe be more interesting or easier to follow for someone else. Soros goes on about his philosophy of reflexivity in financial markets. It’s some kind of explanation of human behavior in markets saying that market outcomes can’t be calculated by purely financial measurements but by taking into account financial forces and human behavior, like each is dependent on each other.

It was something like that. Soros has a very technical way of writing that is very jerky and abrupt for me and not so easy to understand. Maybe a better word would be a ‘scholarly’ way of writing. In English it’s bad enough but when I encounter this type of writing in Spanish its much worse. I find it a real hassle to read, kind of takes the enjoyment out of it. But it’s common to financially related stuff.

So for about half the book he talks about his philosophy of reflexivity and past about half way through its slightly more interesting as he gives his predictions for 2008 and beyond. It’s interesting to read now being 2010 and pretty much accurate but I don’t think the things he predicted were tough to figure out.

He states frequently that it’s a mistaken notion by many that unhampered  markets tend towards financial equilibrium. Anyways, at the least, it’s nice to get a different viewpoint in that respect.

If the government created jobs we would all live in one big communist state. The free market creates jobs. The more money government sucks out of the market to use for public or government spending it leaves less money for private investment. So we don’t want the government creating jobs or even interfering too much with the free market so that it CAN make jobs.

Should we eliminate business taxes? A lot of people seem to think so. In the beginning there were no business or income taxes for that matter. You were taxed when you spent money, not when you made money. Now we’re taxed in every way possible, even when we die!

Basically the more money the government sucks out of us its less we have to decide ourselves what do with it. Its less money for us to spend on goodies, save, invest in our businesses or other people’s businesses.

In some ways we’re treated like children. The government takes a big chunk from us personally and from our employers (I know because I do a little bit of employing) to take care of us when we retire. I’d rather keep my money and decide how to save, invest or handle it for my own retirement.

The worst thing about it is that they are just taking our money and there is no money left in these retirement funds for us when we do retire.

A normal short sale is when an investor makes a bet that a stock or bond will lose value. If it does, they profit. A ‘naked short sale’ is when the seller makes a bet without having anything to back it up.

Here’s an example:

Let’s say you believe a bond is in trouble. So you decide to borrow the bond, sell It at current market value and then buy it back after the price goes down. You then keep the difference and return the bond to its original owner from whom you borrowed it from. To make a naked short sale you make deal without even having access to what you are selling.

Sounds pretty confusing, huh? At least it does to me. Ok, well, whether we understand it too clearly or not here is how it affects the markets.

Until anything is delivered, the buyer doesn’t have to pay. Even though no transaction is actually finalized it shows up as a sale, giving the appearance that the security is worth less than its true value based on supply and demand.

At different times in different situations short selling has been banned to stabilize markets and keep transparency. I’ve heard recently that short selling has kept precious metal prices below real market levels as of late.