There were great things written today. Where we are is a progression of decades, not the cause of one recent man.
I find fault with the quote in the beginning.
The soul produces the man, the attitude, beliefs, the talents developed. Such a man does not need to worry about money, he seeks first The Kingdom of God and all else, no matter the circumstances, is given. Such a man is a pillar of a community worth living in.
Yes, we are all going to die … some poorer and more miserable than others!
As for ‘when’ … I don’t know… Americans are very good at kicking the can down the road… but I did observe from afar the election of Mamdani in New York which may just hasten things along 🤔
I took my father's advice: go into retirement with no house or car payments, no recurring long-term debt, just cost-of-living expenses, and you'll be fine. So I did, and it is nice.
But, with the ticking time bomb of a collapsing dollar, the fiscal irresponsibility of the DC UniParty, taxes and insurance constantly rising, I'm not quite so comfortable anymore. So, while I was forced to 'retire' at age-65, I still work, but at much less earnings than before. I'd like to fully retire, but I just don't feel that's prudent right now. And, at least it keeps me out of the pool halls and bars (...oh, wait a minute, still working is keeping me out of the pool halls and bars!)
Our financial advisor ran an income/expense scenario in 2015 that showed how our savings would hold up in retirement. It included a modest return on investments and full Social Security (on which we held off collecting to max out the benefit). Even then I was very concerned about the viability of SS long term. He laughed and assured me that Congress would fix it. I wonder if he's laughing now. I'm not. Fortunately we've done fine with our investments and should be OK even with a reduction in SS and deterioration of the dollar...but the way things are going, all bets are off.
Yep, I'm with you. The fiscal irresponsibility in Washington is beyond shameful. I still remember Jimmy Carter inflation...16%-18% car loans, 14% mortgage. I fear we are headed in that direction.
And Trump is a credit guy. Made his fortune off of using credit/other people's money (bank depositors.) He's a low-interest rate guy, hence the strong-arming of the Fed. Trump and his billionaire hedge-fund buddies will be just fine if/when the ever-growing bubble pops; the rest of us, I'm afraid, not so much.
At least being as debt-free as possible provides some peace-of-mind.
Clever people are still able use debt to amass wealth, and many who didn't earn their wealth squander it.
Of course, not every entrepreneur succeeds. But none will make the attempt without regulatory encouragement.
(This encouragement doesn't exist in Montgomery County Md where the police will arrest youngsters selling lemonade in front of their house on a hot day).
Another People's Republic of MoCo fan! We fled as soon as we retired. Most of our neighbors in NC also fled the Northeast and Mid Atlantic, using equity in our houses to purchase equivalent homes for cash here. Not sure how anyone can afford home prices in MoCo, Arlington and other wealthy suburban counties...until one realizes that many dual income families are pulling in at least $250K and often $1 million in salary. It's the people who support those high earners (teachers, police, tradesmen, etc) that really struggle.
Change is afoot. Neighborhoods of single family homes (SFH) with garages are being slowly eradicated.
Developers in across-the-Potomac Arlington and Alexandria can now buy SFH's; raze them with city approval; build a four-plex with no off street parking and then sell the individual units collectively for a handsome profit.
Nearby neighbors have no recourse to abate the destruction of their neighborhoods or for the loss of value of their homes, especially those continuous to what is effectively a big box masquerading as an apartment building.
Alas, the cost any of the four-plex units is still far out of the reach of most renters.
The Feds invented a new kind of slavery post-1971. Except instead of whips, they use paperwork.
Most people work all day, every day, trying to pay for things they don’t own, with money that isn’t real, on time that’s borrowed. It’s like a spiritual layaway program.
And a new 50-year mortgage?
By the time you pay it off, the house collapses, the neighborhood’s gone, the sun’s dim, and you’re just a skeleton holding the deed saying,
“I did it.” 🤩
Meanwhile, every month you’re making payments just to stay alive.
It’s not an economy…it’s a subscription service for existence.
I'm 88, and Paul Volker saved my family's future by raising our farm operating loan from 9% to 23.5%. It simply separated and stopped the "inflation wheat from the chaff". After we dug our way out of that mess, for a decent period of time, the nation only borrowed money we were certain we could pay back.
It is funny how the lower the interest the more we borrow and the easier it is to never quite pay it all back. It is now time for "Volker #2". This nation will never learn how to manage their money with ultra low interest funds. so sad!
I agree how many of those huge blue A O Smith silos are still out there? My father in law, a diverse farmer/rancher, called them tomb stones. They cost a thousand dollars a vertical foot. Loans were cheap. Grain and livestock prices were going up...... I'll never forget all the movies and concerts about or to assist the poor, abused, indebited, farmers. He had no problems , he didn't borrow money.
It's kind of funny how, when those farms were being auctioned off in the movies, there were hundreds of people there to buy. People with money.
Bill, as a home owner in NE IL, I paid my house off a few months ago! NOW, I get to rent it from the state of IL for roughly 5 grand in property taxes and 1000 plus in insurance. So now I always ask people "How much will your paid off house cost you"? To people in my orbit and that has been effective. I really like articles like this one, Bill!
Yes, as long as there is a taxing authority over your property, paying off the mortgage is just a cash flow variable. What stops them from taxing you right out of your "ownership?"
BB-excellent article. It’s quite sad that many Americans live life as ‘slaves’. They live day to day pay for everything they owe and own nothing. In my home if we make a mistake we try to correct it. In our government the mistake by President Nixon to get us off the gold standard should be reversed as it was one of the biggest mistakes in American history.
While Bonner makes many reasonable points in his column today, he goes off the rails with his conclusion (see the last three paragraphs - 6 lines). It makes no sense. The only way to avoid Bonner's conclusion is to be born with a silver spoon in your mouth (rich parents) who give you everything you need to start your life. This may apply to a miniscule percentage of the people. The rest of us have to have shelter, food, transportation, etc., much of which has to be paid on a monthly basis. To do this, we must lead productive lives in order to generate the income to pay for these things. That's a fact of reality. In the meantime, we are also endeavoring to make more money than those monthly bills so we can save either for a good retirement and/or to own some of those things so that the monthly payments go away. This does not make us proles or just purely debtors. Certainly, one can argue that our economic system is in the process of falling apart, but Bill's conclusion is a little drastic.
Yes, most of us had to start with a mortgage and car payment. Even a car payment on a used car in our case. But you budget your expenses such that you can pay off these loans, paying a little extra principal each month. And of course you don't by optional items with a loan. Been debt free for a couple decades, and our kids are all on that path. (Note: they have mortgages. While I believe in helping your children, I do not think it is wise to "give" them a mortgage-free house. Part of becoming an adult is earning things for yourself. Being born with a silver spoon can be fatal to ever achieving a modest level of maturity as a good citizen.)
Funny how history repeats itself over and over. It’s clear it’s a cycle and even a local historian can synthesize that. In 1875 Mellon said the following: “The temptations of credit are too great… it encourages a style of living which industry cannot maintain.” Two crisis and a Great Depression followed in time.
I am no hedge fund manager, but I find Ray Dalios framework to be an effective tool analyze where we are in the cycle. You can also put quotes of history and articles, such as this one, through it to determine what stage we are in.
It's not to late. Gold coins may be to esxpensive for many but "good" small gold royalty stocks with low debt are still available. It just takes a little research (even on the Nasdac}. You can't go wrong on gold, youngsters. It's the only real money, as demonstrated by thousands of years.
I'm following the BOLD strategy. It had me sell gold and buy Bitcoin. I never like selling my gold ..... I had a little cash so I bought Bitcoin so I didn't have to sell as much gold. Hence, I clicked "crypto" in Poll.
Charlie Munger is quite worth a listen on this sort of subject. It won't matter if you are gambling on margin, buying a timeshare, the latest RV or even a Woman buying an Italian handbag, Munger will destroy you with mathematics.
All cash in T-bills strategy for the past few years, waiting for the bubble to burst, so I can buy real assets at a price that makes sense. (Not even looking for a discount) Have barely broken even with inflation after tax, but this strategy painful as it is, paid huge dividends after the GFC.
Soon the Feds are going to start robbing us again. At my age of 67 it is not possible to endure another 20 years of zero interest. The giant bubble must burst soon. When it bursts this time, you will be able to hear the bang from outer space as it is easily 10X worse than the GFC. If it does not burst very soon, I may be forced to get rid of my cash anyway and hope for the best. God help us all!
Your post caught my attention because we've been very heavily cash with CD's and MM's for the past few years and I turned 67 back in October. Like you, we're mulling a change to our strategy because with interest rates falling and inflation and taxes being what they are it's not making sense. It presents the age old conundrum, where do we put the cash now?
In the early 00's I 'bought' a small ranch in TX, with cheap debt, thinking I could raise cattle to pay the mortgage. Mended fences, leased cropland. Good plan, til drought + the 06 recession hit. Two happiest days? When I bought it, when I sold it for enough to pay off the mortgage. Now I own a home & old car debt-free. Advising & helping my adult kids to achieve the same freedom of choice
There were great things written today. Where we are is a progression of decades, not the cause of one recent man.
I find fault with the quote in the beginning.
The soul produces the man, the attitude, beliefs, the talents developed. Such a man does not need to worry about money, he seeks first The Kingdom of God and all else, no matter the circumstances, is given. Such a man is a pillar of a community worth living in.
Love your closing paragraph, Xavier. Amen.
And brother, this is truth right here: "Where we are is a progression of decades, not the cause of one recent man."
Yea, but he does need to worry about food, after all, mana ain’t falling from heaven. And at the end of the day, what is money but extra food?
……’good luck with that Xavier’……
The West is now just a ponzi scheme which will implode … it’s just a matter of when.
... you are telling me we are all born to die.
"When" is what I would like to know...
Yes, we are all going to die … some poorer and more miserable than others!
As for ‘when’ … I don’t know… Americans are very good at kicking the can down the road… but I did observe from afar the election of Mamdani in New York which may just hasten things along 🤔
I took my father's advice: go into retirement with no house or car payments, no recurring long-term debt, just cost-of-living expenses, and you'll be fine. So I did, and it is nice.
But, with the ticking time bomb of a collapsing dollar, the fiscal irresponsibility of the DC UniParty, taxes and insurance constantly rising, I'm not quite so comfortable anymore. So, while I was forced to 'retire' at age-65, I still work, but at much less earnings than before. I'd like to fully retire, but I just don't feel that's prudent right now. And, at least it keeps me out of the pool halls and bars (...oh, wait a minute, still working is keeping me out of the pool halls and bars!)
Our financial advisor ran an income/expense scenario in 2015 that showed how our savings would hold up in retirement. It included a modest return on investments and full Social Security (on which we held off collecting to max out the benefit). Even then I was very concerned about the viability of SS long term. He laughed and assured me that Congress would fix it. I wonder if he's laughing now. I'm not. Fortunately we've done fine with our investments and should be OK even with a reduction in SS and deterioration of the dollar...but the way things are going, all bets are off.
Yep, I'm with you. The fiscal irresponsibility in Washington is beyond shameful. I still remember Jimmy Carter inflation...16%-18% car loans, 14% mortgage. I fear we are headed in that direction.
And Trump is a credit guy. Made his fortune off of using credit/other people's money (bank depositors.) He's a low-interest rate guy, hence the strong-arming of the Fed. Trump and his billionaire hedge-fund buddies will be just fine if/when the ever-growing bubble pops; the rest of us, I'm afraid, not so much.
At least being as debt-free as possible provides some peace-of-mind.
Clever people are still able use debt to amass wealth, and many who didn't earn their wealth squander it.
Of course, not every entrepreneur succeeds. But none will make the attempt without regulatory encouragement.
(This encouragement doesn't exist in Montgomery County Md where the police will arrest youngsters selling lemonade in front of their house on a hot day).
"But none will make the attempt without regulatory encouragement."
... oh but they will!
What better impetus to negate law and generate revenue in underground or in the black market...
Yes; you're right. Consider that sentence stricken.
Another People's Republic of MoCo fan! We fled as soon as we retired. Most of our neighbors in NC also fled the Northeast and Mid Atlantic, using equity in our houses to purchase equivalent homes for cash here. Not sure how anyone can afford home prices in MoCo, Arlington and other wealthy suburban counties...until one realizes that many dual income families are pulling in at least $250K and often $1 million in salary. It's the people who support those high earners (teachers, police, tradesmen, etc) that really struggle.
Change is afoot. Neighborhoods of single family homes (SFH) with garages are being slowly eradicated.
Developers in across-the-Potomac Arlington and Alexandria can now buy SFH's; raze them with city approval; build a four-plex with no off street parking and then sell the individual units collectively for a handsome profit.
Nearby neighbors have no recourse to abate the destruction of their neighborhoods or for the loss of value of their homes, especially those continuous to what is effectively a big box masquerading as an apartment building.
Alas, the cost any of the four-plex units is still far out of the reach of most renters.
The Feds invented a new kind of slavery post-1971. Except instead of whips, they use paperwork.
Most people work all day, every day, trying to pay for things they don’t own, with money that isn’t real, on time that’s borrowed. It’s like a spiritual layaway program.
And a new 50-year mortgage?
By the time you pay it off, the house collapses, the neighborhood’s gone, the sun’s dim, and you’re just a skeleton holding the deed saying,
“I did it.” 🤩
Meanwhile, every month you’re making payments just to stay alive.
It’s not an economy…it’s a subscription service for existence.
I'm 88, and Paul Volker saved my family's future by raising our farm operating loan from 9% to 23.5%. It simply separated and stopped the "inflation wheat from the chaff". After we dug our way out of that mess, for a decent period of time, the nation only borrowed money we were certain we could pay back.
It is funny how the lower the interest the more we borrow and the easier it is to never quite pay it all back. It is now time for "Volker #2". This nation will never learn how to manage their money with ultra low interest funds. so sad!
I agree how many of those huge blue A O Smith silos are still out there? My father in law, a diverse farmer/rancher, called them tomb stones. They cost a thousand dollars a vertical foot. Loans were cheap. Grain and livestock prices were going up...... I'll never forget all the movies and concerts about or to assist the poor, abused, indebited, farmers. He had no problems , he didn't borrow money.
It's kind of funny how, when those farms were being auctioned off in the movies, there were hundreds of people there to buy. People with money.
Bill, as a home owner in NE IL, I paid my house off a few months ago! NOW, I get to rent it from the state of IL for roughly 5 grand in property taxes and 1000 plus in insurance. So now I always ask people "How much will your paid off house cost you"? To people in my orbit and that has been effective. I really like articles like this one, Bill!
Yes, as long as there is a taxing authority over your property, paying off the mortgage is just a cash flow variable. What stops them from taxing you right out of your "ownership?"
NOTHING and thank you for adding that! I'm well aware and ready to leave
BB-excellent article. It’s quite sad that many Americans live life as ‘slaves’. They live day to day pay for everything they owe and own nothing. In my home if we make a mistake we try to correct it. In our government the mistake by President Nixon to get us off the gold standard should be reversed as it was one of the biggest mistakes in American history.
While Bonner makes many reasonable points in his column today, he goes off the rails with his conclusion (see the last three paragraphs - 6 lines). It makes no sense. The only way to avoid Bonner's conclusion is to be born with a silver spoon in your mouth (rich parents) who give you everything you need to start your life. This may apply to a miniscule percentage of the people. The rest of us have to have shelter, food, transportation, etc., much of which has to be paid on a monthly basis. To do this, we must lead productive lives in order to generate the income to pay for these things. That's a fact of reality. In the meantime, we are also endeavoring to make more money than those monthly bills so we can save either for a good retirement and/or to own some of those things so that the monthly payments go away. This does not make us proles or just purely debtors. Certainly, one can argue that our economic system is in the process of falling apart, but Bill's conclusion is a little drastic.
Yes, most of us had to start with a mortgage and car payment. Even a car payment on a used car in our case. But you budget your expenses such that you can pay off these loans, paying a little extra principal each month. And of course you don't by optional items with a loan. Been debt free for a couple decades, and our kids are all on that path. (Note: they have mortgages. While I believe in helping your children, I do not think it is wise to "give" them a mortgage-free house. Part of becoming an adult is earning things for yourself. Being born with a silver spoon can be fatal to ever achieving a modest level of maturity as a good citizen.)
Funny how history repeats itself over and over. It’s clear it’s a cycle and even a local historian can synthesize that. In 1875 Mellon said the following: “The temptations of credit are too great… it encourages a style of living which industry cannot maintain.” Two crisis and a Great Depression followed in time.
I am no hedge fund manager, but I find Ray Dalios framework to be an effective tool analyze where we are in the cycle. You can also put quotes of history and articles, such as this one, through it to determine what stage we are in.
You will own nothing and be happy.
..."owning" should not be prerequisite for "happy".
True satisfaction (happiness) is gained or rewarded for producing or accomplishing something of value to others.
Many seek happiness merely by buying ownership and then wonder why they remain dis-satisfied.
The credit-money system has the "own nothing" part covered. Where or when does the "be happy" come in?
Anyway, I've always thought that Klaus Schwab should set an example and go first.
It's not to late. Gold coins may be to esxpensive for many but "good" small gold royalty stocks with low debt are still available. It just takes a little research (even on the Nasdac}. You can't go wrong on gold, youngsters. It's the only real money, as demonstrated by thousands of years.
I'm following the BOLD strategy. It had me sell gold and buy Bitcoin. I never like selling my gold ..... I had a little cash so I bought Bitcoin so I didn't have to sell as much gold. Hence, I clicked "crypto" in Poll.
Charlie Munger is quite worth a listen on this sort of subject. It won't matter if you are gambling on margin, buying a timeshare, the latest RV or even a Woman buying an Italian handbag, Munger will destroy you with mathematics.
All cash in T-bills strategy for the past few years, waiting for the bubble to burst, so I can buy real assets at a price that makes sense. (Not even looking for a discount) Have barely broken even with inflation after tax, but this strategy painful as it is, paid huge dividends after the GFC.
Soon the Feds are going to start robbing us again. At my age of 67 it is not possible to endure another 20 years of zero interest. The giant bubble must burst soon. When it bursts this time, you will be able to hear the bang from outer space as it is easily 10X worse than the GFC. If it does not burst very soon, I may be forced to get rid of my cash anyway and hope for the best. God help us all!
Your post caught my attention because we've been very heavily cash with CD's and MM's for the past few years and I turned 67 back in October. Like you, we're mulling a change to our strategy because with interest rates falling and inflation and taxes being what they are it's not making sense. It presents the age old conundrum, where do we put the cash now?
In the early 00's I 'bought' a small ranch in TX, with cheap debt, thinking I could raise cattle to pay the mortgage. Mended fences, leased cropland. Good plan, til drought + the 06 recession hit. Two happiest days? When I bought it, when I sold it for enough to pay off the mortgage. Now I own a home & old car debt-free. Advising & helping my adult kids to achieve the same freedom of choice