The Fed Doubles The Dosage

How? The bubble is getting bigger and bigger. I believe a lot of naysayers have been speculating another global recession is around the corner many moons ago. But with another round of QE3,4 or 5? lost count! Most of the tangible class of assets have or will be appreciated / inflated. If you intend to accumulate wealth true investing earlier but has not done so due to following the saying of the negative outlook of world economy, you would have banged your head now. Hoping the price will come down as a result of bad economic conditions, instead price has rise to a new level. 

Really, there is no real good time to invest in assets. Investment should be a program / system to be consistently apply whether good time or bad time. Whenever you are financially ready you should invest, not overly affected by opinion of someone - who may be just a naysayer. Whether what was predicted will eventually happen or not is everyone guess. Investment conditions will not turn in light speed. Losses may be incurred due to wrong judgement if naysayer is right! if wrong cut loh, is part of a success journey. What if you are right! the rewards is marvelous! Catch the opportunity whenever it arises. A bird in hand is better a couple in the bushes!  

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The Fed Doubles The Dosage

Posted on: Saturday, December 15, 2012|Written by: Richard Duncan

On December 12th, the Federal Reserve announced the most aggressive program of monetary stimulus ever undertaken in peacetime. Beginning in January, the Fed will more than double the amount of fiat money it creates each month from $40 billion to $85 billion. On an annualized basis that amounts to more than $1 trillion a year. This week we will consider 1) What they did; 2) Why they did it; and, 3) What impact it will have on asset prices over the short-term.

 What They Did:

In a nutshell, the Fed announced it will more than double the amount of fiat money it creates each month and that it will use that money to buy government bonds and mortgage-backed securities until the unemployment rate drops substantially or until the inflation rate accelerates. The press release stated:  “…the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities … initially at a pace of $45 billion per month.”

Take note of the word “initially”. That strongly suggests the Fed may soon increase the amount of money creation beyond $85 billion a month.

Furthermore, the Fed also pledged to keep the federal funds rate at 0 – ¼ percent “at least as long as the unemployment rate remains above 6 ½ percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”

In other words, the Fed intends to keep interest rates near zero percent and to continue creating fiat money at an annual rate of $1 trillion (or more) a year until it succeeds in bringing down unemployment or until inflation becomes a threat.

Why They Did It:

I believe the Fed took these unprecedented steps because it is terrified the world is dangerously close to spiraling into a new great depression. As I have explained before, credit growth in the US has fuelled economic growth in the US and, therefore, the world since World War II. Since 1952, any time total credit (adjusted for inflation) expanded by less than 2% during a year, the US economy has gone into recession. Now, it is not increasing at all.  Consequently, the US economy is very weak. Imports into the US were no greater in the third quarter of 2012 than in the third quarter of 2011. US imports have acted as the driver of global economic growth since the 1980s. Now, with imports flat, world trade has ceased to expand – and there is a very real danger that it will begin to contract. The Fed hopes that its money creation will spur credit creation by pushing down interest rates and by pushing up asset prices, thereby, preventing a downward spiral into depression.

The Fed’s fears have been exacerbated by the danger posed by the “fiscal cliff”. Even if this politically induced fiasco turns out to be only a fiscal ditch (as I expect it will), it will still inflict at least some damage on the economy in 2013 and beyond.

 What Impact Will It Have?:

The Quantity Theory Of Money states that any time the quantity of money is increased, it will cause inflation. But there are different kinds of inflation. What kind of inflation will QE 3 cause?

I expect it to cause asset price inflation. As the Fed creates money and buys $85 billion worth of assets each month, that money will be reinvested into other assets and push up their price. That is certainly what the Fed hopes will happen. That is what QE 3 is designed to do. Therefore, the price of stocks, bonds and real estate should appreciate.

I also expect commodity price inflation. The price of food and metals – including gold and silver – seem likely to move up. The near-term direction of oil is less certain given the enormous surge in oil production in North America and the rapid development of alternative energies that will eventually drive the price of oil sharply lower.

The expanding supply of dollars should exert downward pressure on the value of the dollar relative to other currencies – unless the central banks of other countries follow the Fed’s example and expand the quantity of their currencies as well. It is highly probable that many central banks will choose that course – creating money to buy assets denominated in their own currencies to boost their domestic asset prices or else to buy dollars in order to prevent their currencies from appreciating to protect their export industries. In either case, this will further add to global liquidity, resulting in still more asset price and commodity price inflation.

Thus, the Fed’s strategy of creating more money should succeed in stimulating the global economy in the near term by inflating new asset price bubbles that create a “wealth effect” that underpins consumption. This strategy cannot succeed over the long run however unless accompanied by additional policies that boost median income in the US and globally. Unless wages rise, the public will soon once again be incapable of paying the interest on the money they borrowed to purchase the inflating assets. Then the asset price bubbles will pop and a new and much worse crisis will ensue.

Economic management through bubble creation is not a viable long-term solution to a global crisis caused by unchecked, credit-induced economic bubbles.

Posted on: Saturday, December 15, 2012 | Leave A Comment | Written by: Richard Duncan

Falling & Surging Stock

Falling Stocks @ 121212 

1. Airasia - 2.78
2. SPSetia - 3.10
3. MAS - 0.78
4. Lionind - 0.93
5. Annjoo - 1.33
6. MRCB - 1.58
7. Kimlun - 1.38
8. Canone - 2.43
9. Rsawit - 0.82
10.KNM - 0.42
11. JCY - 0.43
12. KHSB - 0.36

Surging Stocks @ 121212
1. Perdana - 1.03


Correcting Stocks @ 121212
1. Oldtown - 2.00
2. Padini - 1.80
3. Scomi - 0.38

What Are You Working For - A Financial Education or a Job?

Posted on: Tuesday, November 20, 2012|Written by: Robert Kiyosaki

The rich work to learn, the poor work to earn

My poor dad said, "Job security is the most important thing."
My rich dad said, "Learning is the most important thing."

In the movie Jerry Maguire, there are many great one-liners. But there is one that I found particularly truthful. Tom Cruise's character is leaving his high-paying job to start his own agency after being fired, and he says, "Who wants to come with me?" The whole place is frozen and silent, looking down at him. Finally, one woman pipes up and says, "I'd like to, but I'm due for a promotion in three months."

Sadly, this is the mindset of most people when it comes to work. Rather than look at work as an opportunity to grow and learn, they look at work as a necessary evil and try to get as much money from their job as possible.

As a young man, I faced the same decision as the woman in Jerry Maguire. After graduation from the Merchant Marine Academy, I had a good career ahead of me. My first job was on a Standard Oil of California oil-tanker fleet as third-mate. I made $42,000 a year, including overtime, and only had to work seven months of the year. My poor dad was very happy.

After six months, however, I resigned my position with Standard Oil and joined the Marine Corps. My poor dad was devastated, but my rich dad congratulated me.

The reason I joined the Marine Corps was to learn new skills. I wanted to learn how to be a pilot and to learn how to lead others into difficult situations. I knew that the leadership skills I learned in the Corps would benefit me greatly in life and business.

After my tour of duty, I had the opportunity to get a steady paying job as a commercial airline pilot. Instead, however, I took a job with Xerox as a salesman. Again, my poor dad was devastated and my rich dad was happy. Though I could have had a comfortable life as a pilot, I wanted to learn the skill of sales. I knew that skill, coupled with the leadership skills I learned in the Marine Corps, would make me rich.

 

Specialist vs. generalist 

The fundamental difference between my poor dad's philosophy and my rich dad's philosophy about work was one of specialization versus generalization.

My poor dad believed that the best thing to do was to become increasingly specialized in your work. He admitted that people were paid more for knowing more and more about less and less. This is why he was so proud to get his doctorate. Yet, he always struggled financially.

My rich dad believed that the best thing to do was to become a generalist and to know a little about a lot. He said the best thing to do was to work in many areas of a company and pick up skills rather than a profession. He knew the best way to get rich was to be able to lead specialists across a wide spectrum of departments in a company.

Can you cook better than McDonald's?

Sometimes when I'm teaching a class, I'll ask, "How many of you can cook a better hamburger than McDonald's?" Nearly everyone in the room will raise their hand. I'll then ask, "If you can cook a better hamburger, how come you're not richer than McDonald's?"

The obvious answer is that McDonald's is better at business than they are at making hamburgers. They have developed sophisticated sales and business systems and skills that equal success. The reason why most people are poor is because they're so focused on making the better hamburger but not developing the best business systems and skills.

 

Work to learn not to earn
Today, you're faced with these same choices. Will you work to earn, holding onto security over opportunity? Or, will you work to learn (and get a financial education), giving up some security to embrace greater opportunity?

Most people will follow the conventional wisdom and choose to work to earn. But if you want to be rich, I recommend that you work for what you want to learn rather than what you want to earn. Figure out what skills you want to acquire before choosing a specific profession and before getting trapped in the rat race.

 

What skills do you need to acquire to live a rich life?

Posted on: Tuesday, November 20, 2012 | Comments (14) | Written by: Robert Kiyosaki

A disappointment to all young Malaysians — Ong Kian Ming

A good article indeed. Ong Kian Ming, Tony Pua, Khairy, Rafizi and so on are the type of new generation leaders that will survive is the current politic climate. I believe school teachers, government servants, doctors, lawyers are no longer so suitable to be politician ("Old Gen"). Old Gen is suitable after Independence is because they has strong support from grass roots. By virtue of the Old Gen's profession who dealt directly with grass roots has given them advantage of others. In 1960s right up to 1980s, majority of Malaysian are poor, the demands from the grass roots are basic in terms food, place to stay, drainage problem, electricity and very domestic in nature. 

 

Now Malaysia has grown moving to achieving developed nation by 2020, the Old Gen is no longer applicable. The country requires new generation of leaders who has vision and capable to look at wider scope of things to shape the future of the country. For me the domestic issue should be taken care by the local experts. We as voters should select someone that is intelligence enough to debate important issue in the Parliment but no handling domestic issues. 

 

So the big question here is who knows the best about future of a country? The answer is god knows.  Hence when a country is venturing into an unknown territory, the policy makers need to be open to debate about the pros and cons before the decision is made. Hence one of the key traits of new generation leader is ability to debate. 

So CTY, please do not chicken out. step forward and show us your talent. 

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November 22, 2012

NOV 22 — I had the opportunity to have lunch with Chua Tee Yong (CTY, hereafter) before I joined the DAP. I was grateful for this opportunity given that I had already written a few less-than-complementary articles about his father, Dr Chua Soi Lek, in his capacity as MCA president. I wanted to meet up with him because I had been somewhat impressed by the manner in which he handled himself in Parliament. He was articulate in his parliamentary replies and he responded coolly and calmly to the supplementary questions thrown his way. I thought that this MCA leader, in his capacity as the chairman of his party’s Young Professionals Bureau, could raise the overall level of political discourse by attracting more qualified young people to be engaged in the political landscape. I never thought that less than a year later he would instead drown in a puddle of his own making, snuffing out whatever little hope his party had of rejuvenation and regeneration.

The cause of CTY’s massive loss of what credibility he may have had is well known — the so-called RM1 billion Talam “scandal”. When he first announced this “scandal”, many of us in the opposition were worried that he had actually uncovered an issue that could potentially sink the Pakatan government in Selangor. He displayed tremendous confidence which we now know was actually ignorance masked by cockiness. The utter baselessness of his accusations has been exposed by my colleagues in Pakatan. I don’t need to go into the details here except to say that he has been faulting the Selangor Pakatan state government for trying to retrieve debts owed to the state, something which the BN federal government has failed to do time and again because of “obligations” to cronies such as those behind the PKFZ scandal, the NFC scandal, the MAS bailout, and a long list of other real scandals. The public at large, with access to alternative sources of information, have also figured out that CTY is barking and continues to bark up the wrong tree, especially after the recent release by the Selangor state government of the Talam White Paper.

What I will highlight is the utter disappointment that CTY has been to the young people of Malaysia. The political landscape post-GE2008 had been thrown wide open. Given his privileged position as a new MP who had inherited his father’s seat in Labis, Johor, his rapid promotion to the position of a deputy minister and the access to the resources of the MCA and indirectly, the Star, CTY could have been a noteworthy young leader in influencing the political landscape especially among young Malaysians. 

A small but growing number of young Malaysians were awakened politically post-GE2008. Many of them were looking for direction, for avenues to be more politically engaged and for young political leaders who could inspire and perhaps even lead them. CTY could have positioned himself as one of the key young BN leaders to watch by engaging in thought leadership on the important issues of the day including political reform and economic transformation, by taking on Pakatan on substantive issues (read: NOT TALAM!), by building a team of young aspiring leaders to renew his flagging party, by having meaningful engagements and reaching out to the younger generation through the strategic use of social media, by taking strategic contrarian positions to set himself and his party apart from the larger BN infrastructure, just to mention a few. I’m sure there are (hopefully!) many experienced and politically savvy MCA leaders whose advice he could have followed in order to take full advantage of the changed and changing political landscape.

Disappointingly, instead of taking the bull by the horns and charting out a new progressive direction of leadership, he has squander his privileged position in the manner in which he handled the one issue that will define him for many years to come — the non-scandal of “Talamgate”.

The Talam issue is a financially complicated deal with many moving parts. Even though I think there was no basis for CTY to use this issue to attack the Selangor state government, he could have potentially salvaged some pride and his reputation by at least agreeing to have a debate with any one of the Pakatan MPs from Selangor who were more than willing to take him on. If he was that convinced of his case and if he was confident that he could convince the larger public, he should have taken up one of the many offers made to him to have a public debate with — Tony Pua, Teresa Kok, Dr Dzulkefly Ahmad and William Leong. By doing so, he would have put himself in the firing line and perhaps come away with some “street cred” for daring to take on some of these Pakatan heavyweights. Instead, he chickened out. Worse yet, he failed to allow a single Pakatan MP to be heard when the MCA organised a discussion/debate on Talam because he insisted on debating with the Selangor MB, Khalid Ibrahim (this is akin to Tony Pua wanting to debate with the PM), who instead sent four able and willing representatives (three Pakatan MPs and his political secretary) to answer CTY’s allegations.

Perhaps he should have followed the example of some of his BN colleagues who have responded to the changing political times. Umno Youth chief Khairy Jamaluddin does not seem to have an issue with debating PKR’s director of strategy, Rafizi Ramli, not once but twice, even though Rafizi does not hold any elected position within his party. And Khairy regularly shares the same platform in panels and dialogue sessions with younger Pakatan leaders such as Nurul Izzah, Tony Pua and Anthony Loke. 

Does CTY perceive his political stature to be above that of Khairy so much so that these sorts of political engagements are beneath his office? Or perhaps he thinks that such debates and dialogues are not part of Malaysian culture? If so, he should take the lead of a fellow BN deputy minister, Saifuddin Abdullah, currently deputy minister for higher education. Saifuddin regularly engages not just with Pakatan politicians but also many NGOs including youth groups from a wide spectrum of society and political leanings. It is worth highlighting that Khairy and Saifuddin have been working with MCA Senator Gan Peng Sieu, who is also the deputy minister for youth and sports, rather than CTY on making stands against certain government positions including urging the government not to appeal the decision by the Court of Appeal that section 15 of the Universities and Universities Colleges Act (UUCA) is unconstitutional as well as making a stand against the controversial amendment to section 114A of the Evidence Act.

CTY’s Talamgate attacks have negative political repercussions not just for him but also for his party and the BN. The fact that an MCA politician from Johor had to be “catapulted” to Selangor to lead the charge against the Selangor government speaks volumes about the confidence which Chua Soi Lek has in Selangor MCA chairman Donald Lim Siang Chai. The fact that Chua Soi Lek has to use this channel to promote his son also speaks volume about the leadership dynamics within the MCA, especially with regard to the availability of young and articulate leaders. Sadly, this is a reflection of a larger systemic problem within the BN component parties, namely the lack of young, inspiring thought leaders which has led to the ceding of more and more political ground to the ever-dominant Umno.

Not that I should be complaining. CTY’s antics are definitely helping convince the voting public that BN, especially the MCA, is a lost cause. But from a perspective of someone who thinks that raising the level of political discourse and increasing meaningful youth participation in politics on both sides of the political divide is a positive and necessary step for the country, CTY’s inability to take advantage of his privileged position is very disappointing indeed.

* Ong Kian Ming is the DAP’s election strategist.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

Politician Can't Save You!

A good article from Robert Kiyosaki indeed!

Whether its is Romney or Obama become the new President does not really make a different. The US economy is will continue to be sucks. It is a structural issue! The debts level in US is too huge for any new President to make a change. The Politicians are just puppet of the rich. They help the rich not the poor. Should they tell you they are helping you, is just because they need your vote! It is not really they want to help you.

In Malaysia context, the date fixing for 13th general election created enormous uneasiness to the business communities. A lot of investment decisions were delayed awaiting for the outcome of the 13th GE.  Both ruling and opposition parties claimed to be champion in running the country.  For me, both are conman. whether Najib and Anwar becoming the new PM, it has no positive impact to layman like us. It only creates impact to their cronies not us. so people do not get so excited.

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'Tis the Season (to Pass Blame)

Posted on: Tuesday, November 06, 2012|Written by: Robert Kiyosaki

Life’s Feedback Provides a Financial Education

This week, we elect a new president.
For many, elections are emotional roller coasters. This is because they place much, if not all, their hope in politicians to save them. I'm amazed each election year how much time, energy and money some people put towards their favorite candidate. I'm also amazed at how elated or devastated those same people become when their candidate wins or loses.
Bred to blame
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From a young age, we're taught to rely on others for our well-being. This starts, of course, with our parents who take care of us and feed us. This then moves to school where we're taught by our teachers, fed by the lunch crew and perform for a grade. It then moves to work where we're paid for our time and rewarded for our good efforts with promotions.
Given this, when things go badly, we're often prone to blame others.
For instance, if we have a hard childhood, we blame our parents. If we get bad grades, we blame our teachers. And if we don't get promoted, we blame our boss.
Politics is no different. Most people believe that a politician will save them. If the economy is bad, like it is now, we assume it's the government's fault. And there is no season where blame is passed around more than during an election year. All you have to do is watch the commercials.
Moving beyond blame
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And while there is a measure of blame in others that is rightly found in all these instances, it's very rare that we stop blaming others and take a good hard look at ourselves.
One afternoon, I was teaching how to invest using my financial education board game CASHFLOW® as a teaching tool. A friend of mine brought along a friend who was recently divorced, had been badly burned in the settlement, and was searching for some answers. Her friend thought the class might help her out.
In the opening round of the game, this woman drew a "doodad" card with a boat on it. At first she was happy. "Oh, I've got a boat!" she exclaimed. Then as her friend explained the numbers and how a boat was not a good thing in the game, she got frustrated because she had never liked math. When she finally realized how the numbers worked, it dawned on her that the boat was eating her alive. Later in the game she also was downsized and had a child. It was a horrible game for her.
After the class, this woman was upset. She had come to learn about investing, not play a silly game.
Her friend tried to get her to look within herself to see if the game reflected her in any way. The woman said that was ridiculous and left.
This woman's friend later called to give me an update. She said that her friend had calmed down and could now see some slight relationship between the game and her life. Although she and her husband had never owned a boat, they did own everything else imaginable. Her husband had run off with a younger woman after twenty years of marriage and she realized they had nothing to their name after all that time. All they had were doodads.
She realized that her anger during the game came from the realization that she didn't know how to manage money and do the math required. She was embarrassed. She had believed that it was the man's job to handle the finances, and now she believed that her husband had hid money from her in the last five years of their marriage. She was angry at herself for not being more aware of where the money was going, as well as for not knowing about the other woman.
When life gives you feedback...
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Just like a board game, the world is always providing us with instant feedback. This woman learned a valuable lesson. While her husband was certainly to blame for her place in life...so, was she. She had severely limited herself by relying on others to take care of her. Instead, she should have been working with others while taking care of herself.
This week's election is an opportunity for instant feedback. As you watch the results come in, take note of how you react. What does that reaction say about you and where you place your hope? If the news isn't good about how you react, what are you going to do about it?
I've said it before, politicians cannot save you. Only you can.
Rather than blame others for where you are in life, today I encourage you to look within yourself and see where you can make changes personally, which will lead to changes financially. In fact, I'd say that would be a much better way to spend election night than watching—and fretting—as the results come in.
Where are you going to make changes personally and financially today?
For more information, please see our free, financial education community here

Posted on: Tuesday, November 06, 2012 | Leave A Comment | Written by: Robert Kiyosaki

Effect of QE

According to Richard, the inflationary effect caused by QE has been offset by the deflationary effect on low wage offer by the workers from third world country. The same job require USD200 can be done by someone from India for USD5. This is phenomenon is done through globalisation and world trade liberation and the use of information technology as enabler to control manufacturing process from the other side of the globe.

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 Whatever It Takes, For As Long As It Takes

Posted on: Tuesday, October 02, 2012|Written by: Richard Duncan

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.”

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.

Posted on: Tuesday, October 02, 2012 | Comments (12) | Written by: Richard Duncan

Look in the Mirror

Posted on: Tuesday, October 16, 2012|Written by: Robert Kiyosaki

Why money isn’t the answer to your problems

When I was a child, my dad told us that the Japanese were aware of three powers: the sword, the jewel and the mirror.
The sword symbolizes the power of weapons. Great nations throughout history have invested in their military to gain an advantage over other nations. For instance, America has spent trillions of dollars on weapons, and because of this, is the most powerful military presence in the world.
The jewel represents the power of money. I've observed there is some truth to the saying, "Remember the golden rule. He who has the gold makes the rules." History is filled with examples of the rich using the power of money to gain an advantage.
The mirror symbolizes the power of self-knowledge. And, according to Japanese legend, self-knowledge is the most treasured of all three powers because it guides how all other powers are used, whether they are used for good or for ill.
What controls you?
For the middle-class, the power of money all too often controls them. Each day, members of the middle-class get up, work hard and fail to ask if what they do makes sense.
Instead, controlled by the power of money, the middle-class follows the crowd. They conform rather than question. They blindly repeat mantras handed to them by so-called experts: "Diversify." "Your home is an asset." "Get a safe job." "Don't make mistakes." "Don't take risks." "Save your money."
Ultimately behind the power of money is fear.
We fear not having enough, and we fear being ostracized. The fear of not having enough causes us to work harder and harder. The fear of not being ostracized causes us to try and keep up with the Joneses. All too often, the result is the same. The American dream turns into an American nightmare. Here is the familiar story.
Recently married, a happy, highly-educated young couple moves into a cramped, rented apartment. They realize they are saving money because two can live as cheaply as one. For a while they are happy.
Then, the apartment begins to feel cramped. They see friends moving into homes and having kids. They decide to save money to buy their dream home so they can have kids too. They now have two incomes, and they begin to focus on their careers. They make a lot more money, but their expenses go up as well.
As the young couple's income goes up, their tax burden rises. And when they buy their dream home, they incur property taxes. Additionally, they also buy a new car, new furniture and new appliances to match the new house. Their liabilities column goes up and is full of mortgage and credit-card debt.


They are now trapped in the rat race. Soon they have a baby and work harder to make ends meet. A credit card comes in the mail, and they max it out trying to stay afloat. A consumer credit agency calls and promises to help them consolidate their debt into one low payment. They do it, pay off their credit cards and feel like they've done the smart thing. They breathe a sigh of relief.
Then their friends invite them to the mall for the Memorial Day sale. The young couple promises themselves they won't buy anything, but they bring the credit card just in case.
I've heard this story thousands of times all over the world. Each time, the story is followed by the question, "How can we make more money?"
I tell them, “Your problem is not a money problem.”
Rather, the problem is a financial education problem. They don't know the difference between an asset and a liability.
Money seldom solves people's problems. Intelligence and a financial education solve problems. And if you want to be rich, you must understand both how money works and how you work. You must look in the mirror and understand your motivations, desires, and dreams—and stay true to them even when it means going against the Joneses.
Some people go after the power of weapons. Others go after the power of money. But true power comes from the mirror.
I encourage you to spend some time tapping into its power today.
Portions of this post were adapted from Rich Dad Poor Dad.
Do you see someone with a financial education when you look in the mirror?

World Market PE

It is interesting that the Korean market has the lowest market PE among countries in Asia Pacific. Another interesting fact is Malaysia has such high market PE - 16x. Definitely will lower down the yield investing in Malaysia market. 

Theme Park's Royal Link

Theme Park's Royal Link

The above is verbatim from the Edge weekly page 36 this week. This article profiled a prince from Negari Sembilan aged 33, who worked for Khazanah. He has astonished background being educated in English Boarding School and went to Cambridge for a degree. Before joing Khazanah he worked with Mckinsey, one of the most prestigious consulting company from US. 

Usually, as i read about any of the rich and famous, i realised most of them are educated and trained from oversea. I always wonder why the the powerful elite, range from rich businessman, politician, Royal families sent their children to famous schools overseas typically United Kingdom. Even our current PM, Dato Seri Najib and his brothers are trained in UK since young. Hence, the fact is the rich and famous study oversea the poor and unknown study locally! 

What's more interesting is, we Malaysian like to appoint these so called Malaysian, oversea trained  to lead us as though they know more than us about how to run the country whether in public and private sector. By the way the current head in Khazanah, Azman Moktar was also trained oversea. And the smart oversea trained Malaysian will appoint a locally trained Minister to tell us that Malaysian Education System ranked one of the top in the world. Not sure whether you could see a big contradiction or rather just coincident! Worst is the smart oversea trained Malaysia continue to flip flop on the education policy. Honestly, i am not sure why is it so difficult to decide what is the good education system for the less privilege children in Malaysia. If you are a father that sending kids to Malaysian schools and drawing the evidence that most of the successful leaders and the rich and famous are generally oversea trained, i think the answer is pretty obvious. 

Well, it is still difficult because the bunch of people that decide on the future of our locally trained children do not send their kids to Malaysian school instead oversea school. That is why they flip flop on the policy. As the people that decided are in difference (ie they do not have local school going kids), so good education or bad education policy does not really matter to them. Imagine, if all Malaysians are prohibited to receive education from oversea, the same bunch of people will be fighting to death on what is a good education to fellow Malaysian.    

QE1 & QE2

Found this website (http://www.bankrate.com/finance/federal-reserve/qe3-financial-crisis-timeline.aspx) tracking the amount of money from QE1 and QE2 inject into US economy.  In summary Q1: USD1,425 billion Q2: USD600 billion => Total USD 2 trillion. Do you know how many zeros are there for a trillion? hahaha.......just to give us a perspective how much is USD2 trillion: Malaysia 2011 GDP is USD278 billion. The amount injected to US economy will be around 7 times of Malaysia's economy. The Fed has just created 7 economy of Malaysian size out of thin air. There are more to come after QE3 is announced.

Mortgage rates and the Fed