Kia Ora,
Have decided to go through mistakes I have made so far to give lessons. But today it will be more on the smoke & mirrors of our finance system.
A lot of the information I have being getting comes from the US. I am asked but what has that to do with NZ. There are always going to be little differences but much of what happens in NZ copies what has happened in US. Also because like all currencies the NZ Dollar is tied to the US due to Bretton Woods (1944 agreement), what happens there affects us.
For example the US says it has debt of around US$11 Trillion, when in fact it has debt of US$119 Trillion at last count with most of it 'off book' in the same way Enron had much of its debt 'off book'.
Much of that debt is the US medicare (comparison here is best ACC) which was in the black until the Clinton administration borrowed it all.
Even more worrying for NZ is when you listen to how their 401K retirement plans are set up & why they are not going to work the similarity to Kiwisaver is frightening. Right from the beginning you have heard Gareth Morgan go on about hidden costs of most schemes. That is exactly what happens in a 401K & at retirement most Americans will not have enough to live on that is if inflation or hyperinflation hasn't wiped it out. The money will still be there, but it will buy very little.
Don't believe Government statistics on inflation or unemployment. Governments manipulate those figures. In the US there is a site called shadowstats. It basically tracks these figures the way they did prior to Governments manipulating them.
For example here in NZ the government says that inflation is almost 0% at present, when in fact at the supermarket prices have gone up about 10% in last year or less.
First thing they have done is remove assets (property etc - did you know that to justify that they say you don't own your house but rent it from yourself) which have all gone up in recent years (in this last year alone gold has gone up 30% & Silver 60% & house prices are still up even though they dropped this last year).
Then they do something like they did two years ago. They removed mince meat from the list monitored because it wasn't 'a staple meat anymore' which surprised us that heard it. Real reason was it was going up in price. They replaced it with flat screen TV's. Now any new technology will drop in price relative to that it was first introduced to market over time. Just look at computers. More power lower price by comparison.
So net effect it makes it look like inflation is down. All the time they are telling people to save when system requires you to get into debt (hopefully good debt) to keep it going.
It also means they have to keep coming up with ideas that create a market & therefore currency out of thin air. The latest one is carbon credits & Emission Trading. They are all derivitives & the more derivitives you have the more unstable everything becomes because they are backed by nothing substantial. As an Options trader I buy & sell things I don't own & are never likely too.
Whats a derivitave? Best explanation I have heard is to think of it like orange juice which is a derivative of an orange.
Robert Kiyosaki has actually written a book about all this called "Conspiracy of the Rich" in which his aim is to alert you too it, don't fight it, but work with what the rich do to get yourself ahead of the game.
If you can see past the smoke & mirrors then you can use that knowledge to help you & your Whanau.
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