Tuesday, October 02, 2007

Perceived Reality reprinted

This originally appeared June 2006 and I thought it worth repeating.

Ever hear the story about the bum in New York City clapping his hands? When asked why he was doing it , he says, "To keep the elephants away." The listener replies, "There aren't any elephants in NYC!" The bum quips, "See, it works!"

In this case, the level of absurdity sets off warning signs and that casts doubt into your mind. But lets get to the not so obvious.
"Why rent and make the landlords house payment?"
"Owning a house is better than renting."
"Investing in Real Estate is the way to wealth."

People don't realize that the value and the validity of statements change over time. What was pure truth in 1964, is not so certain in the world of 2006. The human mind has a rough time with changes in perspective. We get stuck in a rut.

Go into your closet and make a mental note, "Tomorrow I am going to wear something I bought 20 years ago." Try it on. Does it fit? Would you feel embarrassed wearing it? Will it make you feel young again? Do you still like it? Did this exercise change your perspective about time a little bit?

A lot of our mental values fall into the same boat. We need to have the ability to realize that our perspective needs to change as we get older. Values that seem to be constant need to be re-examined.

Remember this, if something is repeated again and again as fact, then it must be true, and society will accept it as such. For 2,000 years people though the common house fly had 8 legs until someone decided to count them.

So how does this tie into The Great Depression of 2006? I am trying to point out, that you could get caught up in the coming mess, if your values don't change to accommodate the times, as they are-a-changing.


Anonymous said...

I'm enjoying your writings. It is very refreshing to find a voice of reason that challenges the conventional wisdom. Keep up the good work.

Jim in San Marcos said...

Hi Anon

Thank you --your comments are my paycheck. Glad you like it.

Anonymous said...

Jim, if you could, would you put your tin foil hat on and consider this: Gold hits a 27 yr high, dollar hits an all time low, wheat hits an all time high, a barrel of oil hits an all time high...Gasoline at the pump in my hometown continues to fall in price??? Any ideas of why this is? Maybe there is a reasonable explanation for this, and I`m not sharp enough to figure it out. Thanks in advance.

Jim in San Marcos said...

Hi Anon 8:32

Gas dropped to $2.40 around here a few months back, and now it's back up to $2.86 a gallon.

If you look at wheat, gold and oil as having a fixed value. it is our currency that has depreciated 50%.

It now takes two dollars to buy what one dollar use to buy.

It's kind of like having only a half quart of whiskey and you need a full quart. Pour some water in the bottle to make a quart. The government taxes you on your income and what it doesn't raise, it prints. As with the bottle of whiskey, you wonder why you aren't falling down drunk, the booze has lost its kick.

Inflation taxation is rather neat as far as your Congressional Twit/Representative is concerned. With inflation you fall into a higher income and that produces more taxes. The only problem this time is that wages are not rising, tax revenues are falling, there is an additional oil tax paid to foreigners, and there is a surge in unemployment, housing, people retiring etc.

Everyone is tossing around the words "Perfect Storm." I would suggest the words "Meat Grinder," implies a little more realism as for a projection of what lies ahead.