And if you think things aren't too bad and that you just have to hold on, hold
on, hold tenaciously on until you retire, which is when you can start consuming
all that money you have invested in your retirement plans, then Larry Edelson
of MoneyandMarkets.com has some information that will make you crazy.
He has compiled some statistics that illustrate the loss of buying power of the
dollar since 1980, thanks to the Federal Reserve creating so much money and
credit all that time, and thanks to the corrupt Congress (except Ron Paul) who
aided and abetted them every dime and every dollar of the stinking way.
His research shows that, for instance, the average price of a
house was US$62,200 in 1980 and $196,300 in 2007. To compare, monthly rent on
an apartment was $300 a month in 1980, and $1,082 in 2007.
The one statistic that I think is most instructive is "Average cost of a new
car", which in 1980 was $7,200, and in 2007 was $26,950. The reason that new
car prices fascinate me is not because of my raw, seething envy at people who
can afford new cars, as I realize that I will never be able to afford a new car
and will always have to drive cheap, rusted-out pieces of automotive crap
because I am too lazy to work and because my family costs a bundle, but I use
new car prices as an illustrative device, because the price of a car is a big
expense, which makes the average price of new car a nice, handy proxy of
retirement investment needs, which is a big expense if you do it right.
And, because I am lazy, I really, really, really like things that are "handy"!
So, to show you that investing in the stock market over the long term is a
guaranteed loser for the majority of investors, suppose you had invested $7,200
(the price of a new car in 1980) into your precious little retirement account
in 1980. Now, in 2008, after 28 years, your face burns with shame and you hear
the scornful laughter of The Mogambo ringing in your ears when I tell you that
that your original investment of $7,200 would have to have, after paying a 15%
capital gains tax on the increase from your original $7,200, risen to $29,912!
And you got this sum by having a superb annual 5.2% investment gain! Every year
for 28 years! No losses! Marvelous!
Now, to those blithely uninformed as to the horrors of inflation in the money
supply and the loss of buying power it creates, this seems like a nice gain:
$7,200 grew to $29,912. It almost quadrupled!
If you thought that, then The Mogambo is laughing at you, and you will find out
why when you discover that you actually didn't make a damned dime! Hahaha! You
broke even!
Your gain on the $7,200 is just enough for you to have, after 28 years, an
after-tax price of a new car ($26,950), which means that you just break even!
Hahaha! In essence, you invested a new car to get a new car, after waiting 28
years! Hahaha! Nice "investing for the long-term" dudes! Hahaha!
And yet people think they are going to fund a retirement by investing in the
stock market? Hahahaha! It ain't a-gonna happen! Welcome to the real world,
chumps!
From what Bill Bonner, here at The Daily Reckoning wrote, I see that this kind
of crap has been going on a long time, as "Since '67, consumer prices are,
officially, up seven times. Wages in America are up exactly the same amount. In
other words, during your editor's entire adult lifetime Americans' per hour
earnings have not increased a single penny."
Even worse, The Desidooru Saloon column notes that the dollar is falling faster
than ever, as "the dollar index has fallen 41% against the euro during the
[George W] Bush 43 presidency." The dollar has lost almost half of its value in
eight years! Astonishing!
This means Really Bad News (RBN) for people who have no job for one reason or
another (fired, retired, young, handicapped or in prison); not only do they not
have an income, either then or now, but the little bit of money they do have
buys half as much as it did only eight years ago!
And how many people are unemployed? Desidooru finds that while "The wizards at
the Bureau of Labor Statistics have somehow found unemployment still at 5.5%",
the truth is that John Williams at this shadowstats.com estimates that real
unemployment, stripped of the government's manipulating, lying, deceitful, and
intellectually-corrupt handiwork, is "a Carter-esque 14%." 14% unemployment!
Yikes!
And speaking of manipulating, lying, and deceitful, George Ure of
UrbanSurvival.com feels like I do about government debt, and he obviously feels
like my wife does about shenanigans with the money (Her: "Where's the change
from that $20 you still owe me?" Me: "Me no speakee English!"), and in his
"It's Only Money Department" he writes, "check this out: 'The Debt to the
Penny' just went up by $30 billion on June 30 after basically being flat for
two months. It makes one rather suspicious of the validity of the numbers."
George, I am far, far, faaaaAAAAAaaaar beyond suspicious. I'm even beyond
paranoid and frightened.
It is only the safety and security of gold that allows me to laugh, "Hahaha!"
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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