Posts Tagged ‘assets’

“Our credit system is currently sitting at $68 trillion. It’s the largest debt ceiling in the history of the world. It’s more than twice the value of every single home in America put together… More than three times the value of every single U.S. bank’s assets combined… More than 20 times the trillions of dollars the U.S. government collects in taxes every year.” -Van Bryan

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“In the United States neither paper currency nor deposits have value as commodities.  Intrinsically, a dollar bill is just a piece of paper….  What, then, makes these instruments…acceptable at face value in payment of all debts and for other monetary uses?  Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so.  Money, like anything else, derives its value from its scarcity in relation to its usefulness….  Money’s usefulness is its unique ability to command other goods and services and to permit a holder to be constantly ready to do so.” -Federal Reserve Bank of Chicago

Rich House

Posted: November 20, 2016 in Mortgages
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“Buying a more expensive home every time you get a big raise is a great way to ensure that you will never get rich.  What you want to do is find the least expensive house you can love and keep.  The longer you keep it, the more income you will have to invest in the sorts of assets that will, eventually, make you rich.” -Mark Ford

The U.S. national debt ($19.5 trillion) is:

  • Larger than the 500 largest American companies (S&P 500) combined ($19.1 trillion)
  • Larger than the total combined assets of the world’s top seven money managers ($18.9 trillion)
  • 25 times larger than the value of all oil exported globally in a year ($786 billion)
  • 155 times larger than the value of all gold mined in the world in a year ($125 billion)

The investment-advisory industry is a huge, multi-billion dollar business based on hard work, clever thinking, and sophisticated algorithms….  [T]he unfortunate truth is that the financial establishment rarely looks beyond stocks and bonds.  And if you think about it, why would it want to?  It makes its money by ushering you from one ‘hot’ stock or ‘amazing’ fund to the next….  Because they know that you have heard that ‘diversification of assets’ is good, financial advisers give you the illusion of diversification by filling your stock portfolio with businesses that are ‘diversified’….  But at the end of the day, it’s all invested in stocks or stock derivatives.

Asset allocation is the process by which you spread your wealth across different sorts of investments….  Over the years, I have made hundreds of individual financial decisions….  I could see very clearly that it was not particular buy/sell decisions that accounted for this good fortune.  It was the general decisions about asset allocation that paid off.” -Mark Ford

Borrowed Money

Posted: July 17, 2016 in Money Matters
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“Rather than creating new assets, low-cost money borrowed from tomorrow bids up existing assets today.  It produces no new learning or value and leaves no way to pay back the debt.” -George Gilder

“Most people…find a disorientating mismatch between the long-term nature of their liabilities and the increasingly short-term nature of their assets.” –Howard Davies