Whatever It Takes, For As Long As It Takes

At the beginning of August, I posted a blog called “When Will The Fed Print Again?”. Now we know. The answer is now. On September 13th, the Fed announced that it will create $40 billion per month and use that money to buy agency mortgage-backed securities in order to push down long-term interest rates so as to support economic growth. Furthermore, the Fed’s press release stated, “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”

Whatever It Takes, For As Long As It Takes

This round of money creation differs substantially from the two rounds that came before. During both of the earlier rounds of Quantitative Easing (QE) the amount of money to be created and the duration of the exercise were announced from the beginning. This time no limits on either quantity or time were announced. In other words, this time the Fed is going to continue creating fiat money for as long as it takes to bring down the unemployment rate. Some economists have dubbed this exercise “QE Infinity” instead of QE 3 due to the opened-ended nature of the Fed’s commitment.

But why did the Fed launch this extraordinarily aggressive program of open-ended money creation just now? In my August 2nd blog, mentioned above, I outlined four triggers that would force the Fed to switch back on its printing presses: 1) a stock market crash; 2) much higher government bond yields; 3) deflation; or 4) a jump in the unemployment rate. None of those criteria were met between then and now. Moreover, the spike in food prices brought about by the US drought should have deterred the Fed since there is a clear cause and effect relationship between paper money creation and food price inflation. Nevertheless, the Fed went ahead anyway. Why?

Some commentators have expressed the opinion that the Fed acted to help President Obama get reelected. I don’t believe that is the reason. If the Fed had wanted to help reelect the President, it would have acted sooner to ensure the economy was powering ahead by election day in early November. It waited too long for that. It’s going to take more than a month or two for this measure to begin to meaningfully impact economic growth.

I believe the Fed acted now because it is afraid – afraid that our global economy is about to go under. In the past, I have written that it is useful to think of the global economy as a big rubber raft, but one inflated with credit instead of air. On top of the raft float not only all the asset classes – stocks, bonds, commodities and real estate – but also the world’s seven billion people. So much credit has been created globally that the raft is now fundamentally defective because the income of the world’s population is insufficient to pay the interest on all the debt. The raft is full of holes and the credit keeps leaking out as one group after another is forced to default on its debt. Therefore, the natural tendency of the raft is to sink. But, if the raft sinks not only will asset prices crash, people will begin to die – just as they did during the 1930s and 1940s, after the credit-inflated global economy of the Roaring Twenties went down.

Signs abound that the global economy is beginning to submerge. The US economy grew by only 1.3% during the second quarter. The UK is in recession. Europe’s economy is in crisis. And Japan’s economy, which has been in crisis for 22 years, is deteriorating rapidly due to a sharp contraction in exports. Even China’s great economic boom is over. Chinese exports grew by only 1% year-on-year in July. It should come as no surprise that China’s export-led growth model cannot work when all of China’s trading partners are in crisis.

With the global economy going down fast, the Fed has begun to panic. Having already cut short-term interest rates to close to zero percent, it has only one policy tool left to keep the global economy afloat. That is to create more money and inject it into the raft in order to reflate it.

The Fed is not acting alone. In recent weeks, the European Central Bank has announced it will do “whatever it takes” (i.e. print as many Euros as it takes) to hold down the interest rates on Spanish and Italian government bonds so that the Eurozone does not disintegrate. And, in late September, the Bank of Japan announced it would expand its own version of Quantitative Easing by the equivalent of $126 billion. The Bank of England has been the most aggressive player of all, having bought up approximately 30% of all UK government debt with newly created money.

The central bankers are at emergency stations and manning the pumps. They are pumping credit into the global economy as fast as they dare. If they don’t pump in enough, the raft will sink. If they pump in too much, it will turn into an inflationary balloon and float away.

Will this work? It will – for a while. Then it won’t. So much fiat money creation would have caused very high rates of inflation long ago had it not been for one, separate factor: globalization. Because of globalization, the marginal cost of labor has fallen 95%. It is no longer necessary to pay a factory worker $200 per day in Detroit to build a car. That job can now be done with $5 a day labor in India. This unprecedented collapse in wage rates has been extraordinarily deflationary; and that deflationary pressure has completely offset the inflationary pressure produced by the enormous increase in fiat money creation in recent years.

For the moment, fiat money creation is keeping the global economy afloat and globalization is preventing inflation by driving down wages in the developed world. This arrangement is inherently unsustainable, however. The global economy is in crisis (and sinking) because the income of the world’s population is insufficient to service the interest on all the debt. With median income in the developed economies shrinking because of globalization, it is inevitable that credit defaults will accelerate, causing the global economy to sink that much faster.

The only lasting solution to this crisis will be one that causes incomes to rise.

From: Richdad

Why the poor work for money…and the rich don’t

When I was a young boy, I had the advantage of two perspectives on money because I had two dads—a poor one and a rich one.

My poor dad was a government employee. As the superintendent of the Hawaii school district, he made a decent salary, had health benefits and enjoyed a pension. Though he had a good job, he didn't understand money. So, he struggled financially all his life.

Why the poor work for money…and the rich don’t

My rich dad was a business owner with a financial education. Over the years, he invested in and built an empire that ranged from small convenience stores to large hotels. He didn't have a traditional job, but he understood money. As a result, he became very rich and didn’t struggle to make ends meet.

He taught his son, Mike, and me how to view and use money to become rich through a series of lessons, and the first lesson he taught me was, "The rich don't work for money."

My rich dad said, "The main cause of poverty is fear and ignorance."

His point was that most people are so afraid of not having money that they'll do anything to get it. Usually, this means working jobs they don't like, for people they don't like, for a salary they don't like.

The reasons for this is that while people know they want fine things, they don't know of any other way to attain them than trying to work for more and more money. The more they make, the more they buy, and the more money they need to make.

It's a vicious circle that rich dad called the Rat Race.

As people become accustomed to having more and more nice things, they become more fearful of losing all they've worked for. So, they work harder to please their boss and keep their jobs. All the while, they become more and more miserable.

Some of these people are poor in spirit because they are unhappy. Others are poor in actuality because even though they work hard, they don't make enough money to live a good life. Either way, they are living a life of poverty because they don't understand money and how to make it work for them.

As young boys, my rich dad wanted to teach Mike and me a valuable lesson about money. He did so by having us work at one of his convenience stores for three hours each Saturday. Our job was simple but mind numbing. We dusted the shelves each time a car drove through the parking lot, sending a wave of dust through the store doors that were open to keep the store cool since there was no air conditioning.

In return for this, we each received $0.30, which was not a lot of money, and a promise to learn how to be rich. At the end of each shift, I used my money to buy comic books and went home wondering when rich dad would teach me how to be rich.

As weeks went on, I got my $0.30, but I never got the teachings I expected on how to be rich. Finally, I was ready to quit. I was making poor money for hard work and it wasn't worth it—or so I thought. That is when I finally got my first lesson on money.

"I want to teach you the power of money," said rich dad.

He went on to explain that our desire for more money had the effect of blinding us. Rather than see opportunity, we let our lack of money give us tunnel vision. The only option was to have him pay us more. We were working for money.

He then explained that he didn't work for money, but did what he loved and made money work for him. Our eyes were opened.

After rich dad's financial education lesson, Mike and I put our heads together to see how we could make money work for us as well. The answer had been in front of our faces the whole time we were dusting the shelves and complaining about how little we were making.

Rich dad said, "The sooner you stop working for a paycheck, the sooner you'll see things other people never see."

After rich dad's lesson, Mike and I worked at his store for a couple weeks and noticed that the store manager would take the older comics, cut the covers in half, and give them to the distributor for a credit. This gave us an idea.

When the distributor came in to pick up the old comic books, we asked him if we could have them. Because we worked at the store, he said yes, but only if we didn't resell them.

Keeping our end of the bargain, we didn't sell them—we rented them out. Using a spare room in Mike's basement, we stockpiled hundreds of free comic books, and each Saturday we opened our library from 2:30 to 4:30 p.m. to the kids in the neighborhood. Admission was $0.10 a day, a steal since each book was $0.10 and you could read five or six in the two hours we were open.

As things got rolling, we averaged $9.40 per week—a lot more than the $0.30 we were making each week at the store. But we'd never have had the opportunity had we not worked there and had our eyes open to opportunity. The best part of our new venture was that we made this money even if we weren't there at the comic library.

We'd learned to make money work for us.

From: RichDad

Discover the truth and reach your financial freedom goals faster

In the past few blogs, I’ve talked about having a mission and what it takes to sustain a long, healthy business and life.

But what if you are still at square one trying to figure out who you are and what you really want in life?

As I talk about in It’s Rising Time!, our entire company took the Kolbe Index. Created by Kathy Kolbe, an expert on human instincts, this tool helps identify a person’s natural, innate and unchanging talents. It helped us put the right people in the right jobs so they could excel.

During the process, I found out that I’m not a “natural organizer,” and by turning over my organization tasks to someone who loves to organize, I was able to accomplish more. Sometimes, it takes an outside source to show us our strengths and weaknesses.

But what do you do if you don’t have anyone you feel comfortable talking to or the funds to see a counselor or service that can help?

Well, have you ever journaled? It’s a very effective way to discover more about yourself and the environment you’re in. And all it takes is something to write with, a pad or notebook and you!

Are You Looking For Answers?

Whenever I’m looking for an answer, have an issue I’m struggling with or just want to get more in touch with what’s really going on in my life, I write in my journal. It’s a form of meditation for me, and it may work for you too. But when you journal, there are two, key rules to remember:

It’s for your eyes only.
When you write in your journal, write whatever you want, however you want. After all, you are the only person who is going to read it, and this is about you.

Don’t analyze, question or filter anything. Write whatever you are feeling or want to get out of your system. This way, the truth will come out.

Keep writing.

Write until you find the answers you are looking for and the issue is complete. There is no time limit and no restriction. And you’ll know when to stop writing. It will be a rising-time moment, and you’ll feel differently. You may be more relaxed, have a sense of calm, be excited about a particular idea, or feel something else depending on your specific situation.

Being true to yourself is essential to reaching your dreams of financial freedom.

If you are having issues with your finances, business, personal life, and more, it’s time to focus on you and discover what you need to do to change things for the better. Whether it’s taking the Kolbe Index, talking to a friend, family member or counselor, or writing in a personal and private journal, get answers and find out the truth.

Remember, each of us is gifted and unique. Don’t let others, or even your own thoughts, sabotage your success. As I say in the book…

“This is your journey, your dream, your process. Make it true to you. It’s Rising Time!”

What steps are you going to take to discover more about you?

From: Richdad

T. Harv Eker: The Three Keys to a Thriving Personal Economy

We’re in the midst of the worst global economic downturn in decades. Do you see a problemor an opportunity? If you had a millionaire mind, you’d say, “Neither! I see a millionopportunities!”
Contrary to popular belief, there are still tons of opportunities to be found, so long as you’re looking in the right places. Business opportunities abound, but you may have to change your mindset in order to achieve success. The key to prosperity is how you choose to approach and react to the current environment.

Even for the most optimistic among us, it’s hard not to lose hope when the media tells us that we’re in a depression. Where is the motivation to succeed, much less to excel? Why, all of a sudden, does the target of becoming wealthy seem to be completely out of reach for the average person?
The truth is, it’s not. In any economy, good or bad, there are people who make money and people who lose money. This dynamic doesn’t just disappear when things get a little tough. The real question is, which economy is struggling—the general economy or your personal economy?
Think about it: You have your own views on life, your own belief systems, standards and results. You look at things differently than anyone else—why wouldn’t you have an equally unique economy? Everyone has his or her own economy.
There are three elements to be aware of to ensure that your personal economy does well, regardless of how the majority fares: mindset, cash flow and streamlined business.
Set yourself up for success by creating a mindset that focuses on opportunities instead of problems. What you focus on expands, so if you want to have more opportunities, focus on opportunities. Don’t get hung up on obstacles, barriers or all the bad news you see in the media.
Change your thinking and look at things from the other side: As stock prices decline and property values plummet, everything is on sale. If you bought stocks or real estate two or three years ago, you almost certainly paid a premium. Today, everything, from real estate to the stock market, is on sale, and these are sales you don’t want to miss.
When this current economic meltdown began, Warren Buffett, one of the richest men in the world, said, “This is the day I’ve been waiting for the last 10 years.”
"There are three elements to be aware of to ensure that your personal economy does well, regardless of how the majority fares: mindset, cash flow and streamlined business"
The law of duality states that what goes up must come down. Eventually, what is on sale now will rise and prices will go back up, which makes today’s climate a great place to invest for the future. A lot of people are losing money right now because everything they sell is at a loss. But look at the flipside: If a seller is taking a loss, the buyer is getting a discount.
Warren Buffett has also been quoted saying that when everyone is greedy, you should be fearful, and when everyone is fearful, you should be greedy. True to his word, while so many others are frozen with fear, he’s taken $10 billion and put it into just two companies: Goldman Sachs and General Electric. I’m not telling you to rush out and do the same, but I will tell you that that’s how someone with a millionaire mind operates.
Now let’s look at cashflow. If you are looking at investing, you fi rst need to arm yourself with a sound understanding of investment principles and strategies. Avoid going strictly for asset appreciation, and look instead at creating positive cash flow. Interested in stocks? Find ones offering the prospect of excellent dividends. Considering real estate? Look at commercial options, such as buying part of a plaza or small retail mall with strong tenants who serve necessities.
When investing in real estate for cash fl ow, whether the value of the real estate goes up or down has little effect, because the goal isn’t to sell it, at least not in the short term. It doesn’t matter if the property appreciates $1 or $5 million or if it goes down $3 million. If the tenants pay their rent, that all-important revenue comes in every month.
We’ve looked at mindset and investments—now let’s talk streamlined business. It’s never a bad idea to start your own business—as long as you do your homework, follow your heart and commit yourself 100 percent to the challenge. Be mindful of the kind of business you’re operating. If your market includes high net worth individuals and you have an expensive product, you’ll probably be OK. Most of the people I know who have a high net worth aren’t overly affected by this downturn; in fact, they’re the ones buying what everyone else is selling.
Another relatively safe type of business is one that caters to people’s needs. Remember that your business is competing with people’s disposable income. As people have less disposable income and lose confidence, they quite naturally focus on necessities, not luxuries. For example, people still need to eat, but they might not go out to restaurants as often as they did a couple of years ago.
Take this as an opportunity to set your business up to be failproof. Be flexible—trim the fat off your business and make it run in a way that will allow you not only to survive, but to perform well even if revenue decreases.

The most important thing is to stay positive—focus on increasing your sales, and, if worse comes to worst, you will have set yourself up to survive. If, for example, your revenue decreases by 40 percent, then you will need to cut your expenses by 40 percent or more, if possible. The result is that your business will become more efficient, more viable and more sustainable in the long run.
Success is all about attitude, knowledge and the willingness to learn and grow. Set yourself up to prosper by taking an objective look at your business, your investments and your mindset, and make the changes that are necessary for you. Look for opportunities, and get involved with people who are doing well; model these people and make it a point to study their thought processes and habits. Think rich! If you change your mindset and build one that supports your success, your personal economy won’t have a choice: It will have to thrive.

T. Harv Eker is an author, success trainer, and founder and president of Peak Potentials Training. His books include the No. 1 New York Times Best-Seller Secrets of the Millionaire Mind, and his international bestseller, SpeedWealth. Eker also offers the Millionaire Mind Intensive, a three-day seminar that helps people take control of their minds and nurture self-empowering thoughts.

Customers for Life, Set for Life

A lifetime customer value is absolutely critical to your success online.
Here’s a straight fact. A study conducted by Bain & Company last year showed that repeat e-commerce buyers spend more money, refer more customers, and buy a broader range of products than one and done shoppers. Other studies have shown figures as high as 34% for average repeat shoppers buying similar products.
That means once you get them in by fulfilling the want that wasn’t previously available in that market you can start offering your competitor’s products.Your customers are practically guaranteed to buy something again as long as it’s similar and in the same kind of industry to what they’ve bought already.
You’ve built credibility and rapport. They believe in you. They’ve given you their credit card number.. Hopefully you’ve done your job and they’ve had a good experience with you. You haven’t ripped them off. You haven’t lied to them or failed to deliver on a promise.
You took care of them. You gave them good customer service. You gave them great value for the dollars they invested in you. Are they going to buy from you again? Absolutely! They qualified themselves to do business with you. It’s easy to sell them again. It shows you the power of backend marketing.
When you treat every prospect visiting your webpage as a potential lifetime customer, you don’t care what they’re buying from you today. You should even be willing to lose a little money on your first sale, because it’s all about the backend. You make all the money on the repeat sale, and it costs nothing to mail to them for the rest of their lives. So if you even lose money on the front end, you’re going to make that money back by selling them again and again and again.
Don’t worry about the $20 you’re making today. Think about that customer that may be worth $2,000 over the next two years to you.
Now think about the ways you can more easily develop multiple streams of income from the internet. You find niche; passionate small markets that only take a few weeks to monopolize, and you build a website and a business that has small profits, but combined with others equal large profits.
The process moves faster because you can test your efforts quicker and easier. You know exactly if things are going to be successful even before you launch them because you can test smaller segments in 24 hours. You send emails to 1,000 people, and you know exactly how much money it’s going to make you based on that response. If it responds well, you send the email to the whole list. That’s a launch.
Before, you used to advertise in a magazine and to get results back in 30, 60 days minimum! Now, you can get results in 24 hours.
There’s no magic wand here. There’s no genius to it. This is easy, no brainer type of stuff. It’s so easy you can walk away after you’ve set things up and earn an incredible month’s income very, very quickly.
The internet’s open 24 hours a day, seven days a week. You know this already — are you taking full advantage of it?