that other guy’s thoughts

He doesn’t contain enough substance to actually break the threshold of negative worth, but there is always room for a deeper failure of human thought.

Throwing Good Money After Bad

I’ll give you the heads up, this is a wickedly long post, more than 1500 words long in fact, and it’s mostly about the many ways in which I discerned that Robert Kiyosaki is a worthless piece of crap. Read on for a good example as to why you should believe everything you see.

“We all remember the stock market crash of 2000, and most of us remember the real estate crash after the implementation of the 1986 Tax Reform Act. Today, many people are anticipating another real estate crash.”

Today? Just today? What about yesterday, or the day before, or 18-months ago when everyone and their dog came to the rapid realization that 5 straight years of record-low interest rates and housing value appreciation would cause a downturn. The rise nationwide median house price has been slow or negative for the last full year. I’d say nobody is anticipating another crash, they’re living it.

“Unfortunately, despite our understanding of booms and inevitable busts, it’s always near the top of a boom that “dumb money” buys in. Currently, this has set the scene for a potential market bust of which few people are aware.”

Oh my freaking God! Could you be any more of a pretentious dick?

“Most economists are forecasting a strong economy, but economists worry me more than newly minted real estate agents. Most seem to be happy that inflation is in check; when I hear that inflation is in check, I begin to think about deflation, and as most of us know, deflation is much, much, worse than inflation.”

Deflation isn’t good to be sure, but you can’t honestly be worried about it at this point. Inflation is still outside of the Federal Reserves comfort zone of 1-2%. So it’s not so much that inflation is in check, it’s that inflation is coming down from the crazy zone.

“In the simplest terms, inflation occurs when there’ too much money in the system. On the flip side, deflation occurs when there are too few dollars in circulation. When that happens, prices start to fall. For example, in inflationary times, prices of houses go up. In deflationary times, prices of houses come down.”

No, in simplest terms, inflations is what happens when your dollar is worth less tomorrow than it is today, deflation is the opposite. The rate of inflation/deflation has nothing to do with the total amount of money “in the system” it’s about the rate at which money enters and leaves “the system.” For example, in inflationary times, the price of EVERYTHING goes up, because each dollar holds less value, housing is no different.

“The strong economy we’ve been experiencing for years has thus been built on dumb money — in addition to smart money — borrowing more and more. Even the U.S. government has had a field day borrowing money to do such things as fight a war and attempt to rebuild Iraq and Afghanistan rather than rebuild our country. And the inconvenient truth about debt is that it has to be paid back.”

I’m sorry I wasn’t paying attention did I just hear you say, “Oooh, Oooh Look at me! I read an article in the 4-month old Newsweek that was sitting in the reception room of my dentist’s office.”

This entire paragraph is simply so wrong as to not warrant the privilege of my thought.

“For the next two years, I’m cautioning people to watch their ratios between good debt and bad debt, and keep liquid reserves such as cash, gold, or silver.”

Okay, but only for two years, after that everyone can go back to being irresponsibly uninformed about their personal finances.

“Most people don’t have good debt — all they have is bad debt. Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I’m the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.”

I’m with you on car payments, credit card balances, or other consumer loans, but a mortgage as bad debt? A mortgage? 100% of the interest is tax-deductible, that effectively cuts you’re interest rate by 1/3. A mortgage allows you to buy a house before you otherwise could, protecting yourself from rent-inflation, which saves you money. Owning your house isn’t the be all and end all of the universe, but it certainly isn’t “bad debt”

“In a deflationary market, the value of your home can drop. If the value drops, the bank may call in your loan.”

First off, in ANY market the value of your home can drop. You are misusing the concept of inflation/deflation. The value of your home is dependent on two things, supply and demand, nothing else. Your home has a value and they value may translate to a higher or lower number of dollars based on inflation/deflation. This is really apparent if you translate this into another medium for comparison.

Let’s say today your house is worth $200,000 or 4 Cadillac’s, or 57,142 boxes of Girl Scout cookies. If overnight, inflation doubles the price of everything, what is your house worth? $400,000 or 4 Cadillac’s or 57,142 boxes of Girl Scout cookies. Now what if overnight, deflation halves the price of everything, what is your house worth? $100,000 or 4 Cadillac’s or 57,142 boxes of Girl Scout cookies. So what changed? The value of your house? Cadillac’s? Girl Scout cookies? Nope, only the value of money. Robert Kyosaki, you are dumb.

Second off, no the bank may not “call in your loan” it’s against the law, has been since the 30’s.

“If such deflation happens, cash will become king. There will be half-price sales on BMWs, expensive restaurants will close, and people will be out of work. And anybody who caters to people with dumb money will be in trouble. As I said before, deflation is much worse than inflation.”

“Deflation is much worse than inflation” That seems to be the crux of your argument Bob. So lets just get down to it. I will admit that pound for pound, deflation has a worse effect than inflation. So 1% deflation is worse than 1% inflation. But pound for pound, nerve gas is worse than cancer; which do you suppose we ought to concern ourselves with though?

The analogy is more apt than you might think. Inflation can be self-propagating, the higher inflation is, the more likely people are to buy goods and services because prices are surely headed upward, this is increased demand which leads to universally higher prices, which is by definition more inflation.

As a country, we haven’t seen any deflation since 1955. That’s right, 52 years. We haven’t a full deflationary year since 1939. We haven’t seen deflation great than 2% since 1932. Contrast that with inflation, which has been below 2% a grand total of 2 years since 1966, with 10 of those years being greater that 6%.

Using a sophisticated system of probability and statistics I learned when I was 15, i.e. ignoring patterns and trends (which would in all likelihood make deflation a near statistical impossibility) we discover the following about our financial history.

6.7 times more likely to have inflation than deflation.
8.6 times more likely to have inflation greater than 3% than deflation greater than 3%
5.0 times more likely to have inflation greater than 10% than deflation greater than 10%

In fact during the course of the 20th century there have be an equal number of years (12) where inflation was between 8% and 18% and where there was any inflation at all.

I’ll ask you again Bobby, which do you suppose we ought to concern ourselves with?

Now that I’ve thoroughly p0wn’d you, lil’ Robby. Shall we now concede that what you should have been talking about isn’t “deflation” but “devaluation,” when the value of your assets declines in absolute terms? I think so.

“The good news is that during deflationary times, smart money reenters the market, so crashes are great for smart people with smart money.”

In deflationary times, the smart money sits on as much cash as is humanly possible. If there is actual deflation, honest to goodness appreciation of the dollar, the smartest thing you could possibly do is fill your pool with cash and dive in Scrooge McDuck style.

“For now, be aware that if deflation comes and there’s a recession, it won’t have much effect on the poor. Instead, it’ll punish middle-class people who think they’re rich because their houses and stocks have gone up in value.”

If deflation comes, it will be because there is a recession as it has been every other time in our recorded history. The effect on the poor will be the most harsh, because they have the least distance to fall, the smallest breathing room. The poor and the unskilled are the most likely to lose their jobs in a recession. Living from paycheck to paycheck with no margin for error and you lose your job? I would venture to say that that is the most common path to back-rent and eviction. Sounds like a large effect to me.

I simply don’t understand how someone can preach so smugly about matters of fact and be so wrong. Robert Kiyosaki IS a worthless piece of crap.

Lawrence is the place to be this weekend. Which is why it’s a miracle I’ll be there.

There is an alumni get-together and KU basketball watch-party at the Triangle house. Plus I’m supposed to find out about these 2 guys we are interviewing for work. I’ll be hanging out there all weekend, hooking myself up the the ol ‘juvenation machine and partying like I was 21 again, which is too say not really that much at all, but I’ll be damned if I don’t make a midnight run to Steak ‘n Shake.

mmm….steak….’n…..shake….mmm

You’re profession isn’t cool enough to have invented everything now is it?

pfffft? what kind of a kitchen light is that? This looks like a job for my awesome powers of home improvement!

Bam!

No longer will a single socket hinder my cooking powers! My wonder will shine with the brightness of a thousand suns!

…or maybe just a 4-bank of 32T Flourescent bulbs.

“Remember, Feb. 19 is when we beat ‘The Streak.’ ”
-Bob Huggins, Oct 15 2006

Sorry Huggy, the streak lives

In the entirety of my life, K-State has never beaten KU in Manhattan.

Every year, in the 23 1/2 years I’ve been alive, the University of Kansas men’s basketball team has played a game against the Kansas State University men’s basketball team on the Wildcat’s home court, and every year they have won.

That’s just nuts. This is freaking college basketball we’re talking about. No home team should lose to any road time 24 straight times. This is absurd…absurdly awesome.

Welcome to part two of my quest to lay out a blueprint for my ideal president. I’m making a few assumptions, but not thinking about names. This is just about me and what my perfect candidate would be like and believe.

Health Care:
Something is funky in the system, but I don’t know what exactly, but I can tell you what it isn’t. It isn’t because of greedy corporations, or medical malpractice suits. I would guess it has something to do with the fact that as living beings, we don’t treat or value our health the way we value any other good or service. (e.g. no one goes bargain shopping for orthopedists, or looks for the best value in heart transplants)

I want my president to recognize this. I don’t think that a nationalized, universal health care plan is the answer, but mostly because it hasn’t worked out well for any country that has ever tried it…ever. My instinct says more government involvement isn’t the answer, but I don’t have an concrete empirical basis for this.

With so much personal indecision about the issue, the only thing I can realistically expect from my president is to not fall into obviously illogical and pandering lines of thought. Don’t complain about ‘greedy’ companies or assume tax-deductions will solve everything.

‘Tis the season for presidential announcements, So before we all get in too deep with the horse race and whose campaign went mudslinging first. I thought I take a moment (or eight) to layout what I would like from my president. No faces or names or systems or arguments of electability, I’m just having an honest conversation with myself.

I’ll stretch it out a bit, partly so you don’t have to read 3000 straight words on my unattainable ideals.

Immigration:
Some semblance of support for the current president’s previously proposed immigration plan would be nice. A 3000 mile long fence, with a giant door and welcome mat. As long as you can get a job and don’t consume government resources (a la unemployment benefits or Medicaid) for something like 5 years you can come in, no caps or quotas. If you’re part of the masses yearning to be free, you are welcome, you can even move into the house next door to mine, we’ll barbeque together. I’ll just want to check the back of your truck to make sure you aren’t carrying a nuke.

“These are tough times, but there’s no doubt in my mind that you want to secure this homeland as much as I do”

Dear God I hope that’s not true.

I hope no government official ever wants security as much as this president.

I don’t want security at the expense of habeus corpus.
I don’t want security as an excuse to torture.
I don’t want security instead of tolerance.
I don’t want security as a preemption of the constitution.
I don’t want security in place of liberty.

I don’t want security as much as this president. No one should.

My college friend is a mommy.

By the way, If mama and papa’s skill in name picking is any indication, they’re going to be fantastic parents. Amelia Grace, I wish that was my name…you know, if I was a girl.