The endgame in stacking.

I know we have discussed "exit strategies" when "the time" comes. These are many and varied, but I'm going to suggest a way to keep the game going.

In my opinion theres no reason to divest oneself of all their metals. In my opinion the 10-20% of your net worth as protection strategy means that the metals must always be your core position. Never to be sold unless absolutely, and I mean absolutely, necessary. This does not allow this 10-20% to be traded, since things can go fom bad to worse and leave you exposed.

That's why I think that if you want to get the most out of the current bull you need to go in further than the 10-20% insurance level.

I think its important to keep that 10-20% as your central reserve always into the future. Do what you will with the rest but consider these points:

A. Pay off all debt and never take on any more. This is the fundamental step in freeing yourself from the system.

B. Use banks only as a payment system from there on. This means having a floating balance that is used for facilitating payment. Use cash if desired.

C. Save in metals. As long as there is inflation you'll find that metals will help store your wealth long term. Dont be fooled by bqnks and interest etc. You'll always lose against inflation in the long run.

D. Liquidate your non core savings whenever needed to make other investments.

E. Always hold on to your 10-20% core.

With your central reserve of metals you in essence become your own bank. You'll have your assets, your reserve and be debt free.

Just some ideas.

 

My Gold is my reserve.

My Silver is for growth.

My fiat is for day to day.

My vegimite & weetbix are for eating.

 

Not sure about this part.

You may free yourself from the system but you also free yourself from opportunity. Whether that matters or not depends on your stage of life and what your goals are.

It pays to learn how to manage debt and how to use it correctly. It doesn't pay to be reckless with it and it certainly doesn't pay to be scared of it.

C

 

Debt is a tool, use it as appropriate, leveraging yourself properly you can make large gains when opportunity arrises

 

I have strong views on usury. In a fiat system which allows fractional reserve banking then any interest no matter how small is theft. The reason is that all money created out of nothing also costs nothing. No one forgoes money that could otherwise be deployed. If fractional reserve banking is to be allowed then only fees directly related to the administration and collection of the repayments with a profit margin should be allowed. Not percentages of the sum borrowed for lengthy terms.

Its no good trying to stop the whaling industry if you continue to eat whale meat.

In a similar vein, use of credit enables its perpetuation. What is needed is education of the public to the system that enslaves them. That makes them think their wealth is increased by rising nominal prices of their houses when it should be an alarm bell alerting them that they are being fleeced. We have less, and have less purchasing power than our parents who didnt have to enslave themselves for 30 years to just own the roof over their head.

Banking, namely fractional reserve banking is the biggest scam / racket ever. It is not my intention to ever become involved in the system once I am free. I'm reminded of the slavery paradigm and the miniseries "Roots". I feel like the ancestor/founder of a line where through my efforts I and my family after me will be free of the shackles of the modern banking system.

Until honest money is firmly established. That is the goal.

 

Understand your point of view. Unfortunately taking a moral stand against the system wouldn't have gotten me to where I am now, nor would it get me to where I want to be.

I'll keep using their money to my advantage and keep buying shares in the biggest scam ever.


C

 

Im a bit 50/50 on this one i hate debt with a passion & avoid it at all costs but if the right opportunity came up id borrow in a blink. My dad has been telling me for years i should be using the banks money & not my own but i cant bring myself to do it .he says id get richer faster but being rich isnt everything .I usually ask him if i look happy he always says yes i rest my case !! The freedom of being out of debt is truly liberating .

 

A closer reading might inform you that I am necessarily in debt myself. I am partaking of the whale meat so to speak. But in the future, when I am able, in keeping with the slavery paradigm, emancipate myself by paying off the last debt and then stay clear of it thereafter.

Its not just a moral issue. Sooner or later the consequences of the dishonesty are going to be felt in reality not just theory.

 

The period when I was in the most debt was truly liberating for me.

Made even more liberating by the fact that I was terrified of debt to start with.

The hardest part is managing debt pschycologically and unfortunately that only comes with first hand experience.

The rest of debt management can all be learnt in theory before you take the plunge.


C

 

"Debt management".

Reminds me of "Pest management".

You used to call in the 'exerminators' to get rid of vermin. Now, they are 'managed'. Implies that you never really 'exterminate' vermin any more.

For many, a bit like debt, perhaps?

 

Those who were successful in their handling of debt will bestow it's virtues.

Those who are burned by it will swear against it for all logic and reason.

Debt is like your daddy's shotgun. In the right hands, it will work as you intend.

Go in with a foolhardy approach or without respect for it and it'll bury you.

The casino market will be happy to allow a few winners, to keep the rest of the suckers willing to step up to the wheel.

Australia has seen a national record level of forclosures & bankruptcies every year for the last 5 years straight.

Whilst I've no doubt there are 'winners' out there who beat the system, for every one of them, are hundreds of losers who will get destroyed.


The problem we have in this country is that we give debt to irresponsible people to gamble with and press the responsibility of the failure on those who refuse to participate.

For those who win under this debtor system, congratulations. You're one of the lucky ones who were either in the right place at the right time, or had a level head on their shoulders.

But in this 'equity mate' society, there will be many more who will be taken down through this process.

I don't feel sorry for them in the slightest, but it's worth considering this in the context of any assumption that would perpetrate an ideal that says debt is the sure path of wealth.

 

I really think this is a myth.

It is my opinion that more money has been lost through leveraged investments than gained. What you see is survivorship bias. You only hear about those who made it. They're the one who write the books and sell you seminars on the topic. Like a winner at Russian roulette you dont see the piled up bodies in the graveyard.

Housing loans are where people are exposed most to a leveraged investment. The only reason it is so common is that the prices of property are in general more stable than other 'investments'. But it is the very use of leverage and the effects of inflation that has gotten everyone tangled up in this housing bubble mess.

When you lose in leveraged scenarios, you lose everything. Yoy lose your invested capital, your asset, and all the interest you've paid out already.

 

Praise the heavens that I have NO DEBT.

Bills come in regular cycles.

But am able to pay them.

It would chill me to the core to go into debt on a gamble.

Lost money in the past on "sure things".

I had no control over them ....just promises.

I own what I own............

And will NOT step lightly where angels fear to tread.

 

Would you be where you are now if you had never got into debt? Would you have had more or less?

I think debt has been demonised. For me, it has been abused by debt junkies writ large who then "encourage" govt to keep supporting their habit at the expense of the responsible. Kind of like alcohol in a way. In moderation and well-managed is fine and will quite possibly enhance your life to a certain degree. Too much is highly destructive. Problem is that we have a society where most people are children who don't want to take responsibility for themselves. And a debt-saturated society tends to be bad for everyone due to it bidding up prices.

Debt will be always be around, even if it is the form of you lending your friend a tenner or whatever. Maybe another analogy to use is that of guns. Guns don't kill people...

just mho

edit: oh, btw, mostly liked your first post, had a lot of good advice.

 

I agree 100% Intelligencer.

I often tell others that if I knew what I know today, I never would have bought a house in todays climate. But what's done is done and I need to work my way through it. The way I see it, as soon as my stack = remaining mortgage, I'll be making the final payment. It's more important for me to be debt free than "rich".

Point C, if only there was a way to not rely on banks altogether. Unfortunately the days of cash in hand are past and your employer needs to put your income somewhere.

 

I'm with Auspm on this one. I look at it this way much as I look at gambling how much can I afford to lose and how much do I want to pay the bankers. Unfortunately when it comes to my mortgage I have no choice but what spurs me on is the fact that I am slowly releasing their hold on me and I can see the light at the end of the tunnel. I use credit cards because I can afford to pay it off when it is due. I have looked at margin lending but have always shied away from it because it does not fit my risk profile much like negative gearilng for investment property.

My dad always drummed it into me there is no free lunch even the air we breathe our bodies has to work for it.

I guess what I described here is the exact opposite of the fiat money system but using fiat dollars if that make sense, it is early morning

A part of what you earn is yours to keep -- George S Clason is as relevant today as it was when his book was first published in 1926

 

Interesting point. Gerald commented on this last year in Melt Up actually...

[youtube]http://www.youtube.com/watch?v=N3gytnPdQNQ[/youtube]

 

Some valid points for sure.

Just a few clarifying points on credit.

A. Some people think that a bank gives a person credit. Nothing can be further from the truth. It is the person who approaches the bank who owns the credit. It is theirs. Their trustworthiness, and financial strength are the credit they bring. The bank gives them debt, not credit. The bank lends against the persons credit.

B. The entire culture of bank lending, and people borowing in the past decade long boom in real estate has been a consequence of loose lending. The banks create these booms in order to make their risk lower. If prices of properties they are lending against are constantly going up as a result of increased lending to support it; then the bank is more guaranteed to get its money back. Moreover the amount of lending increases and so profits from usury rise.

C. The endgame for the banks isnt pleasant in that a larger proportion of the last inflated loans given out at the end of the boom will put the banks at risk of insolvency. Thats where the government and the taxpayer will be called on for bail outs. the years of fleecing their customers is topped up by fleecing the taxpayer for their wrecklessness.

Yes. You can benefit financially by involving yourself in this scam. Not that many people know the scam for what it is and enter it innocently. But once you know what it is all about then I think participation is questionable from then on.

 

Your point about debt saturation and increasing prices is a good one I touched on above.

In terms of your other point, it shows a different type of debt, an honest type.

The lending of money by a friend represents money that person has EARNED. By lending that money they are forgoing the benefits it might bring them. So in a sense asking for a compensation for this is deserved.

When a bank lends money, it is not giving you earned money. It is giving you created money. Money that appears through a book-keeping entry.

If on the other hand full reserve banking existed. Then banks could only lend money that was deposited in time deposits to earn interest. The bank would be lending out real, earned money in that sense. Money that its customers have earned and deposited for the purposes of lending. The bank would take more interest from the borrower and pay a smaller amount to the depositor.

What is the difference?

The money is not created. It is not inflationary. It would be subject to more honest checks of creditworthiness. Wreckless lending would be kept in check. The real cost of money would be higher - the interest one would pay would be a real representation of risk not just a result of 'price fixing' by a central bank. Money lent would therefore stay sane and reflect reality. House prices would stay affordable.

 

It also gives an insight on what our aim should be. Not a gold or silver standard for money etc.

The goal should be FULL RESERVE BANKING.

If that can be achieved honest money will follow as an almost automatic consequence.