Keep your hands inside the ride!

As the end of the beach approaches, the sweltering heat is a motivator to keenly seek out any beleaguered offerings of shade.

With sand, shade and a gently breeze as companions our gaze turns to the ocean, the watery horizon appearing to be sculpted with god like precision.

It is tough to concentrate and the mind wonders to echo’s of time and the cold snaps in Alberta and the food rioting in Egypt, Libya and Tunisia. One is a natural storm and other a financial one.

The captain said that the financial storm is already here, we just need to be able to read the signs, is this one of them?

A vision of a mobile above a babies crib comes to mind, pull on one piece and all the pieces move to adjust. I don’t remember the mobile, I just some how know it was there.

Yesterday's sailing lesson we talked about Government's ability to print money.

^^^
Let’s say we have a company worth $10. There are 5 shares outstanding so each share would be worth $2. ($10 divided by 5 shares = $2)

(stay with me :))

Now let’s print 5 more shares and hand them out to friends.
Each share is now worth $1. ($10 divided by 10 shares)

The shares have lost value and gone from $2 to $1.

As we print more shares, each share become worth less.
^^^

Think of a Canadian Dollar as the “shares” of the Canadian Government. As more dollars are printed, each one becomes worth less. Put another way, every time we print a dollar, each existing dollar will “purchase” less.

As we print more dollars, each existing dollar looses its "purchasing power".
^^^

When we put a $10 bill in our pockets and then pull it back out, it looks the same doesn’t it….its not.

So when you were able to by a loaf of bread for $2, and now it takes $3, did the price go up or did the purchasing power of the dollar go down? Does it now take more dollars to buy the same loaf of bread?

This stuff will prove to be critically important for your financial futures, hang in there!!