Wednesday, September 17, 2008

The Economic World is Flat - NOT ROUND

I'm thinking I should cash out my 401K despite the penalties and taxes. I probably won't and will live to regret it. But any of you that still have more willpower left than I do should heed my advice.

Withdraw anything from the banks. Get out of stocks, bonds, commodities. Any type of financial instrument. Take the hit now. Maybe invest in good quality real estate. Even cash will be better in the short run. But eventually we will get hyperinflation like in the Weimar Republic.

You will need to be nimble to avoid all the coming financial disasters. But by all means DO NOT TALK TO A FINANCIAL ADVISER. Or follow the advice of those TV finance "experts". They have no idea what to do in a crisis. All there advice is based on the economy sailing along normally.

Right now we are approaching the End of the World, in the sense that Europeans used to think that the world was flat and that you could sail of the End. Economically that is where we are. We are sailing in uncharted water. The assumption that the economic world was round, turned out to be wrong. It is Flat and therefore Not Infinite. You can't just keep circumnavigating. There are limits to the economy when it is under stress. You can only produce so much wealth out of thin air.

Do you remember your High School Physics class and learning about conservation of matter. Well economists want us to believe that there is no such principle for Money. That it just magically appears and disappears in the Stock Market or in the Housing Bubble. Sure in a normal economy you have to play along and pretend you believe this is true. Is there any alternative for most of us? But in this economy at the Edge of the World with the Waterfall looming, you had better get back to common sense. You used to have it before you were conned into using Credit Cards and assuming a Huge Mortgage that you would never pay off in your lifetime.

Trust your instincts. They will save you.

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