Posted by Eric Solis on June 22, 2011 under National Debt, Public Policy, Saving & Investing, Uncategorized | 
This will shock many and I am sure cause a reaction in some, but the cure to the economic woos facing our nation is not the national debt in isolation, as the national debt is an unsolvable problem under the current tax schema. Bottom line…America has a structural deficit and the problem can’t be fixed without first converting from a consumer based society to a nation of savers. The problem with our national debt is that we are not “self funded”. As you know the US relies heavily on external capital from nations that do not share our values and/or interests. This so called “hot money” can be expatriate back to its home country without warning.
What is the solution? We MUST generate enough domestic savings to absorb the delta between tax receipts and government deficit spending. In other words, private sector savings can offset government spending on the cash flow statement of USA Inc. The debt will still rise, but if Americans hold the debt, then it is like borrowing money from ourselves. In the absence of addressing the private savings rate, spending cuts alone will not solve the problem as the debt bucket has a hole that no amount of duct tape can fix. In the absence of a complete overhaul of the tax system, which is out dated and built on a industrial era platform of American consumerism, the USA will collapse from the weight of its debt and will make Greece look like a wealthy nation in comparison, and NO amount of tax cuts can change this course if left uncorrected.
On the other hand; an increased savings rate will have an inverted multiplier effect on public debt reduction. Meaning that for every dollar saved, the net effect will be an equivalent reduction of government debt. Savings is to de-leveraging, as leverage is to consumption. We MUST also let go of Keynesian dogma that asserts that savings hurts the economy. We need to think about becoming healthy financially so we can sell best of breed products into a global economy which has the potential to explode in the years to come. If America gets serious about causing China to play by the rules (i.e. re-valuing the Yuan) then America will once again be in position to compete for high paying manufacturing jobs.
Re-valuation will also reverse the tide of our massive trade deficit and move us toward a balanced current account, furthering the reduction of aggregate US liabilities.
Posted by Eric Solis on February 6, 2010 under Banking, Financial Crisis, General, Investment Strategies, Prophetic Visions, Saving & Investing, Stewardship/Spiritual/Finance, Stock Market, U.S. Treasury Markets |
Eric wrote this article while sitting at his desk in 1997, staring out the window gazing upon the San Jacinto Mountains in Indian Wells Ca. God gave Eric a vision for what was to come in the future of our country. Read with amazement the accuracy of the vision and get ahead of the curve as we are only half way through the events to come. Eric had his entire client base load up on gold at under $300 an ounce (to be stored in their homes in a safe), he steered them into commodities, had them pay off their mortgages and eliminated all credit card debt as a result of this vision. He also saw that the only way to stop this coming economic catharsis was for Americans to save more. He launched www.savedaily.com and www.save252.com in 1999 and 2005 respectively in pursuit of creating solutions to this coming disaster. fall-of-capitalism-092319971
Posted by Eric Solis on October 20, 2009 under Saving & Investing |
I will buy your book and your RoR analysis. But, may I suggest that your rebuttal misses the point. I agree with you from a quantifiable and static approach of looking at rate of return. Clearly 10%-.15% is better than 10%-1.5% all things being equal. It does not take a lot of brain power to agree with that. But making RoR the central issue relating to costs and fees ignores the qualitative and dynamic issues that pertain to wealth accumulation and economic inclusion. Wealth accumulation is about core=commitments, vision=financial security, strategy=financial instrument and report=RoR.
In my view, the “percentage of assets under management” debate is absurd. It is a calculation for the rich, not main street. What is relevant is helping folks understand the concept of “marginal utility value” like electricity to stay warm versus the marginal value of operating an electric razor.
There is a real dollar cost of technology, legal, accounting, transfer, clearing and settlement and these systems are the gateway to economic prosperity and freedom for the middle and lower classes. Just as if they were starting a business, consumers must invest in the start up costs associated with building wealth.
The communistic view that one need not invest, but rather they are entitled to receive the best price is delusional and destructive (in my
opinion) to the long term financial health of our middle class. The issue is democratization through creating supply at market rates, which as a percentage of assets under management may look different than the traditional ratios. But if a person sticks with it long enough they too will be able to dictate the terms that they are willing to pay for the marginal value delivered over and above the fixed cost to maintain their account.
In closing here is an example:
$1 invested everyday for 67 years at 10% grows to $1,000,000 (est.). If the fee is $52 a year they will pay a total of $3,484 dollars over the
67 years. Yet, each and every year they paid 14% of the amount invested in fees. Is this smart?
The $52 is the utility value of saving and aught to be viewed as consumption in the early stages. But over time the ROI on the fees makes really good sense.
Posted by Eric Solis on August 10, 2009 under Financial Crisis, Investment Strategies, Public Policy, Saving & Investing, Stock Market |
With all of the chaos in the world of finance, I was recently asked to appear on Fox News kttv_s2521, to discuss financial principals that would work for the average American in today’s uncertain world.
I spoke on issues regarding the impact that the global financial crisis and economic meltdown can have on you, your family and your wallet. I postulate a strong belief that now is the time to reclaim our country; together we can “buy America back one dollar at a time, one day at a time, and one person at a time” through an increased National savings rate and personal stewardship.
I am an unwavering champion of the “little guy”. My goal is to create sustainable financial solutions for all of man kind by thinking differently and being willing to do the hard work of breaking down barriers (and believe me it is not easy).
This interview demonstrates how a highly complex financial breakdown can be utilized as an opportunity to improve on your personal vision and financial goals.
Now watch the interview kttv_s2521 and pass it along to family and friends. Also, remember to post a comment when you are done as your feedback is important to me.
God bless,
Eric
Posted by Eric Solis on November 17, 2008 under Banking, Financial Crisis, General, Housing & Mortgage, Housing & Real Estate, Investment Strategies, Saving & Investing, Stewardship/Spiritual/Finance, Stock Market, U.S. Treasury Markets |
I recently appeared as the featured guest in a 10-minute segment on KTLA’s Morning News. We discussed some solutions for braving these rough economic times. Have a look at the video below …
KTLA Morning News appearance
