Would have taken all of the money from every slave in the village to buy votes from people who don't want to work at all.

just curious...what would mr.practical suggest be done other than the current financial "howitzer" stimulus?....

Wealth and money are not the same thing, indeed.
I commend you at trying to preserve your wealth. We could use all the tips/help in this area right now.

Regarding:"Yesterday was a sad day indeed: The Federal Reserve said it will “print as much money as necessary to revitalize growth.”

One point I would like to make is that even as they print money, debt is likely being destroyed at a faster rate. So the FED is trying to slow down deflation. If the consumers change their habits (return to normal levels of debt), I can't see there being any inflation until growth returns. The destruction of debt will mean lower levels of demand. I still see some deflation or a targeted net inflation rate of slightly greater than zero. But it is possible that the debt bubble is so large(as you mention), that net deflation is inevitable.
If the debt bubble is truly burst, then like all bubbles we should return to levels about 80-90% before the bubbles were created. Some food for thought.

Also, Obama wants to spend a Trillion on projects. But we will have to borrow that money from foreigners. If we create too much money(over monetize and create inflation), why should they lend to us?

Once real economic growth returns, then there will have to be inflation.

There are many interesting discussions taking place in the 'ville.... Wish there was a way to consolidate them.

Anyhow-- Where/ When is the multiplier effect of all this money going to take place.

If there is such historic debt out there that will eventually be brought down by printed money, when does it ever get into the real economy to start inflation?

There is no doubt the fed wants to inflate, but would they really WANT to create runaway inflation (not exactly hyper)?

And how about the race for every other currency trying to do the same--? doesnt it brings the net effect to zero?

before it was hidden in inflated asset prices... now that assets are deflated... where does it hide? Where is inflation????

Barney Frank would take half the interest earned from slave 2 and lend it to slave 1 so they would both be equal slaves.

i agree with all.

Per Mr. Bacan, you need renewed borrowing to create inflation. deflation should continue to progress. hyperinflation may occur down the road with a monumental monetization.

Its actually Mathew 25: full verses:

The Parable of the Talents
14"Again, it will be like a man going on a journey, who called his servants and entrusted his property to them. 15To one he gave five talents[a] of money, to another two talents, and to another one talent, each according to his ability. Then he went on his journey. 16The man who had received the five talents went at once and put his money to work and gained five more. 17So also, the one with the two talents gained two more. 18But the man who had received the one talent went off, dug a hole in the ground and hid his master's money.
19"After a long time the master of those servants returned and settled accounts with them. 20The man who had received the five talents brought the other five. 'Master,' he said, 'you entrusted me with five talents. See, I have gained five more.'

21"His master replied, 'Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master's happiness!'

22"The man with the two talents also came. 'Master,' he said, 'you entrusted me with two talents; see, I have gained two more.'

23"His master replied, 'Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master's happiness!'

24"Then the man who had received the one talent came. 'Master,' he said, 'I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. 25So I was afraid and went out and hid your talent in the ground. See, here is what belongs to you.'

26"His master replied, 'You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? 27Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.

28" 'Take the talent from him and give it to the one who has the ten talents. 29For everyone who has will be given more, and he will have an abundance. Whoever does not have, even what he has will be taken from him. 30And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.'

While I agree financially 100% its hard to uproot your kids and sell the fricken family farm, I'll manage it by fxa , francs and land and gold thank you very much. Merry Christmas. There are many ways to get your Talents to grow. The key is to give them away ................for productive loving and the truely needy among us. For it is harder for a rich man to enter the kingdom than a camel to get thru a key hole. No?

A dollar in your pocket for the last year is worth, say, 20%, or so, more. At least it is in terms of stocks, real estate, bonds, automobiles, etc. Maybe soon, food and health care. A Yen in your pocket has done even better.

It might be useful to consider the velocity of money as well as the quantity. Money is not wealth, but the preference for holding it is not an abstraction.

I shudder to think what Barney Frank would do with his two slaves, and it has nothing to do with money or wealth.

Baaaaahahahahaha!!!!

Mr. Practical.

So good to hear from you.

The title of your article, "Alchemy," refers to the dream of converting lead into gold...in other words, converting something not very useful into something that gives one wealth.

Here's a slight variation on your scenario:

Farmer B chops down all his trees so that he can grow more food. He becomes dependent on Farmer C for his firewood.

Farmer C recognizing Farmer B's dependency, demands 50% more food from Farmer B for the same allocation of firewood.

Farmer B goes to Farmer A and says, "If Farmer C gets more food from me, he'll ask for more clothing from you sooner or later. Let's band together and refuse to give him food or clothing until he relents."

Farmer A, being a good risk arbitrage capitalist, says to Farner B, "I still have my own forest land so I can get by without Farmer C's wood if I have to. I will propose to Farmer C to give to me 50% more wood for a 25% increase in my allocation of clothing and I will give to you the extra wood for a 50% increase in my food allocation."

If you were Farmer B or C, would you accept this?

Did Farmer A create more wealth for himself...assuming Farmer B and C accept?

Nations are like the farmers. Has the USA chopped down all of it's trees?

Do we, as "passive investors," create wealth through taking advantage of the suffering of others? or is it just plain "alchemy?"

My best regards,
Gary

And then, farmer C, realizing that with his four sons he has the largest "army" in the valley, arms his boys with axes, walks over to farms A and B, and takes everything he needs or wants, including their wives.

A scenario which may very well play out as economic turmoil spreads. Why play by the rules when you have the power to change the rules to your advantage? If morality does not rule (and it very seldom does) than naked power will.

I understand why you moved to Yenville as a Wealth Preservation mode.When Scrooge finally decides to help Tiny Tim get better by way of debt monetization(inflation)debasement what ever plays out down the road.Do you see certain sectors participating while others you would think but mysteriously stays sidelined?The reason I ask I remember the Hunt bros and the last blowoff off gold and silver----only to see periods of inflation and the precious pups slowly recede in value likea drained pond as the hoarding turned to expulsion.Any thoughts on this and I do want to take the time to wish everyone a Merry Christmas and joyus Holiday no matter what your persuasion may be.Minyan,JT P.S. always good to see you post Mr.P its always appreciated

Dean agree wholeheartedly as unfortunate as it is but very human nature like as we have had proof through the ages as told in history books and in our own lifetime.I have always thought the ability to kick arse and take names always bolstered a countries fiat to some degree.Be well and goodluck in this muck,JT

I'm just an ordinary person out here and I would like an explanation as to why everyone seems to think that the Japanese Yen is "THE" currency to be in. I certainly understand the mess that the U.S. is in but how much better off is Japan? From what I read Japan has still not recovered from their debt orgy 10 or so years ago. Didn't they do the same thing that the Fed is doing now to prevent the failure of their financial system? Japan has a problem with their aging population as well and they are far more dependent on commodity imports than we are. So my question is, why is being invested in the Yen perceived as being the best way to protect the value of your money if it is now denominated in dollars.

Why did you need to move to Japan to convert all of your dollar denominated assets to yen denominated assets? You could do the same while living in America.

If you moved to Japan because you would rather live there, it is a different story, but not the reason you give.

very good. the presentation i used to create this article goes into that, though i didn't go that far for this purpose. in subsequent diagrams, certain farms get bigger (richer) than others as certain production processes are more exlcusive than others, but as you imply, also due to certain collusive forces. over time, pure capitalism creates imbalances, just like pure socialism does. this is why we do need good regulation: those that allow production to continue.

ah my friend you should read some of bernanke's papers. one solution the feds came up with in case of dollar collapse is a two-tiered currency system where dollars in the u.s. cannot go outside and dollars outside cannot come in. i am not saying this will happen, but it has been penned by the federal reserve so cannot be ignored.

very simple. japan has the highest level of savings pool relative to private debt. their public debt is horrendous, but what is happening over time and why the yen is appreciating is because japanese savers are bringing those savings back to japan. when i feel that has been done the rally in yen should be about over. dollar yen 75 and i pack my bags.

gold will be a great buy in the 600s if it gets there. certain stocks able to weather severe recession are very cheap, certain names beaten down by liquidation forces. but again, the first thing to do is pay off the mortgage...that's the best investment you can make.

Kenneth, you beat me to it! As an un-abashed Christian, the first thing I thought to do was post a correction to Mr Practical's Bible reference, since I was 99% positive the passage was incorrect. Probably the only thing Mr Practical writes on MV that will ever be incorrect :-) His point on production is correct when he references the passage but the teaching of the parable is we should use what talents and gifts God has given us, to work for His kingdom. God gives us talents according to our abilities, and if we prove we can handle the little responsibilities, then we will be given greater responsibilities.

as a follow-up Kenneth, the passage you state is off, the verse (according to the NIV translation) is "it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God" You have may have a different translation.

Mr Practical, do you see much of a decline in the Yen due to "after after Japanese authorities signaled they may intervene in the currency markets for the first time in 4 years? Do you see the Japanese devaluing the Yen to the point you'd move?

Thank you Mr. Practical for your response. Since I can't afford to move out of the country, what can I do to protect myself? I retired at the end of 2007 so I'm trying to protect what I have. My home is paid for and I have no other debt but I am concerned that these thieves in charge of our country will end up destroying everything I've worked for. I worked for an hourly wage all my life so I'm not wealthy but have managed to save some money and at the present time I don't need to access it to pay my living expenses. Any general suggestions on what direction to go would be appreciated.

I would actually submit that this parable is about money. Talents were simply stores of value like dollars. It's actually very interesting to compare this teaching about money to Jesus's other teachings on money.

While talents were stores of value (I believe 1 talent was equal to something like a life time's worth of wages earned), and the passage is "about" money, the point of the parable is to be a good steward of what God provides you, money, time, ability...Jesus's teaching in this parable, like most other parables, using an object (in this case money) to illustrate the attitude, which is the primary concern.

No argument here.

I think Mr. P knows there is no Matthew 29. He didn't just misquote the story, he misquoted the passage as well. I wonder if there is something there.

Just a quick FYI,

This just came from Terry Woos post:

"The yen dropped against the euro -- and fell from a 13-year high against the dollar -- after Japanese authorities signaled they may intervene in the currency markets for the first time in 4 years. According to Bloomberg, Japanese Finance Minister Shoichi Nakagawa said he's “keenly watching” the foreign-exchange markets, and, while it's not definite, may try to limit the yen's appreciation.

The last time Japan intervened in the currency markets, it sold a record 20.4 trillion in 2003 and 14.8 trillion in 2004. Mr. Practical mentioned the yen yesterday in Alchemy. "

Nothing like a little government intervention to interfere with your travel plans.

AH, that is interesting....maybe...maybe Mr P will weigh in!

you are a real person in a real country, so you can't do what i do. so your flexibility is poor. reality limits what you can do. my moving around is just meant to show by example how central banks dilute wealth over time by devaluing currencies. when you pay off debt you in a sense get long the dollar...this is why i recommended paying off debt before this thing got started. strangely, at the right time (impossible to predict), one could take out as much debt as one can afford and buy raw property right before a hyperinflation occurs in the next few years (huge devaluation of dollar). i am not recommmending trying this (i wrote about this before) because the timing and risk are huge if wrong.

there is desire by all central banks to devalue their currency...no surprise. the euro (actually its the swiss franc) has been much much stronger vs the dollar than any major currency over the last week or so. two possible reasons: trichet saying he will not cut rates (probably not true) and europeans are large investors in u.s. and move them around more than asia does, so when two day fed meeting rumored to be a dollar talk down, europeans may have bolted out of u.s. investments back into euro fast.

i have a good memory, but i guess not that good. no mystery here. Jesus taught by metaphor, so more than one lesson in His stories.

Since you are retired, I would offer a quote from Mark Twain?,

"The first principle of investing, is the return of the principal"

and

"Wealth can't be created. Only money can" -Mr Practical

Combining:

"The first principle of investing, is the preservation of the principal"

They will definitely be in a pickle.

Have the debt unwind, print tons of money, dollar devalued, inflation starts, then...then...raise interest rates? Ack! That will constrict spending by people who took out new HELOC's when they had the T and A jiggly girl adverts about lower interest rates and FED and Bush programs.

What to do...a real pickle they are putting us in. I've heard deflational spiral, hyperinflation and Weimar republic. Oy Vey!

I have a suspicion Mr. Practical is Todd's alter ego (doppleganger?) who gets to play in Japan with the Asian models and drink Sake (spending Yens at Dollar +23% of course).

Cheers!
Eric

Mr. P - You comment that "gold will be a great buy in the 600s if it gets there" and then a few sentences later state "the first thing to do is pay off the mortgage...that's the best investment you can make." These two strategies appear to be at odds with each other.

Buying gold makes sense if you have inflationary expectations, while paying off the mortgage is good recession strategy. If buying gold as an inflation hedge, why would you pay off a low cost fixed-rate mortgage, which would look pretty cheap in an inflationary environment.

Of course, if you're a market timer, I guess you could pay off the mortgage now ( gaining a risk-free after-tax rate of return better than current treasury rates), and refinance (pulling out max equity) at fixed rates just before rates shoot up again and invest it in gold :o)

they are. pay off your mortgage now as over the next year deflation forces will be powerful (my opinion only). this 1. reduces risk and 2. is the best investment you can make in deflationary environment 3. is like going long the dollar as it stengthens in deflation. but at some point deflation processs will lead central banks to panic and monetize. this is when the dollar gets really devalued and then you want to be short the dollar. at this point if gold is down in 600s it is a hedge against this (reversal of dollar down). again, timing is hard and risky and that's why i am reluctant to even talk about this. so i just say to people "lower risk and buy a little gold if it goes down".

or maybe Todd is mine.

This is similar to my three rogue waves (hitting our economic ship) prediction:

1. Deflation due to debt unwind (currently hitting the ship)

2. Inflation due to oil prices (when significant growth returns, and once again supply is constrained)

3. Inflation due to baby boomer promises, expanding FED balance sheet and now possible monetization

Timing of these waves will be key. But they are already on the radar.

The best way forward is real growth in new industries to be able to afford tomorrows (a few years from now it seems) expensive goods.
Plus the USA must return to innovation, as we have already exported many industries.

You can't have a high standard of living, if you don't produce the best good in the World, which people want to buy. A great quote I once heard was , "There will always be someone who can produce it cheaper". Something I hope the new administration will understand.

"The second principle of investing is the principled appreciation of the principal"

What is the end game of this "shared wealth" plan ?
If only 56% of the US population is paying taxes now,what is the tipping point where
the inventive to earn more and work harder is replaced with the result to cut back on work and do more of what one enjoys all day.
If US leadership/policy encourages citizens to cut back production ,or move to another country to escape the consequences of bad policy,the available resources of wealth to re-distribute are diminshed.
As for B. Frank, I am a staunch supporter of term limits.