Thursday, April 27, 2006

Investing For The Short Run

As John Maynard Keynes (1883-1946) said - "In the long run we're all dead."

Of course Keynes said that as a response to the reasonable assertion that economists of his type focus on the short term effects of their manipulation and ignore the potentially disastrous long term effects.

Keynesian economics has had a long run, if there are disastrous effects we should be feeling them now.

Keynes in a nutshell suggested that government had the key to economic stability -- in manipulation. In good times government could do little - in bad times they could prime the pump with spending.

Politicos of all types loved his theories - especially the spending part.

The trouble was doing little in good times - spending has always increased instead. To those that believed a lie about declining spending - take a look at the Official Treasury history of debt - it just keeps going up. By playing Enron type games with the balance sheets political types claim to balance the books - but the debt just keeps climbing - that is the reality.

In fact the government showed Enron how to do it.

I am particularly disappointed with a site I read frequently. They took down the debt page I refer to above and put on a private page that claims Clinton had a surplus. They wanted to support a political agenda rather than the truth. (they have changed back to a real page since this was posted. -ed)

The truth is that almost all government policies that have a short term beneficial effect have long term consequences that are not considered. The result is that government programs almost always have the opposite long term effect from that desired.

Central government planning killed the Soviet Union, the same socialist agenda is now choking America.

Today we are living at the end of the long run.

If you plan on investing for the long term - it is probably already too late.

Inflation, real inflation not government statistics, is probably around 10%. Unemployment, real unemployment not with cooked books, is probably over 10%.

The dollar is in trouble, the best of the economy is moving offshore, excessive regulation and high taxes have destroyed the internationally competitive stance of American business.

It is time to protect yourself and your own.

The return of your principle is now far more important than the return on your principle.

Tighten up your stop losses, research all your ventures again, think of the short term.

Buy some gold.

It may be time to switch to short term investing and keep your losses small.


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