Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Archive for July 2009

an acute example of government’s pernicious inflation

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Letter Re: One Way to Visualize Inflation and Dollar Devaluation

Let’s look at a way to visualize inflation. Let’s say you had a $1,000 bill in 1900. At that time, this would be the equivalent of letting the government safeguard [about] 50 ounces of gold for you.

In 1933, Franklin D Roosevelt devalued the dollar, and as a result gold’s price rose from $20/ounce to $35/ounce. Equivalently, you could also say the 50 ounces of gold the government held for you now became 28.57 ounces of gold. The government stole 21.43 ounces of gold from you overnight!

In 1971, Richard Nixon ended the Bretton-Woods gold standard for good, and by 1974, gold had risen to $200/ounce. You now had 5 ounces of gold. Thus, between 1971 and 1974, the government stole 16.43 ounces of gold from you.

In 1999, gold bottomed out at $250/ounce. You now had 4 ounces.

With gold nearing $1,000/ounce today, you are down to 1 ounce. Over the last 10 years, the government has stolen roughly 3 ounces of what little gold you have left.

Now instead of paper money, visualize that you did indeed have 50 ounces of gold in your safe in 1900 and that year after year the government broke into your home and stole gold from your safe at this rate. Would you find that acceptable? – CRW


Written by heyercapital

July 30, 2009 at 8:58 pm

Posted in Austrian Econ, Econ

Bill O’Neil interview @ Investors.com IBD TV

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“Investor’s Business Daily” founder Bill O’Neil provides an insightful interview on KOA radio earlier last week. Here’s the link if you need browsing background-sound.


The three key take-aways are that 1) he believes a new secular bull market began in March; 2) tune out Wall Street noise and predictions from the overeducated talking head. Discern what the facts of the market tell you;  3) entrepreneurial America will thrive, regardless of Washington’s follies.

Written by heyercapital

July 23, 2009 at 9:31 am

The Folly of the Fed

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From the time of the Declaration of Independence until the establishment of the Federal Reserve in 1913, the value of money actually increased over that century and a half. The money supply was stable and technology improvements and capital accumulation meant that peoples’ savings (even money stuffed in a mattress) effectively increased in value over time because it could buy more for less.

Because the governments adhered to Article I, Sec 10 of the Constitution: “No State shall make any Thing but gold and silver Coin a Tender in Payment of Debt” which reflected the Founder’s respect for Deut 25:13 “Thou shalt not have in thy bag divers weights, a great and a small.”  The founders understood the danger and corruption of paper money, and also the practice of diluting the precious metal content of the coins, which destroyed the Roman money so spectacularly. (The Byzantines had a 1,000 year stable money supply; they are mankind’s best example. No other money supply has been uncorrupted for so long.)  In response, right after the Constitution’s ratification, the Coinage Act of 1792 provided the death penalty for messing with the money.

And now we see the effects of what they were concerned about.  Modern Americans just expect to lose 2-5% per year on the value of their money. Instead of retirees’ nest eggs buying more each year, we expect our money to buy less. Instead of technology improvements and capital accumulation improving productivity over a generation and creating higher standards of living, we have to take more risks with our investment money in order to overcome the headwinds of a deliberately inflationary monetary system.

Surprise surprise.  When we stick with what’s Biblical we prospered. When we abandon it, the people suffer. Our current financial mess is a exact result of this Federal Reserve folly.

Written by heyercapital

July 15, 2009 at 7:00 am

Posted in Econ

Son of Stimulus, error

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Now that the political classes and leeches are clamoring for another stimulus, now is as good a time as any to dissuade you from this nonsense.

The “Economy” is often discussed as a detached entity that can be controlled, poked, prodded, studied, enhanced, depressed, and manipulated at will.   In reality, the “Economy” is you and me.  That’s it.  What’s good for you and me is good for the Economy.  The converse is true.  What’s bad for you and me is bad for the Economy.

Now let me ask you this:  is your household and neighborhood suffering because you are not spending more than you have each month?  Or are things a bit tight now because you, your neighbors, or your company already spent more than was available, and now you’re tightening your belts because of that prior excess?  If the latter is the case — and it is– then how is spending more and more of the money that you don’t have going to ‘cure’ the problem. It won’t.

Spending more won’t. Saving will.

Written by heyercapital

July 8, 2009 at 7:54 am