Oxstones Investment Club™Dennis Miller, Miller’s Money Forever
We’ve all heard from our elders that “Money doesn’t grow on trees.” It’s simple kitchen table economics: If you want money, you have to work hard for it, earn it, and then you can buy what you feel you can afford. How much easier things would be if we had a money tree, or better yet an orchard, and our only effort would be to pluck off all the cash we wanted.
What most people fail to understand is that nearly every country in the world has such a money tree. It is owned and controlled by the government, king, central bank, or whatever they choose to call it.
Here in the US, our money tree has been creating a 100-year supply of money every year—and the government is lavishly spending this magic money. By the time you read this, it will be over $4 trillion, up from $800 million a few short years ago.
Throughout history governments have had a money tree at their disposal and taken full advantage of it. The fairy tale never has had a happy ending—neither for the peasants nor for the owner of the money tree.
The Money Tree Owner’s Manual
Buried deep in the vaults of every government, there’s a “Money Tree Owner’s Manual.” Had Edward Snowden shared this information, no country on earth would have offered him asylum.
As your humble scribe isn’t seeking asylum anywhere, I’ll share what Snowden couldn’t. Here are the rules:
- The peasants must believe the money has true value. If they do not believe in it (be it shells, sticks, or fancy pieces of paper), they will not work hard and be satisfied with receiving a piece of paper or trinket in return.
- The peasants must believe that you, the owner of the money tree, are acting in their best interest. If you tax them, you must convince them it is for their own good. Whether it is building roads, bridges, providing education or police for their protection, there must be visible symbols that prove you are looking after them.
- You must not allow competition from any other trees or crops. If your tree produces fancy paper, you cannot allow others to copy your paper to make it look like money. They must face stiff penalties for doing so in order to discourage competition. You cannot allow other fruits like gold or bitcoins to be used as currency; only using money from your tree is allowed.
- Keep your lavish spending out of sight. Peasants do not appreciate working hard and being heavily taxed to support the lavish lifestyle of their feudal overlords. History is full of examples that the symbols of luxury are the first to be destroyed in a revolution.
- Establish a vast and vicious army. Your reign is only as good as your army is intimidating. You must discourage others who wish to be king from attacking you and capturing your money tree.
- Keep the peasants in a perpetual state of fear. Use the media to continually frighten the citizenry—tell them how their very lives are threatened by those who want to conquer and kill them. That way, you have justification for all your many taxes. Peasants will pay dearly to those who offer protection from harm.
- Get the peasants to fight among themselves. Pit one class against the other. If you have a two-party system, let each blame the other for the problems at hand, even if they essentially both have the same goal: to serve themselves and their most influential members. In that manner, the peasants are less likely to unite and overthrow the king.
- Addict the majority of peasants to your handouts. The more dependent you can make the population on your handouts—as opposed to the results of their own work and effort—the easier it is to maintain power. As the old saying goes, “When you rob Peter to pay Paul, you can always count on the support of Paul.”
- Borrowing is fine. Go ahead and spend more than you take in through tax revenue. You are pledging the work efforts of future generations of your citizens to garner money for you to spend right now. But you will probably be dead before the bill comes due, so you need not worry. This can continue for decades as long as your creditors have faith in your money and ability to repay. Copious borrowing and spending is one of the fun parts of belonging to the government elite.
- Keep the illusion of stability as long as possible. When taxation or borrowing no longer work, it may become necessary to magically create money. The never-ending spending must continue. Inflating the currency, making the value of each piece of paper or trinket worth less is a non-violent choice—so you can pay your debts back with “cheaper” money.
- Use the power and might of your army and police force to protect the system. Flex your muscles regularly as a reminder to all peasants that they need to conform. Confiscation of wealth is an idea that can be easily sold to the masses. After all, what do the rich need all that money for? Redistribution of wealth is part of the rulers’ job. Without the benevolent government to lead, the peasants would never be able to survive. Always remember, you know best what your citizens need.
What Is Happening to the Middle Class?
The real issue is not that we don’t own a money tree, but rather the abusive behavior of the governments that do. You can look at most countries in the world and make the case that the leaders have abused the system. No matter how much tax revenue they take in, they are incapable of living within their means as everyday citizens do. They always have to spend more.
Peek at the US debt clock to see that our leaders have pledged over $1.1 million per citizen of our future earnings to borrow and spend. And the future doesn’t look any better. Our own Bud Conrad has taken data from the Congressional Budget Office (CBO) to show where we’re headed. By the end of this decade, gross federal debt will have reached $30 trillion.
Who knows for sure what the future will bring? The facts point to inflation, meaning the value of the money from the US money tree will radically drop (and possibly collapse at some point), following the fate of most other fiat currencies throughout history.
So What Can We Do?
Here are a few guidelines for those of us who don’t own a money tree, or ever will.
- Think and act independently. There is tremendous social and government pressure to go along with the crowd and see things their way. Survivors don’t get caught up in the hype. You don’t have to have an Ivy League PhD to understand what’s going on; the handwriting is very clear.
- Diversify. While you may always be a “subject” to one or the other government, the best way to protect yourself from their heavy hands is diversification. Own things like gold, silver, farm land, and investments denominated in money from other money trees. Spreading your assets across various forms of money and locations can go a long way to protect your buying power.
- Buy physical gold and silver. Gold and silver, throughout history, has been the only real forms of money. When the value of trinkets, shells, and paper collapses, precious metals are the best way to preserve your wealth. Make sure that some of your metals are held in places out of reach of your own, desperate government. While paper may cover rock in the old kids’ game, gold and silver win every time.
- Play by the rules. Like it or not, each owner of a money tree has a vast army to make sure you comply with their rules. Their goal is to protect themselves, even if it is at the expense of the hard-working citizens they are pretending to look after. There are still many legal ways to protect yourself that will allow you to keep the results of your labor.
- Be self-supporting. Don’t get caught up depending on the handouts from the government, or you will become an economic slave for life.
- Investigate all other orchards. If you find that other places in the world have better trees and less draconian rules for their working class, you may want to live there. You only live once, and keeping the fruits of your labor so you can provide for yourself and your family is called sensible economic survival.
There are even ways to profit from debt, and nicely so. In the current edition of our monthly newsletter, Miller’s Money Forever, we recommended a little-known business development company (BDC). BDCs are very similar to venture capital funds; they help grow small companies in the initial stages of their development. BDCs are required to distribute at least 90% of their annual taxable income to shareholders.
The particular company we discovered focuses on higher-quality debt instruments and is paying a handsome 7.8% yield. It runs a diversified $371 million portfolio with companies from 23 sectors and subsectors. Over 80% of its portfolio is invested in first-lien senior secured debt. That’s what we like best about it: its conservative approach sets our pick apart from other companies in the private-debt sector.
Tags: living within means, middle class, money tree, US debt, US government, USA