Protecting Wealth in This Economy

Author: Tommy Leung | 07.29.2008 | Category: Economics, Life, Money

I write a lot about inflation. It is amongst the greatest evils in the world as it robs us invisibly. Unfortunately, it is not a very popular subject. Our economy has been getting worse and worse with each passing day. Prices have been skyrocketing in everything we buy–some relief may lie ahead with the recent correction in oil. With inflation and economics being such an uninteresting topic to most people, I figured I’d write about something we all care about: money.

The economy is in bad shape. Banks are failing, the national debt is increasing, home prices continue to fall, inflation is rampant, jobs are being lost, and wealth is being destroyed. One can argue that no real wealth was created in the last several years as the boom was due to inflation but, whatever. We have dollars and we generally measure our wealth in dollars.

The likely scenario in this potential economic Armageddon is massive inflation. Some analysts and economists say the dollar will go to zero. I don’t think the dollar will go to zero–that is a nightmare scenario. I think inflation is going to get worse as our government is ready to spend any amount of money to keep our current financial system from falling to pieces. The House recently passed a bill to bailout Fannie Mae and Freddie Mac. It is awaiting the president’s signature. The bill basically says the United States government will insure Fannie and Freddie no matter what happens–these two institutions account for about $5 trillion in mortgages.

The Great Depression was a time of deflation so while unemployment were in double digit highs and pain and suffering was abound, things were cheap. Our situation–not that we are headed for a Great Depression–is that of high and increasing prices. The reason for these high prices is inflation–a devaluation of the dollar. So, if the dollar is losing value you will be wise to not hoard any.

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The $10 Trillion Problem

Author: Tommy Leung | 07.22.2008 | Category: Economics, Money, Politics

Secretary Henry Paulson has been calling for a bailout of the insolvent Fannie Mae and Freddie Mac and the Democrats in Congress are looking to pass a bill to raise the limit on the national debt. The national debt is over $9.4 trillion already and the deficit for next year is approaching $500 billion. The bailout for Fannie and Freddie is estimated to cost $25 billion by the government.

So, if you and I were in $1,000,000 of debt that was accruing interest on a daily basis, would extending how much more debt we are willing to take on going to solve our problem? Is it a good idea? Of course not! The kicker here is that this $10 trillion of debt is OURS! We are even making monthly payments on it–the government steals money from us every paycheck. Unfortunately, the money that is being taken from us is also being spent instead of paying down debt.

Our national debt in 2001 was in the $5 trillions. We will have almost doubled that by the time Bush leaves office. Neither the Republicans or the Democrats in Congress are fiscally responsible. They are like teenagers with their daddy’s credit card. Paulson has also recently said that we are turning the corner in this housing crisis. Even if that were true, we have just added to another problem: the $10 trillion problem.

You Are Being Robbed

Author: Tommy Leung | 06.26.2008 | Category: Economics, Money, Politics

The talk of economics usually puts people to sleep. We feel the affects of high food and gas prices and we know it has something to do with inflation. What if I told you the reality is that you are being robbed? Inflation is the talk of the town these days. That is why prices are so high. Not the other way around. The prices are not causing inflation–popular thought is a misunderstanding of cause and effect. I’ve read headlines and articles that keep referring to inflation as an increase in prices. Simply put: it is wrong. The truth is, you are being robbed.

The concept of inflation is not hard to understand. It is not mystical and not a topic we the people can’t grasp. Trust me, you are smart enough. The Federal Reserve met today, the 26th of June, and decided that they were not going to change the interest rates. So, what the hell does that mean? It means that the Federal Reserve decided not to rob us. When interest rates are lowered, money is more freely available through loans. This increases the amount of money in circulation. The law of supply and demand tells us that if there is a greater supply of something, it will be worth less. That is the net effect of a lowering of the interest rate. The rate has been lowered several times in the last year.

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Developing Facebook Applications

Author: Tommy Leung | 06.19.2008 | Category: Business, Internet, Marketing, Money

I’ve worked on several Facebook Applications since the beginning of the year and although none of them have been massively successful hits, I’ve learned a couple of things about developing Facebook Applications. Hopefully, I can share some of what I’ve learned and experienced. I’m not going to talk much about the technical development process but instead, more of the marketing and business aspects. I’m also going to try to not make broad assumptive conclusions based on my experiences but instead, share my experiences and give conclusions that I’m pretty confident in. Some of us are making applications because we want to share our great ideas with the world but, all of us would like to monetize our ideas–don’t lie, you know you do. :)

Facebook launched their application platform in the middle of 2007 and it has done very well since. Thousands of people have made applications for it and some businesses have sprouted from it. I was generally cautious of the Facebook Platform and did not look into it until mid-January of 2008. As of today, I have four active Facebook Applications that were developed solely by me and one other that I worked on. My applications aren’t drawing any significant number of daily active users–I don’t even have an application that has 1000 installs yet. The total combined user base of all my applications probably falls in around 1500 – 2000 installs. It isn’t impressive but, keep reading.

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Salerno on Gold Standard

Author: Tommy Leung | 06.01.2008 | Category: Economics, Money

Joseph Salerno of Pace University explains and discusses the history of the gold standard in the United States on C-Span. I am a marketing major at Pace University and Salerno teaches graduate classes so I have never had the privilege to be in one of his classes. I do believe I’ve seen him on campus. It is always good to see an economics professor of Austrian economics. Salerno does a good job of teaching some economics in this video for those interested.