Those who are familiar with the work of thinkers like Milton Friedman know that inflation is actually a second form of taxation that is caused by government action, and acts by eroding the purchasing power of dollar-denominated assets.  This effect happens when the government increases the amount of currency in circulation faster than the growth of real production.  The net effect is more dollars chasing after fewer goods and services.
The inevitable “next question” is to find out what inflation means to us as individuals, and how we can fight against …

In the midst of the constant headlines concerning government ‘bailout’ initiatives that have resulted from a credit crisis in the financial sector, one must stop to wonder whether the government is acting responsibly and what the likely results of these actions will be. (In truth, one doesn’t have to wonder that much … the government is acting with an almost complete lack of anything resembling financial responsibility.)
The core driver of this problem is that public agencies making market decisions will tend to make them based on political expediency instead of …

The “Occupy Wall Street” protests of recent months has placed a lot of attention on income inequality and the reviled top 1% of earners.  The protestors loudly proclaim themselves to be a part of the 99%, and profess all sorts of beliefs about what should be done to remedy this perceived injustice.  Predictably, the desired remedies take the form of government financed subsidies.  As the protests have persisted, they have become notable for the disgusting state of protest areas, the deplorable behavior of some protestors, and the lack of a …

In the midst of persistent economic turmoil, there is a growing sentiment that somebody should do something about all of these problems.  This is a natural reaction to what feels like an opaque and impersonal market.  The actions of Washington and Wall Street show no semblance of connection with that of the regular people who drive the economy forward.  In light of this clear lack of interest to do anything that is not oriented toward special interests, there is a persistent feeling that ‘somebody’ should do something.  Unfortunately, nobody seems …

During business and economic discussions, it seems that distinctions are rarely made between income and wealth when it comes to personal and professional well being.  Income represents the amount of resources that are accumulated annually, and Wealth represents the total amount of resources that have been accumulated throughout the tenure of your life.  One very important distinction between these two resource categories is that income must be earned by you year after year, and wealth can be used to generate income year after year, without any direct input from you.
The …

Many stock market investors have become familiar with the work of Harry Markowitz in creating a methodology known as “Portfolio Theory” for managing equity investments.  The fundamental premise of portfolio theory is to maximize the rate of return for a given level of volatility (risk) by diversifying with multiple financial instruments that are not perfectly correlated in the way that their prices move.
Traditionally, portfolio theory bases all of its calculations on the ‘risk-free’ rate of return, typically assumed to be the rate of return from government bonds.  By constructing a …

With all of the recent news about the real estate market, it is probably a good idea to take a look at the different kinds of real estate that are available.  In general, real estate breaks out into ‘residential’ and ‘commercial’ properties.  The key difference between these categories we will be examining is the way that they are valued.  This is very important, because price increases & decreases are driven by the means of valuation.
Residential real estate represents the places where people live.  Generally speaking, residential units tend to be …

Most people are associated with one or two people whom they would consider to be “High Maintenance” or demanding of your time and attention.  These people are the ones who call to ask why you haven’t commented on their Facebook post.  Sometimes this type of person is referred to as a Diva or a Drama Queen.  For some reason, these folks seem to seek out dramatic encounters that draw attention to themselves.
In contrast to this, most of us know people who are “Low Maintenance” or perfectly content to do their …

Most people are very familiar with the traditional investing axiom of ‘buying low’ and ‘selling high’ that is rooted in experience with the stock market.  Because of this, many equity market investors choose to hold their capital on the sidelines waiting for prices to hit a cyclical bottom before buying-in.  We understand this sentiment in regards to stock market investments, due to the increasing volatility of market values in recent years.  The orthodoxy of ‘buy and hold’ worked very well for stocks through the 1990’s, but has subjected investors to …

A survey of millionaires conducted by Thomas J. Stanley and William D. Danko for their book “The Millionaire Next Door” found that taxes are their single highest expense item.  Because of this, tax reduction is one of the highest impact items that can increase your net personal income.  It is also worth mentioning that taxes work differently for employees and business owners.
As an employee, you must pay taxes on my wages before you can spend them for the necessities and luxuries of life.  There are limited deductions and credits available …