Tiny Thoughts....................

 

We spend time chasing money, then spend money chasing time.

-Shane Parrish, from this edition

For those of you who care................

 

...........about the future of the Federal Reserve.

On the importance of value................

 

If time=money, your earning potential is limited. If value=money, your earning potential is unlimited.

-Nicholas Bate, from Rule 4 of 7 about money

A worthy goal................

 

     My only financial goal is to go to bed every night with a sense of calm, knowing my family is OK and that I can spend the next day doing what I want, when I want, with whom I want, for as long as I want.

-Morgan Housel, The Art of Spending Money:  Simple Choices for a Richer Life

On earning and spending...................

 

Earning more money increases freedom.

Spending less than you earn reduces stress.

-James Clear, from this edition

two ways.......................

 

     Let me reiterate the two ways to use money: One is as a tool to live a better life.  The other is as a yardstick of success to measure yourself against other people.  The first is quiet and personal, the second is loud and performative.  It's so obvious which leads to a happier life.

-Morgan Housel, The Art of Spending Money

value.....................

 

The thing that is least perceived about wealth is that all pleasure in money ends at the point where economy becomes unnecessary.  The man who can buy anything he covets, without any consultation with his banker, values nothing he buys.

-William Dawson, The Quest of the Simple Life

no fixed rules......................

Money is less about numbers and more about stories—stories we tell ourselves about what matters, what makes us happy, and how we measure success.

     Spending money is more art than science.  There's no universal formula, no fixed rules.  What brings one person joy may leave another feeling empty.  And so, just as with investing, understanding our emotions—our biases, hopes and fears—can guide us toward smarter choices.  Choices that reflect who we are, what we value, and how we want to live.

-Morgan Housel, from the Author's Note to The Art of Spending Money

a revolution............

 

Law's reputation as a brilliant economist rests on some pamphlets he authored a decade or so after his escape to the Continent.  In his Essay on a Land Bank (c. 1703-4) and Money and Trade Considered (1705), the fugitive Scot displayed novel insights about the nature of money.  Money, he said, did not derive its value from precious metals, as people like Locke believed.  Rather, money was simply a yardstick of value; or, as he put it, "Money is not the Value for which Goods are exchanged, but the Value by which they are exchanged."  This clever switching of the prepositions—by in place of for—amounted to a monetary revolution.  In essence, he was saying that since money lacked intrinsic value it need not be backed by gold or other precious metals.

     A constant theme in Law's writings is that trade depends on the circulation of credit, and that credit was "only lost by a scarcity of Money."  Here Law anticipates later monetarists.  He argued that prosperity could be achieved by establishing a bank that issued paper money, collateralized with land rather than gold and silver.  By severing the link between money and precious metals, Law opened the possibility of a managed currency.

-Edward Chancellor, The Price of Time: The Real Story of Interest

experiments....................

 

Central bankers, who resort to printing money, manipulating interest rates and fueling asset price bubbles, exude a similar air of infallibility.  The fail to heed Cantillon's warning that it's all very well to embark on a grand monetary experiment, but there is no painless exit.  "What central bankers are doing now is exactly what Law recommended," Law's biographer Antoin Murphy wrote in the wake of the global financial crisis.  "From this perspective, it may be argued that, notwithstanding the failure of the Mississippi System, Law's banking successors have been Ben Bernanke, Janet Yellen and Mario Draghi."

-Edward Chancellor, The Price of Time: The Real Story of Interest

On Social Security................

 

Ben Carlson takes an interesting look (with lots of charts and graphs) at us older Americans and our real estate, stock portfolios, and social security checks.

However, it’s crucial to recognize that Social Security remains a vital financial asset for a large number of Americans.

I hope we don’t screw it up someday.

Ed. Note:  Started getting Social Security checks at age 62.5.  As checks go, they are not very large.  Was only a W-2 employee for a handful of years.  By my Sweetie's calculation, if I live past 80, my net will be less than if I had waited longer to start collecting.  But, at age 62.5, we still had kids in college.  However meager the checks were, they came in handy then—the time value of money counts.

Try me.....................

 

But after writing about money for two decades, I am constantly amazed at how bad most of us are at knowing what we want out of money, or how to use it as anything more than a benchmark of status and success.

Morgan Housel, who writes better than most, has a new book coming out, The Art of Spending Money: Simple Choices For A Richer Life.  My copy has been ordered.

the time value of money................

 

For Turgot, as sum of money delivered immediately and the promise of the same amount of money at some future date could not possibly have the same value.  Time preference explains why Aristotle was wrong.  Interest is the difference in monetary values across time, the rate at which present consumption is exchanged for future consumption.  Interest represents the time value of money.

-Edward Chancellor, The Price of Time: The Real Story of Interest

It's good for grifting though.................

 

Throwing money at a problem is rarely the solution.

-Phil Knight

A really good question....................

 

Solvency is maintained by means of the national debt, on the principle, "If you will not lend me the money, how can I pay you?"

-Ralph Waldo Emerson

a process of elimination..........

 

Brooks asks Hughes what he most would like to have more of than an average person: power, money, pleasure, or honor. They go through a process of elimination. What does Hughes care least about having in excess of the average person? Power. Then what? money. Then what? pleasure. So Hughes cares most about honor. He wants to be respected by people who are important to him. I also would have eliminated power first and ended up caring most about honor, but I care more about money than pleasure. Money to me represents security for my wife and family.

-Arnold Kling, from here

a Medium of Exchange.................

 

"The dollar has lost 96% of its purchasing power over the last century."  This statement is the most misleading claim in all of finance.  Full stop.

     The collapse of purchasing power of the US dollar is used to scare investors, sell dubious products, and fool people into believing nonsense.  . . . 

     Let's begin with the biggest issue:  The US dollar (USD) is not a long-term Store of Value.  That was never its intended purpose.  Rather, the USD is a Medium of Exchange.  There is an enormous difference between these two cases, and those who seek to mislead people rely on their not understanding the difference.

-Barry Ritholtz, How Not to Invest: The Ideas, Numbers, and Behaviors That Destroy Wealth—and How to Avoid Them

Reminder................................

 The point of delayed gratification is eventual gratification in the future.

-Ben Carlson

unflagging diligence...............

 

     Making votes was one example of how corruption evolved—one could even say became democratized—in post-Revolutionary New York.  Given that land was no longer the sole path to wealth, politics became another pipeline.  Elites funded newspapers that promoted their interests.  They bribed legislators in exchange for votes on banks, turnpikes, and chartered corporations.  Van Buren saw this "implied alliance" between monied interests and the state as a means of restoring colonial-era oligarchy under a different guise.  Columbia's "money power" was, he believed, the essence of Federalism, whose raison d'etre was to "combat the democratic spirit of the country . . . an object which it has pursued with unflagging diligence."

-James M. Bradley,  Martin Van Buren: America's First Politician

still.............................

 

     This idea was at the core of Van Buren's worldview.  It would never change.  Collusion between government and private interests, he believed, would always enrich the few at the expense of the many.

-James M. Bradley, Martin Van Buren: America's First Politician