International Monetary Fund Shows America's Decline Yet How Do You Invest?

The International Monetary Fund (IMF) shows America's decline as a percentage of the world's purchasing power and that China will take the no. 1 positon in five years.  Brent Arends of Marketwatch writes a brilliant article on the IMF Bombshell so please click the link to review it.   With China's economy to likely surpass ours in 2016, it's interesting how more articles are being published about this very topic and the devaluation of the US dollar yet not much is being done.  CNBC's article on Don't Like a Weak Dollar? lends more current news on the dollar. 

Given some grim current news about the US dollar, our national debt and the decline of US dominance with regard to the IMF, how do you invest? 

It's a provacative question that many are pondering in the back of their minds as they go about the day caring for children, working a job, and/or sidelining it in retirement.  My parents are baffled by what the future holds if things don't improve.  Many of the baby boom generation seeking to retire and enjoy social security are perplexed at IF they should retire rather than when.  Health insurance, medical bills and medicines are high and tend to take away a larger portion of their fixed income than originally calculated.  For those of us twenty plus years away from retirement and/or funding a child's college, it's perplexing where to seek the best return for your investment. 

My recommendation is to first assess your financial situation as well as your time horizon.  If you are a young person, then you have time to invest and reap the benefit of the power of compounding.  If you are working and are starting a family, it's time to invest in good quality growth investments.  If you are nearing retirement, it is important to sock away as much as possible and focus on a balanced account. By all means, it is wise to pay off all your debt.  There are ways to do this, and while each individual case is unique, I recommend that you seek the advice of a professional. 

We can't worry about the IMF statistics nor America's decline.  America historically has combatted many unbelievable scenarios where we were the underdog, yet the underdog prevailed.  I have NO MAGIC wand but I have faith in the American capitalistic spirit that remains in few of us today.  Should we correct certain measures, we as a nation will remain a strong economic influence in the world.  Invest in America is still a good idea.

Children & Their Financial Future

In listening to a local financial advisor talk radio show over the weekend, a caller called in a question asking how can he explain to his children the importance of investing and saving for the future?  The guy went on about how you want to accumulate assets so that you won't have to work as hard when you get older in life.  In my opinion, he missed THE real key and that is TIME.  Children have time and the ability to benefit from the power of compounding over a longer period of time.

Today, children are not being taught prudent financial managemet.  Even at Walmart, children can get a FREE piece of candy for opening up a credit card account.  Dave Ramsey commented that that was low on the corporation's part to lure in future customers.   Credit cards and their balances are high, yet subjecting children's credit history to this activity when their income is nonexistent is ludicrious. This is a recipe for financial disaster and perhaps we are seeing some of the first signs of these credit problems with the Recession of 2007-09. 

Children look down upon work and earning money. It's hard to believe that young teens expect to make $20 an hour and do nothing for it.  There are some hard working teens in our area but most want to waste time on the computer, check out the latest in fashion or goof off in other ways.  I certainly don't have many high school kids knocking on my door offering to mow the lawn or do handy work.  Where are the children working these days, if they are?  McDonald's is looking to higher many employees this year, yet many high school kids look down upon that line of work.  It is sad because people used to embrace hard work, develop good character and people skills and help support the family. 

If weird in America means that your child works a decent paying job, doesn't do drugs, and brings home an above average credit card, then what may be even more weird is for them to not have any debt, fund their college though jobs, savings and/or scholarships, and have an investment portfolio.  I commend the parents and child willing to follow that path in America.

Cyber Criminal Activity is On the Rise

When you get secured e-mails from your local bank about a serious announcement such as the one below, it ought to grab your attention.


Email continues to be a favorite target for cyber criminals to compromise sensitive information of businesses and individuals. In fact, emails have recently been sent purporting to be from such large organizations as the IRS and NACHA, the national electronic payments association, encouraging users to click on web links and download malicious software. These emails are fraudulent. Should you receive an email like this from the IRS, NACHA, or any unknown source, we encourage you to delete it immediately (don’t open, click links, or accept downloads).

For military families, it is an uncomfortable feeling to deal with this issue. 

It is important to beaware of this activity, report any suspicious items to your bank or other, and do NOT respond to these e-mails. Delete them.  Do not open them.  Do not click links.  Do not accept unknown downloads.  Most important, do not give out any personal information. 

It is being vigilent with these criminals that will curtail their success rate and cause them to see other means, preferably the legal way.

S&P Negative Outlook on US Dollar

According to the Financial Times, the S&P credit agency downgraded the dollar from stable to a negative outlook.  Our national debt is of huge concern.  Wall Street saw the color red on just about all screens today as concern grows about the U.S. not addressing its budget deficit. This is reflected in the down rating.  Even FoxNews reports a negative rating should jolt politicians in the United States to resolve this budget deficit. 

If you go to US National Debt Clock's web site page, you will see some shocking numbers.

Raising the debt ceiling may put a patch on things but the bottom line is change has NOT happened.  The debt is destroying opportunities for our future generations.  Our forefathers would be rolling over in their graves if they knew of the present financial situation for this country.  Ed Morrissey writes a good wake-up call on how Americans need to reduce debt to income.  Keep in mind that U.S. households versus the U.S. Government are not as much alike as you would think.  If you read the Consumerism Commentary on The Budget Deficit and Debt, you will understand a subtle difference. 

This is just the beginning of a long road ahead for America to get itself out of a budget deficit, turn the economy around and pay down its national debt.  The bells and sirens have gone off.  Wall Street showed its reaction today.  Time will tell what will come. 

WAR of the CURRENCIES

If Donald Trump's wake-up call about a 25% tariff on imported goods from China doesn't strike you enthusiastically, then consider this:  we are at war and it is a war of the currencies. 

China devalues its currency by up to 40% so that US manufacturers can't compete with goods and services imported from China.  A trade tariff may be a wake-up call that's come too late (it could have been made in the 1990s).  President Hu has criticized the US for it's plan to buy $600 billion of debt to stimulate the economy.  (How come the U.S. media hasn't cared to comment about this....Instead, all that is on the news is who got killed, what charity organization got what, what the weather did in this part of the country or a picture of a cute dog up for adoption).  China has a vested interest in our monetary system since it holds billions of dollars in government debt (or U.S. Treasuries).  I find this debt issue alarming.  There is justification for the dollar being a financial product of the past and the yuan to emerge as the next dominant currency of exchange.  (Jim Rogers sells many of his books translated into the Chinese language if you look on his official web site page). 

The Eurodollar back in the 90s was intended to compete directly with the U.S. dollar.  Europe imitated a similar financia approach to the United States with one major problem....they were not a unified nation under similar laws nor similar fiscal systems.  Hence, today's challenges presents a major setback for the Euro.

Critics and experts can all say what they want to say.

Speaking in China at a gathering of finance ministers from the Group of 20 economic powers Thursday, U.S. Treasury Secretary Tim Geithner said that "weaknesses and inconsistencies" in global exchange rate policies are among the biggest challenges facing the international monetary system according to CnnMoney.com.

What many fail to communicate to the American people is the importance of a unified economic force to remain competitive in international markets.  As the average American goes to work and brings home a paycheck, it's discouraging because of the longer hours, less pay and/or benefits and less time with family.  Americans are in debt and use debt to maintain a standard of living that is not sustainable over the long haul.  The Unions cannot make demands today that were once influential.  We as a nation are just not as competitive as we used to be. 

Our National Debt is of grave concern to those who care about the future for our children and grandchildren.  What is to become of this debt?  How can we maintain interest payments?  Why won't politicians halt the bleeding and do what the American people elected them to office to do?  While Donald Trump's run for the Presidential Office may seem a side-kick to the GOP or funny to some, I say "You Go Donald Trump, and please help me save this country for the sake of our children."

Shutdown Looms As Hype Continues

For those in the military and dealing with the added financial stress in your daily life, it is wise to consider ways to get by on less until this mess is cleaned up.  The hype and news about government shutdown and hiccups in military pay will continue.  There are some major future financial challenges looming for our country, and until the politicians and other elected officials can fix it, it will be a stressful time for many.

Wives of Faith posted one of my current articles dealing with financial stress called Tune Out Financial Stress and Tune In to God.  If you are a believer, it will provide some spiritual relief.  If you are not a believer, it will encourage you to revisit your current spending behavior. 

What a Government Shutdown will mean is this:  essential positions will remain in effect and some will be furloughed.  For the military, you will report to work and receive a paycheck when the government reopens.  Granted, there will be a paycheck for one week of work.  Questions remain about future military paychecks so if and when you receive your paycheck on the 15th (it will likely be two paychecks rather than one because of internal operations to generate the payment), it is prudent for you, your spouse and your family conserve and cover your bare minimum payments.  Doubt is high about when the next paychecks will be made. Hence, for the next pay period scheduled at month-end, it is questionable at this time whether you will get paid or not. 

For veterans, it is important to understand that the Veterans Services could be interupted (as sorry as I am to type this information) because of issue with government shutdown and budget cuts.  The Washington Post with Bloomberg post an interesting article about the Budget 2011 and how this vote will determine the future direction financially for this country. 

Hype will continue.  Many will fuel anger as a negative sentiment rises amongst people both in and out of the military.  Mismanagment in Washington is unacceptable, and to be in this position of suffering the consquence of poor decision-making makes for an ugly day at the office especially when it's in a combat zone.  (I am appauled that folks in line of fire are having this added financial stress added to a stressful time already.  Thank goodness, I am not the only US citizen who feels this way.) These issues have occurred in our country's history, and while I have not pulled out my history books to state those facts, the issue remains that your military paycheck is jeopardy. 

It is wise to review your finances, stockpile your cash, scale back your current spending in ways you knew not, and wait for what will evolve.  It is wise to focus on what is within your means and control rather than what is not.  For example, I normally go to the hair salon for a cut and color.  It's not a cheap bill.  Because we are paying medical bills for our son's surgery, I went to a different hair salon for a $15 haircut and then colored my hair at home.  Total cost was $25.  That is substantially less than what I had paid (about $100).  It was risky but I took a chance because we needed the money to go elsewhere (classic economics on opportunity cost). 

This time will pass, and if you can weather the storm, the hype and the financial stress, it will be a wonderful character-building time.  My grandmothers survived the Depression and passed on to me awareness for saving up for that rainy day.  Today is such the day as our country embarks on a challenging time. 

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