The only person I read economic commentary from these days is John Tamny.
Tamny is a voice of clarity on economic issues — an equal opportunity offender for both liberals and conservatives.
… and sometimes even free market libertarians.
Which makes him not only entertaining to read but also… and interesting guy to learn from.
Here’s what I mean:
All this talk of stimulus this, PPP loans that, EIDL grants for the other thing has gotten me thinking about the government’s black hole of debt that is sucking the life out of everybody.
I mean there’s so much taxpayer debt now that will necessitate future government spending, it’s unfathomable.
And for anyone who is unprepared, it’s going to be very painful in the future. I don’t think people yet realize just how painful it’s going to be.
But it’s not all bad.
All this debt also got me thinking about some very basic economic truths that allow anyone to do their own thing and (mostly) ignore what the government is doing.
For example, Tamny recently wrote about a basic economic truth often ignored by… everyone (especially highly-paid economists).
And his lesson comes straight out of The Bernstein Bears series — a series Yours Fatherly was obsessed with as an ankle biter.
When Sister Bear loses a tooth, Papa Bear tells Sister Bear:
“…sometimes the price of things goes up, like gas. The price of gas for our car went up twenty cents just last week! Maybe the same thing happens with teeth.”
Rumor is, the price of teeth is rising. Instead of buying teeth for a quarter, the Tooth Fairy now has to pay at least a dollar.
Sometimes, money doesn’t buy as much as it used to.
And, when inflation is rampant, prices of goods and services don’t increase as much as the value of money decreases.
Very much a Matrix moment — “there is no spoon”.
But Sister Bears thoughts are even more interesting. Namely, she starts thinking about all the things she can buy with her money — a “Bearbie,” markers, marbles, a lolly pop, a milkshake, and so on.
People don’t really want money. They want resources. They want what money can buy — either immediately or in the future.
Maybe a lolly pop can be bought with $1. But a “Bearbie” might require Sister Bear wait, save and invest her Tooth Fairy money, and buy the doll later on in the future.
Money lets her do this otherwise impossible task.
Likewise, Papa Bear might need money for his future retirement, so he would have to wait 20 years with his money so he can buy whatever he wants with his money.
But the point is the same.
Money will be spent, either on “Bearbies”, retirement expenses, or maybe… Papa Bear’s favorite charity’s expenses when it’s all over.
What’s the big picture here?
Everyone seems focused on just endlessly stimulating the economy as though that will somehow result in more goods and services being bought.
Businesses have been mostly closed last year.
The economy has been somewhat of a barren desert.
And, like any desert, there’s nothing to buy… even if you had a bazillion dollars to spend.
If anyone doubts this, go stand in the middle of the Sahara or Death Valley and see how much your money will buy you.
No amount of debt will help this situation either.
This is why i love the underlying principles of whole life insurance so much.
It requires policyholders to first create and produce something valuable on their own, then build up a savings inside the policy, and only then can they use the cash values (as policy debt) and only in a way that forces the policyholder to save more money than he or she borrowed, thus endlessly growing their savings.
And yes… even combatting inflation with ever increasing premiums.
And, if the policyholder does his part, the insurer will do theirs by paying dividends.
Nothing but good can come from that kind of approach.
Anyway, if you’re ready to learn more about what whole life insurance can (and can’t) do for you, download my free Monegenix® Labs mobile app and access the free trainings and courses.