I occasionally like to visit websites that encourage saving money.  In particular, I enjoy visiting ones that encourage ultra saving, perhaps on the verge of being compulsive.  Two such websites are as follows:

http://www.mrmoneymustache.com/

http://www.thepennyhoarder.com/

I find them fascinating, perhaps because I know it is not realistic for me.  It is not realistic for most people, especially those with a spouse and children.  You pretty much have to get the whole family on board or it isn’t going to work.  You will just end up getting frustrated.

Personally, I don’t really like compulsive saving, but I do occasionally get some good tips from these websites.  I strongly encourage people to save money and live below their means, but I also don’t think you should make yourself miserable in the process.

I know the $5 cup of coffee is often used as an example of cutting expenses, whether or not it is symbolic.  You can probably get a cup of coffee for cheaper, but that is beside the point.  If you really enjoy your $5 cup of coffee and it makes your day, then I don’t think you should cut it out of your life and deprive yourself, unless you are really in a tough situation financially.

Saving five dollars a day isn’t going to make you rich.  Even if you find four or five little things to cut out of your life, it probably isn’t going to make much of a difference.  You will probably get frustrated because you are depriving yourself of little life pleasures while not seeing much progress on the savings front.

In terms of saving money, you should really look at the big things.  This would include car payments, rent/ mortgage, and perhaps your biggest or most expensive pleasures.

If you really like boating, maybe you can find an alternative to owning a $30,000 boat.  Maybe you can join a boat club or share one with others.

There are people who will pay $600 per month for a car payment, yet they feel forced to pack a lunch every day.  It is fine if you like to pack a lunch and you really love your car.  But I find that this isn’t usually the case.

The other important point is that sometimes you just have to find a way to make more money.  If you are stressing over a $5 cup of coffee, you really need to either check your spending or your income or both.

If you are making six figures and you don’t live in a really expensive city, then you should be saving money.  It is more of a spending problem than an income problem.  But I find that many people feel locked in to their income and never explore other options.

If you are making $40,000 per year, you will probably never be rich.  You can try to save, but you aren’t going to get very far.  You may just have to look at finding ways of making more money.  This could include finding a better job, finding a second job, starting a side business, or doing some extra consulting work.

While I often write about investments and wealth protection, this advice isn’t going to do you much good if you don’t have much of anything to protect.  At some point, you have to make more money than you spend.  You may have to be creative and find ways to make more and spend less.  The key is to figure out which area you can get the biggest bang for your buck.

As I write this, the price of gold is back down to almost $1,200 per ounce.  The price showed promising signs recently for gold investors, but it can’t seem to hold on to the gains (in terms of dollar profits).

Gold stocks have been a terrible investment over the last several years, but they also started showing signs of life in the last few weeks.

Gold has actually traded in a fairly narrow range over the last year or so.  There are day-to-day ups and downs, but the swings haven’t been too wild.  Just when you think gold is about to break out, either to the upside or downside, it reverses course.

One important thing to consider is that the U.S. dollar has been strong in comparison to other fiat currencies.  In particular, the two other major currencies – the yen and the euro – have been really weak.  Both the ECB and the Bank of Japan are in monetary inflation mode (more so the Bank of Japan up until now) and the economies in Japan and Western Europe are extremely weak.

I believe that gold can still go higher even with a strong dollar.  It isn’t so much that the dollar is strong, but that it is just less bad than the other fiat currencies.

People ask if it is a good time to buy gold.  I say, “that depends.”  If you don’t own any, then you should certainly buy.  If you own 40% of your portfolio in gold and gold-related investments, then you should probably sell a bit.

My target is generally around 25% of your financial portfolio as part of a permanent portfolio.  This would include any investments directly tied to the price of gold.  Gold stocks should be separate as a speculation.

In the next year or two, the dollar price of gold is going to depend on what the Federal Reserve does.  This in turn depends on the state of the U.S. economy.  If the economy sinks and the Fed starts another round of so-called QE, then I expect gold to go higher.  If the Fed keeps its current tight money stance, then I expect gold to stay in its current narrow range.

The current CPI numbers show a decrease in price inflation for December.  A lot of this is due to falling energy prices.  The median CPI is usually a better measure and it is showing 2.2% year-over-year.

I don’t think Yellen and the Fed are worried about price inflation, unless they just aren’t showing their hand.  Since price inflation doesn’t seem to be much of a factor right now, at least by their standards, I don’t think it is going to take that much to start another round of digital money printing.

Adam Kokesh, an ex-Marine and libertarian activist, interviewed people seeing the movie American Sniper.  There is a 27-minute video where he really gets to the heart of the matter.  It is amazing how many people are either ignorant or just downright confused.

The movie has been huge at the box office and many people (not just Republicans) are calling Chris Kyle an American hero.

First, I have to point out that Chris Kyle was a liar.  For him to say that he shot several looters from the top of the Superdome in New Orleans after Hurricane Katrina is ridiculous.  If it were true, he should have been charged for murder just for that act alone.  How can anyone accurately judge a situation from that far away?

But the fact that Chris Kyle was a liar does not change the rest of the story.  Even if he had been completely truthful, it would not change my opinion of him.

While many Americans see Chris Kyle as a hero, I see him as a murderer.  We know that he killed a lot of people.  He admitted it.  He had 160 confirmed kills in Iraq.

Most Americans view these 160 kills as justified.  In many cases, he was protecting his fellow Americans.  This view needs to change.

This took place in Iraq.  It wasn’t in the United States.  The American military went into Iraq and blew up buildings, blew up utilities, and killed a lot of people.  Then they occupied the country and effectively put it under martial law.

If the Chinese government, or any other government, came into the United States and devastated cities and killed a bunch of your friends and relatives, what would your reaction be?  Would you be justified in taking up arms against the Chinese military men?  If a Chinese sniper killed you because he saw you walking around with a gun, should he be called a hero for protecting his fellow Chinese soldiers?

So many Americans are so hypocritical when it comes to foreign policy.  They view their own country and their own government as righteous.  They believe everything is right because “we are Americans”.

Many people still believe that the invasion of Iraq was linked to 9/11. It wasn’t.  The only link was the implication by the Bush administration and all of the apologists.  They lied.

But even if Iraqi officials had been involved in 9/11, it still would not have excused killing innocent people and devastating the country.

None of those 160 people killed by Chris Kyle had been convicted by a jury.  None had been formally accused of a crime.  They were people living in their own country trying to fight off people they saw (and justly so) as occupiers.

It doesn’t matter about Saddam Hussein.  Maybe he was a bad man.  There have been a lot of bad men who have sat in the White House too, but it doesn’t mean I want another government to come in and bomb my country.  Still, even with that said, most Iraqis would probably much prefer to have Saddam in power than to have a devastated country occupied by foreign troops.  It has been chaos there ever since the war started, particularly the second time.

I think some Americans see the reality of the situation, but unfortunately are too cowardly to speak up.  They don’t want to be accused of being anti-patriotic or anti-American or pro-Saddam or any number of other names they will be called.

But it is time to tell the truth.  It is especially time to stop defending someone who was a cold-blooded murderer.

I don’t know what the motivations were of the guy who killed Chris Kyle.  Maybe he was just crazy.  But I can’t help but think that he actually had a conscience.  This is not a defense of what he did.  It is just to point out that he probably felt a lot of guilt for having been violent and felt resentment towards Kyle that he didn’t feel the same.

The military worship has to stop.  Murder is murder.  Chris Kyle should be looked at as a thug.  If he had been a true hero, he would have refused to go to Iraq.  He would have refused to kill innocent people who were trying to defend their homeland.

For some reason, some libertarians like Thomas Sowell.  Many fiscal conservatives like him.  To me, he is a statist.

Sowell has some decent views on certain aspects of the free market.  He is a good writer when he knows what he is talking about.  Some of his writings on economics are decent, although even here he falls very short sometimes.  He seems to have little to say about central banking.

I have written about Sowell before.  I called him a moron.  I don’t really like name calling because it is usually unproductive and unpersuasive.  With that said, it is really irritating that someone can seem to be so articulate about certain aspects of the free market, yet fail to see some of the simplest things and be a complete statist.

Sowell is a war hawk.  He is mostly a Republican apologist.  He might have had a few minor criticisms of George W. Bush.  He supported Newt Gingrich for president (that should be enough said about him).  He couldn’t seem to find anything nice to say about Ron Paul when he was running for president.

Now Sowell has written an article about measles, vaccines, and autism.  I will quote the final paragraph in his piece:

“Some say the decision to vaccinate or not should be the parents’ choice.  That would be fine if their child would live isolated from other children.  But that is impossible.”

In other words, Sowell wants to force you to stick needles into your child.  If you don’t obey Sowell, then he wants the police to come and kidnap your children away from you.  If you resist, then you yourself will be kidnapped or shot and killed.

I hope if Sowell ever gets a cold that he never leaves his house.  Maybe the police should force him to stay there.  After all, we wouldn’t want him infecting anyone.  There is always that possibility.

Of course, I am not the first to point out that if the vaccines are so great, then why are people worried about unvaccinated people.  Wouldn’t it just be the unvaccinated people that would have to worry?

And what about people who receive the vaccine?  There is shedding, where the virus can actually spread.

If young babies and people with cancer (weakened immune system) aren’t supposed to be vaccinated, then why is a particular age for an older baby or young toddler all of a sudden risk free?

Sowell says that there is hysteria over a faulty study that linked autism to vaccines.  Sowell says there are better studies out there, presumably by government officials and government-paid scientists.

Sowell says that the doctor who wrote the study linking autism and vaccines (he is probably referring to Andrew Wakefield), had his license revoked.  In Sowell’s eyes, this strengthens his case because the government-run bureaucracy revoked the doctor’s license.  Sowell, as we know, trusts the state and all of its licenses and those who issue them.

Sowell says that the main reason for the increase in autism is because they have changed the definition.  I know the guy is over 80 years old, but does he have to spout off like an ignorant fool?  Can he just open his eyes to reality?  I have seen people argue that the increase in autism is related to other factors, which is fine, but for him to argue that there is no significant increase in autism in today’s world is just plain ridiculous.

Almost everything in Sowell’s article is completely wrong or based on wrong assumptions.  All of his “evidence” is based on trusting the state.  And he, of course, demands using the violence of the state to stick dozens of needles into each young child in America.

But the topper for me that shows his absolute ignorance is when he says that lawyers were suing pharmaceutical companies because they had a vested interest.  Yes, the lawyers have a vested interest in winning their cases.  They have probably made many millions in total.

This somehow doesn’t compare to the many billions (in case you are reading this Sowell, billions is more than millions) that pharmaceutical companies have made pushing these vaccines.  The pharmaceutical companies are in bed with the FDA and various politicians.  But if they make a profit, I guess it is just free market capitalism at work.

Thomas Sowell is a complete statist.  I can’t understand why any libertarian would like the guy.  He is pro war, pro government spying, pro central banking, and he wants to force every parent to vaccinate according to his opinions.  It is understandable why he supported Newt Gingrich so much.

• Brian Williams is in hot water over embellishing (some would say lying) about an incident that happened while he was in Iraq.  Now people are questioning his stories about his time in New Orleans during Hurricane Katrina.  He talked about bodies floating by in the flood waters.  I just figured it was the bodies of people that Chris Kyle took out from the top of the Superdome.
• I recently saw The Tonight Show where Jimmy Fallon said: “Speaking of Obama, he presented a $4 trillion budget that he says would help the middle class.  And then the middle class said, ‘You know what, how about just giving us $4 trillion?  That will help us.  We will figure it out.  We’ll figure out what to do with it.'”  Fallon has no idea how true that should be.
• Jeb Bush said his brother had been a “great president”.  I understand loving your family.  But if he thinks his brother was a great president, that is enough for me to strongly oppose Jeb Bush.  Anyone who thinks George W. Bush was a great president, or even a good one, deserves huge criticism from libertarians.
• How does ISIS sell all of this oil?  We are not talking about Bin Laden hiding in a cave somewhere.  This isn’t a bunch of roaming terrorists.  These people somehow know how to package and deliver oil and receive payment.  Do you ever get the feeling that you are not getting the full story from the U.S. government?

The presidential election of 2016 is beginning.  There are a long list of potential Republican candidates including Scott Walker, Jeb Bush, Rand Paul, Chris Christie, and Marco Rubio.  On the Democratic side, there is Hillary Clinton.

They are all war hawks, with the possible exception of Rand Paul.  But even here, we can’t be sure.  Rand Paul is nothing close to his father, especially when it comes to foreign policy.

I expect someone to come out and challenge Hillary Clinton in getting the nomination.  It may be Elizabeth Warren, but I doubt the party will nominate someone that is perceived as being far to the left.

According to polls, now that Mitt Romney has dropped out of the race, Jeb Bush is the frontrunner.  But just as Hillary Clinton has baggage, Jeb Bush also has baggage in the form of his brother.

From a libertarian standpoint, it seems that Bush or Clinton would be the biggest disasters, but you never can tell.  It would be interesting if there was a Bush vs. Clinton matchup in 2016.

How much more of an in-your-face message would the American people need?  Other than Obama, we have had nothing but a Bush or a Clinton since 1989.  We already had a Bush vs. Clinton matchup in 1992.  Would there be any doubt left that we are ruled by oligarchs?  Would there be any doubt that the whole system is rigged?

In a country of over 300 million people, don’t you think the two major parties could find a nominee that doesn’t have the last name of Bush or Clinton?

My hope is that Jesse Ventura runs.  My one fear would be if Ventura runs and Rand Paul gets the Republican nomination.  They would split the anti-establishment vote.  The Democrat – presumably Hillary – would probably get in with around 40% of the popular vote, much like her husband did in 1992.

I puzzle a lot of libertarians with this, but I have a preference of Ventura over Rand Paul (not Ron Paul).  I actually think Rand Paul is a bit more sound economically.  Ventura is certainly no student of Austrian school economics.  To be sure though, he is far more free market than any of the other establishment candidates.

The reason I tend to favor Ventura over Paul is because he doesn’t play ball with the establishment.  He tells the truth and he doesn’t back down.  He doesn’t feel the need to pander.  I would trust him more in standing up to the establishment and in dismantling the U.S. empire overseas.  That is the best we could hope for out of a president at this point.

I think the next president is going to be in for some rough times.  There will be major economic problems and budget problems.  It is too hard to predict what foreign problems will exist, but probably all of the ones that exist now.  As things shape up more, we will get a better idea of what we might be in for in the future.

The people of Greece, desperate for a change, just elected a far left-wing government.  It was not a majority vote, but the left-wing party won a plurality and is now effectively in control.

Of course, there will probably not be any change, or it will be change for the worse.  It probably seems that things can’t get any worse to the people living there, but they will soon find out that that is not the case.

H. L. Mencken said that democracy is the theory that the common people know what they want, and deserve to get it good and hard.  It is a funny quote, but also sad at the same time.

I really don’t think most of the people there deserve what they are about to get.  They are getting what they asked for, but I can’t really wish poverty and misery on  most people.  To be sure, there are certainly a few people there that truly do deserve what is coming.

Greece is a welfare state.  They are running in to the problem that Margaret Thatcher once identified with socialism.  The problem with socialism is that you eventually run out of other people’s money.

Greece is out of money.  To be more precise, they are out of wealth, or close to it.  For anyone left in Greece with any significant amount of wealth, I would run for the hills.

I think a far left-wing socialist government is exactly what Greece needs right now.  The people there probably won’t learn their lesson, but at least maybe some observers will learn a lesson.  While the economy continues to descend into chaos, it is better to be blamed on a socialist government.  I am getting tired of hearing that “austerity” is to blame for the crisis.  There has been anything but austerity in Greece, unless you accept the crazy definition that austerity is higher taxes.

I believe it is inevitable that Greece will leave the European Union.  I have thought this for a while, but things always seem to take time to play out.  The elites seem to find a way to kick the can one more time.

Greece should default on all of its debt.  It is actually one of the best things that can happen to the Greek people.  It isn’t so much because they won’t be burdened with the interest payments, although that will help.  It will be because, hopefully, nobody will lend money to the Greek government any longer.

This would be a good thing.  The talking heads say it as if it is a bad thing.  If the government can’t borrow, then it can only spend what it taxes or prints (inflates).  It is better to have two options than three.

If Greece leaves the EU, it will get its own central bank going again.  They will probably try to inflate.  Hyperinflation there would be a real possibility.

Maybe they will eventually straighten out their problems, but for now, it is a complete mess.  It is better to be blamed on a socialist government.

The Federal Open Market Committee (FOMC) released its latest statement on monetary policy on January 28, 2015.  Since the Fed ended its QE program in October, most of the focus has been on interest rates.

The statement said the following:

“Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.  However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.  Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.”

All of this focus is on the federal funds rate (the overnight bank lending rate).  But despite these threats of higher rates from the Fed, long-term interest rates are falling.  Investors either don’t believe what the Fed is saying or they really don’t care.

I am expecting and preparing for a recession.  I don’t know when it will come, but the Austrian Business Cycle Theory tells us that it should come.  The Fed has had six years of high monetary inflation and there is little question that this has generated bubbles and misallocated resources.  The bigger question is when this will fall apart.

Perhaps an even bigger question is how the Fed will react when the bubbles start to deflate.  Will it watch it happen or will it start another round of QE?  While we can’t be sure, my bet would be on the latter.

Right now, I feel like Janet Yellen is a magician.  She is distracting everyone with one hand.  That is interest rates.  But nobody is paying attention to the other hand.  That hand is about to pull a rabbit out of the hat in the form of new money.

Again, the timing of this is impossible to predict, but we shouldn’t be surprised when it happens.

The European Central Bank (ECB) has announced its own version of quantitative easing (QE).  It will start buying 60 billion euros of assets each month, going well into 2016.  This will total at least 1.1 trillion euros, which is approximately 1.3 trillion dollars.

I see this as the ECB trying to imitate the Federal Reserve.  The Fed has quintupled the monetary base over the last 6 years, with its biggest round of monetary inflation coming to an end this past October.  Yet much of this money went into bank reserves and consumer price inflation has stayed relatively low.

It is almost as if the Fed has had a free lunch.  It has gotten away with its biggest round of monetary inflation ever with few consequences.  Meanwhile, the U.S. economy is looking better, especially when you compare it to Japan or Western Europe.

It might almost seem rational for the ECB to try to imitate the Fed.  Much of Western Europe is in recession or worse and the price inflation is low there as well.

Unfortunately for the Keynesian central bankers of Europe, things might not turn out the way they plan.  Mario Draghi, central banker and former Goldman Sachs guy (or do I repeat myself?), may not get off as easy as central bank officials in the U.S.

First, it is important to point out that things have not played out in the U.S. yet.  The economy is seemingly strong and much of it is because of the Fed’s inflation.  But asset bubbles take some time to pop.  The popping of the oil bubble may just be the beginning.  Perhaps stocks are not far behind.

The point is, central bank inflation misallocates resources and it slows down productive growth.  At some point, these misallocated resources get exposed and the realignment usually means a recession, unless it is not too severe and other areas with strong productivity are able to offset it.

The second problem for Europe and the ECB is that Europe is not the same as the United States.  There is simply not as much real wealth.  The U.S. is a very entrepreneurial society and there is a lot of wealth from 200 plus years of capital accumulation.  Western Europe has been more of a hardcore welfare state and is relatively poorer in general.

When there is less in the way of real wealth and real savings, then things can’t be covered up as long.  The people of Greece are finding this out the hard way right now.

When there is a large amount of government spending, coupled with central bank inflation, a wealthier society can withstand it better, at least for a period of time.  There is more real wealth to sustain things.

It is no different than a family.  If you have to take a pay cut and you are spending more than you are earning, you will be able to better withstand the situation if you have a lot of prior savings.  In terms of a country, I am not talking about government savings.  I am talking about real wealth that is owned by the individuals.

The ECB may find that its policies have almost no effect up front.  Meanwhile, they will be misallocating resources and hurting long-term wealth production.  It will wipe away what little savings are left there.  If much of Europe finds itself in recession, maybe the ECB will up the ante and create even more inflation.  But then it will just exacerbate the problem more and they may end up with a depressed economy and high price inflation at the same time.

Overall, it isn’t going to be pretty for Western Europe in the long run.  The ECB is making things worse.  It is wasting real capital and real wealth.  If I were living in Western Europe right now, I would want to be in Switzerland, away from the euro.

The big financial news this past week was the announcement by the Swiss National Bank (SNB) that it would drop its peg to the euro.  The SNB announced this peg in September 2011, where it would not let the franc rise against the euro.  The peg was set at 1.2 francs per euro.

In order to maintain this peg, it meant that as the European Central Bank depreciated the euro by creating money out of thin air, the SNB had to essentially do the same thing.  The SNB, over the last 3 years, has had to buy up euros, mostly with newly created francs.

While this temporarily helped exporters in Switzerland, it hurt all consumers in Switzerland by making things more expensive.

This past week was the final straw, as the SNB realized that it wasn’t up to the massive monetary inflation that would be necessary to keep up with euro, particularly with the anticipation that the European Central Bank is about to announce a massive monetary inflation scheme.

It is good news for most of the Swiss that the SNB has dropped this ridiculous peg.  The franc has been an historically strong currency, but its reputation was evaporating quickly before this past week.

The announcement will mean several companies and investors will be severely hurt or bankrupt, but that is because they were betting on the continued peg.  The “carry trade” – where investors would borrow francs at low rates and exchange them for other currencies that pay higher rates – was a popular thing, but it will now mean a lot of pain for those who tried it and now have to convert back to francs.

The SNB never should have attempted its policy, as it can now see.  But at least it is abandoning this bad policy, even though it will hurt some people in the short run.

PRPFX

My favorite mutual fund is PRPFX.  It somewhat mimics the permanent portfolio that was advocated by Harry Browne.  I recommend that investors put a minimum of half of their financial assets in a permanent portfolio setup.

I say that PRPFX “somewhat mimics” the permanent portfolio because it does stray from the original formula.  My biggest criticism of PRPFX, especially over the last few years, is its holdings of Swiss francs.  About 10% of the fund’s assets are invested in Swiss assets.

This doesn’t make a lot of sense to me because gold is in the portfolio and is supposed to protect your portfolio from dollar depreciation.  You shouldn’t need to invest in foreign currencies.

This was made worse in 2011 when the SNB announced its peg to the euro.  I don’t understand why the managers with PRPFX kept Swiss francs as part of the portfolio.  It may as well have invested in euros, at least up until this past week.

Well, things have just gotten a bit better.  It is no surprise that PRPFX did well last week with the SNB announcement.  I still think the fund should get out of the franc, as it is really speculation to buy foreign currencies.  Again, the significant gold portion should protect your portfolio against massive inflation.

At least now I feel a bit more comfortable recommending PRPFX.  While it is still far from perfect (nothing is perfect), it is a good option for investors looking for wealth protection and growth, without having to buy the individual pieces of a permanent portfolio.  It also does the rebalancing for you.

I don’t expect any more major announcements from the SNB, but the market will have to find the new exchange rate for the franc.  There may be some more volatility in the short run.

Overall, this is good news for people living in Switzerland.  It is also good news for those invested (or wanting to invest) in PRPFX.