What Should I Do?

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How Soil Health Impacts All Wealth

A focus on the importance of healthy soils
Monday, November 23, 2015, 9:13 PM

In today’s complex economy how do we progress financially from where we are today and the life of abundance we seek? This is the first question a financial advisor will ask us. It is seldom an easy question to answer because the quality of our life isn’t measured purely in financial terms. There are multiple factors including our work, our family and, fundamentally, our values. How does our quest for financial wealth balance with the people and planet upon whom we depend? Surprisingly, it all begins with soil.


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Charles Eisenstein: What Is Wealth?

It's about so much more than just money
Monday, September 28, 2015, 10:54 AM

Recently, author and "de-growth activist" Charles Eisenstein stopped by the Martenson homestead while traveling on business. Taking advantage of the opportunity, Chris sat him down to record an impromptu discussion on the nature of wealth.

As should come as little surprise to Peak Prosperity readers, financial wealth ("money") is just one component -- and given society's current over-fixation with it, its pursuit oftentimes limits our ability to be truly wealthy. » Read more



Why China Is Extremely Vulnerable Now

The majority of household wealth is at risk of vaporizing
Friday, August 7, 2015, 11:36 AM

Executive Summary

  • Too much of China's wealth is tied up in housing
  • The Obvious Risk: Declines in demand will crush prices
  • The Less Obvious Risk: housing in China is very illiquid
  • China's extraordinary vulnerability

If you have not yet read Part 1: Is China’s “Black Box” Economy About to Come Apart? available free to all readers, please click here to read it first.

In Part 1, we looked at the factors that render China’s economy a black box: the inputs and outputs are visible, but the internal workings are often opaque. Though there is an abundance of data on China’s housing market, it too is opaque in critical ways.

Let’s dig into what makes China’s housing bubble so risky.

Chinese Household Wealth Is Mostly In Housing

The percentage of household assets in real estate varies from source to source, but however it’s sliced, China’s household wealth is extraordinarily concentrated in housing.

This means any reduction in housing values will have an outsized impact on household wealth and the perception of wealth, i.e. the wealth effect: people who own assets that are rising feel wealthier and tend to spend more freely as a result. Those with assets that are declining in value tend to feel poorer, even if their day-to-day life in unaffected by the drop in wealth. This is the negative wealth effect.

While middle-class households’ wealth is in their primary residence, upper-middle class households tend to put the family wealth in additional homes as investment properties. Anecdotally, it is not uncommon for middle-aged people with secure employment to own three flats: one for their residence and two as nest eggs. The practice of buying third homes was subject to restrictions a few years ago, but the resulting drop in housing demand scared authorities into... » Read more



The Self-Employed Middle Class Hardly Exists Anymore

Why owning your own income is more important than ever now
Saturday, May 16, 2015, 3:57 AM

Of course, the easiest path to financial independence is being born into a wealthy, well-connected family.

But since few of us win that born-rich lottery, this article addresses the important question: How do “the rest of us” carve out financial independence? » Read more


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The Fed Is Destroying the World One Saver At A Time

Bernanke's new blog offers bloviating proof of that
Monday, April 6, 2015, 11:25 PM

I must confess to a deep-seated anger at just how insultingly stupid the world has become. As a sufferer of crisis fatigue I can be caught exclaiming You have got to be kidding me!!? several times per day, or perhaps shouting How dumb do they think we are?

Three choice outbursts came last week as I read Bernanke’s new blog and came across statements like this one:





The Consequences Playbook

What will happen as central banks lose control
Wednesday, January 21, 2015, 10:45 PM

Executive Summary

  • Desperate central banks are dangerous central banks
  • Why wealth disparity will get worse
  • The list of what comes next as central banks lose control
  • What you should do in advance

If you have not yet read When This Ends, Everybody Gets Hurt available free to all readers, please click here to read it first.

What’s really happened since 2008 is that central banks decided that a little more printing with the possibility of future pain was preferable to immediate pain.  Behavioral economics tells us that this is exactly the decision we should always expect from humans. History says as much, too.

It’s just how people are wired. We’ll almost always take immediate gratification over deferred, and similarly choose to defer consequences into the future, especially if there’s even a ridiculously slight chance they won’t materialize.

So instead of noting back in 2008 that it was unwise to have been borrowing at twice the rate of our income growth for the past several decades -- which would have required a lot of very painful belt-tightening -- the decision was made to ‘repair the credit markets’ which is code speak for: ‘keep doing the same thing that got us in trouble in the first place.’

Also known as the ‘kick the can down the road’ strategy, the hoped-for saving grace was always a rapid resumption of organic economic growth. That’s how the central bankers rationalized their actions. They said that saving the banks and markets today was imperative, and that eventually growth would return, justifying all of the new debt layered on to paper-over the current problems.

Of course, they never explained what would happen if that growth did not return. And that’s because the whole plan falls apart without really robust growth to pay for it all.

And by ‘fall apart’ I mean utter wreckage of the bond and equity markets, along with massive institutional and sovereign defaults. That was always the risk, and now we’re at the point where... » Read more


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2014 Year in Review: Part 2

Will 2015 be the year it all comes tumbling down?
Friday, December 19, 2014, 11:27 AM

This year has been all about risk—existential risk. Some of it seemed to dissipate and some lingers.  Market valuations remain risky—regression to the mean could easily provide a 50% haircut and more if we observe regression through the mean. This has not come to pass, but the risk is very real.

Those who seek risk in markets will eventually find it. » Read more



2014 Year in Review

The year we piled up risks like a global game of Tetris
Friday, December 19, 2014, 11:27 AM

I have not seen a year in which so many risks—some truly existential—piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. Groping for a metaphor—I love metaphors and similes—I feel like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows. » Read more


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I Blame The Central Banks

For the coming bond bubble disaster
Wednesday, August 27, 2014, 7:17 PM

The current bubble in financial assets -- in both equities and bonds of all grades and quality -- raging in every major market across the globe is no accident.

It's a deliberate creation. An intentional result of policy.

Therefore, when it bursts, we shouldn't regard the resulting damage as some freak act of nature or other such outcome outside of our control. To reiterate, the carnage will be the very predictable result of our terribly shortsighted decision-making and defective logic. » Read more


Peak Prosperity

Quantitative Easing - Crash Course Chapter 10

What exactly is this process that the world is betting on?
Friday, August 22, 2014, 8:34 PM

At the exponential pace at which the Fed is increasing the money supply, and knowing the huge challenges the Fed – and most other world central banks  - face in trying to stop or even slow down their money printing, the potential for a disruptive global inflationary period is very real.

So what exactly is quantitative easing» Read more