Today I heard on cable there is a rush to inflation fighting ETFs and Bonds. It looks like the smart money is moving in early to park their wealth until the inflation or the fear of it is over.

Now I’m about to make a statement that is a cut off your nose to spite your face moment. By this I mean that I have just read a book by Henry Hazlitt called “The Inflation Crisis And How to Resolve It“. After you read this book you will understand why inflation will come.

“In 1977, when Henry Hazlitt set about to write this volume and send it on its way,

• The US Dollar was losing purchasing power at a double digit rate
• Gold was selling at $550 an oz and rising
• Interest rates were soaring
• The World Dollar Standard was quaking and quivering in its Federal Reserve moorings”

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As governments wrestle with what they should do about capping excessive pay and bonuses to executives it seems clear to me that they will not be able to get it right.

There are too many variables. If the US sets tough caps on compensation then there may be a flight of financial wizards to other countries where they don’t impose such restrictions. That’s the commonly head view anyway, which has never been tested.

If the G20 have a consensus you can bet it will be just like OPEC. They will agree in principle and then find some back-door ways to pay for the wizards they want. It’s called cheating and we all know the financial industry and governments are professionals at it.

So what do you do to ensure salaries and bonuses are in line with “normal” expectations of the shareholders, who are the legal owners of the company.

In my view it is simple

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US universal health care has taken centre stage for the last few weeks. Come visit Australia to see how it doesn’t work even with private health funds. But that’s another story.

With the stock markets booming and company profits above estimates it appears financial regulation will go on the back-burner for now.

With the US legislature taking a “well-deserved” holiday in the middle of the worst financial crisis in history things may stay quiet until the end of the year. We may well just be in the eye of the financial storm, so all has the appearance of calm and tranquility.

It’s as we try to get out of that financial hurricane we may find we have yet another financial crisis to face.

What I read about re-regulating the markets doesn’t fill me with confidence. Let’s see,

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I got back from my trip two days ago and am in catch-up mode. But here is something I think worth a look.

I have written three posts on how to set up your own bank. The best known book is by Nelson Nash and Becoming Your Own Bank entitled, “Becoming Your Own Banker”.

Another book by Pamela Yellen and is available and is called, “Bank on Yourself“.

Bank on Yourself  is based around dividend-paying whole of life insurance policies. These policies allow you to control the money you pay into them and make loans to yourself to make major purchases.

Please note Australia no longer has dividend-paying whole of life policies available. So we cannot do this in Australia. But baby boomers in the US should check it out.

You can read my earlier posts here;

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There is no doubt that governments around the world where private retirement funds have been encouraged are now eyeing these funds with envy as they look for money they can use to bail themselves out of this fiscal mess.

China is making it plane that it doesn’t want to play the game anymore and is looking to trade in anything but US dollars.

If China doesn’t keep loaning the world money and governments become reluctant to print more money for fear of inflation, then they have to find where the money is stashed in the country and use it.

There are billions of dollars supposedly sitting on the side lines in millions of retirement accounts in managed funds. I heard yesterday they was enough to buy all the stocks on the US stock market (at today’s prices that might not be that much )

But if it is true the money is sitting there what’s to stop our fearless leaders grabbing it for the “good of the country” with a promise to pay it back?

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The one thing I found I needed to do was to find some way to get control of my retirement nest egg. Giving my hard earned money to a financial planner who then gave it to a wealth manager, who then gave it to several fund managers, some of whom could then give it to other fund managers to manage means you have no control of my nest egg at all.

No wonder the returns are so poor when you have all these people eating at the trough.

When I was in a managed fund they told me it took up to three days to calculate the unit price. Why? See the note opposite posted on one Mutual Fund Site. I’m not singling them out I just want to make the point.

So you may not really know your financial position at the end of the day. In a fast moving market I find this intolerable and open to possible manipulation since it is not transparent.

This article, “Why ETFs Beat Mutual Funds By A Mile” present the case well.

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Now the dust has settled temporarily on a potential financial melt-down people are dusting themselves off and reconsidering their retirement options.

A recent survey indicates 85% of Americans want government and employers to share the responsibility for their retirement nest egg.

According to an article by Emily Brandon on Planning to Retire, a recent survey by the National Institute on Retirement Security found

“Americans with shrunken nest eggs are feeling nostalgic for pensions. About half of those without a pension (55 percent), say the old-fashioned retirement plan would ease their money worries.”

When I went to view the web site for the National Institute on Retirement Security I found it’s headline was “New Survey Finds 83% of Americans Concerned About Retirement“.

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And I’m just talking about investing since the year 2000!

Like all investments, if the public are all doing the same thing, it is not an investment. It is more like a ponzi scheme.

But since 2000 many of you have invested your nest egg in mutual funds yourself or through your employer only to see it decimated twice. Are you going for the triple?

The problem is too much money is chasing too few investments selected by the wealth managers to make their life easier and maximise their wealth, not yours.

These investments are chosen because they can be invested in easily and fees can be charged for doing this and all on a computer.

It’s easy to take your money and invested in “carefully selected” mutual funds with the promise of long term returns all the while taking a small fee, provided you don’t cash out. Just think of 40 years of small fees

It’s easy if all the wealth managers are feverishly buying and selling stocks to create a paper profit  that can then be posted as REAL profit all the while taking a small transaction fee. Again just think of 40 years of transaction fees

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