Asset Expense Index

There are a couple old investing axioms, first, buy low and sell high, and second, invest early and often. With that understanding I would like to analyze the investing environment for the baby boom and millennial generations. The oldest of the baby boomers, if they chose to go, would have graduated college in 1967 or '68. The oldest of the millennials, of which I am one, would have graduated in 2002 or 2003.

If we paid attention to the main stream media we would believe that the biggest financial issue facing millennials is student debt. While there is no doubt that being saddled with a mortgage for what in many cases is a poor product isn't ideal, a little analysis shows student debt shouldn't be the main issue concerning millennials. According to only about 69% of seniors graduating in 2013 have student debt. Of those with student debt, the average amount was $28,400, which is a fraction of what a millennial should acquire in assets, including a home, 401k, pension, et al, in the first 20 years of their career. In this light, asset prices, which millennials should be acquiring early and often as they say, should be more of a concern than education prices.

As Predicted BOE Head Economist and Time 100 Most Influential Suggests E Dollar Concept

Andy Haldane is the Chief Economist and a voting member on policy for the Bank of England. He was also named by Time Magazine as one of the 100 most influential people in the world, let that sink in for a moment before we move on. Now consider he just advocated a move toward the E-Dollar. Of course if it occurred in the UK it would be an E-Pound but what he describes is not similar to what we have forecasted the governmental and banking interests would attempt here, here, here, and here, it is exactly what we have said they would try to fix the monetary mess we find ourselves in.

An E-Dollar concept not only addresses many of the issues the monetary system now faces, it fits the unbreakable covenant of shifting monetary systems throughout history, and particularly the last century; namely the government and banks get stronger. As I have stated in the above posts, I do not believe the E-Dollar is the right course of action, only the path I predict will be followed. Below is an excerpt from the full speech Mr. Haldane made to a group of businessmen in Northern Ireland that shows that what he is advocating is precisely the E-Dollar Concept.

Predictable Government Windfall

With the ongoing equity market correction, and possibly the start of a bear market, it's time to revisit a concept we touched on in How They Got us Into This Mess. The government windfall that results from a credit created boom. This latest credit created boom is just another up leg of what, in reality, is a debt fueled bubble that has been going on for over 80 years and must eventually fail.

Much of the debt taken on recently has been by the government, but new, record amounts of debt is also adding to the burden of car buyers, corporations, students, and of course, traders and investors using margin debt to buy stock. The fed has even managed to prevent the real-estate mortgage market from contracting to a reasonable level with ultra low interest rates and direct intervention in the mortgage market through QE.

If you can believe it, the government balance sheet has been one of the biggest beneficiaries of this ramp up in total credit market debt. As employers believe that good times are here again and here to stay, they start to hire more employees, granted this "recovery" has seen pretty anemic growth, but some jobs are being created. They tax the income from this increased employment. Corporate earnings have also seen a bump, which is also taxed. Finally the income from the sale of stocks is also taxed. All of this helps the government's finances even if the deficit was at very frightening levels at the beginning of this "recovery". And the reason I put recovery in quotes is because if the recovery can't be sustained it is merely an illusion, and as Von Mises said "There is no means to avoiding the final collapse of a boom brought on by credit expansion."