So What?

A vibration of shock can be felt through all souls present and accounted for. We can see the devastation created from the wall of water that has torn over the once beautifully treed landscape far below our height created sanctuary.

Whatever universal forces have conspired to bring us to this place and out of the reach of such an awe inspiring and destructive force, we give thanks.

Haphazardly seated in an open area heated by the warmth of the sun, all eyes are now on the Captain who carries a look of both draining concern and sheepish pride.

He begins talking about how far we have come and how different we are from the group that got on the boat some 50 days ago. How the knowledge and skills we have acquired were beautifully displayed over the last few days in ensuring our safe arrive in this place.

Financially, where is this place? Where have we come to and how are we to apply the knowledge and skills we have spent all this time learning? Does a Tsunami lie in our future? Like on our island, nature is not a certainty, but a matter of probability.

This place includes the pieces necessary for the foundation of our financial house and now is a good time to start asking how they fit together. What kind of house do we need to build to protect us from what ever future storms may be coming our way?

It is time to start to answer the age old strategic question;

“So What?!”

Into the Light

On the other side of our tent flap is a changed world, different from one we knew before. 

What spirituality lies within the pulling back of the flap, the act of boldly striding into an unknown future, of stepping into the light and asking for the truth of what is? 

Is it an act of self love, a place where there is only our intension and the question of whether our actions are consistent?  A place of no right or wrong, only one of what can I learn, how can I grow and how can I making a contribution?

Stepping into community eager to do our part, we seek the answer to our first question, are all souls present and accounted for?  Our eyes squint from the light. 

Stepping into the financial light of our future we ask;

What is Money?

What an obscure question.  In this age, that question has no place. 

In these days of wired and wireless communication, electronic bits moving through out the world at tremendous speeds, our bank account balance an electronic display on a screen or piece of paper, that question becomes barbaric. 

We are in the modern world, the 1^st world; we don’t have time to ponder such ridiculous and unnecessary questions.   Even if we did, the answer would be complicated and obscure and of little value. 

It is interesting however, that our currency today does not meet the test of money.  Is this a passing oddity to be filed away in our “worthless facts folder”?

The list of items that meet all the “tests of money”, {a means of exchange, a unit of account and a store of value}, is tiny.

Our Captain is telling us;

Not only is this not a barbaric question, our financial futures depends on our understanding the answer, literally!!!
-----

Griffiths says that...“Most western economies can’t get what Lord Keynes said about gold out of their head, he said it was a barbarous relic. And in our western culture it still is a barbarous relic, but we’re moving into a world where the cultures of China and India are going to be more dominant...and they are the engine of the world’s growth. In their culture, gold is real money, has been for thousands of years...and will be in the future

Robin Griffiths is at Cazenove which as a group now manages nearly £15 billion on behalf of their client base and is one of the oldest and most respected names in the financial community, Robin has over 44 years experience. .

The Light of a New Day

At the crack of this dawn we lie in the sanctity of our sleeping bag knowing only one thing for sure, we are alive.  Like a soldier cocooned in a fox hole the shelling, for now, seems to have stopped.  

To contemplate courage in the warm light of day is one thing, to search for it alone in the dark night is another; with only our soul’s voice to guide us to what we truly cherish.

These times bring us present to the value of steps taken to protect that which we hold most dear; and the potential cost of those not chosen.     

If we take steps to protect my financial future and are wrong, what is the downside?  If the steps are easy and carry little cost, am I truly present to the value of peace of mind they will bring? 

With any storm, the value is in the preparation as it can be too late to start getting ready after the storm hits.

As our Captain has said many times: “Never underestimate the power of denial”

Are we in denial, maybe or maybe not?  If someone is willing to make a case, are we open to listen?  Are we willing to take steps even though we may not yet believe?

These thoughts run through our head as we feel the hesitation reaching for the fly on our tent, knowing that in the next few seconds, the destruction we are about to see and experience may change our life forever.

We Await the Dawn

It has been a long night and hats off to those who could sleep. The Tsunami was due to hit our small little isle in the early hours of the morning.

It was dark last night as an electrical storm blow in just as the sun was setting. Flashes of light were the only interruption to the impenetrable darkness. What ever the sound of a tidal wave forcing its way in to our island home, could not be heard with strained ear. Truly Lucifer had opened up the gates of hell himself last night if only to gloat over the spectacle of its awe-inspiring supremacy.

Like the many soldiers over many battlefields, we await the dawn.

Money is like our own army, battling it out to determine the value of exchange.

For most people, the battles are done with Fiat Money.

Fiat Money;  is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.

That is where the phrase Legal Tender comes from; you are required by law to accept it in the tendering of an exchange.

Today, all national currencies are fiat currencies, including the US dollar, the euro, and all other reserve currencies. As we know, this trend began with the Nixon Shock of 1971, which ended the backing by precious metal of the U.S. dollar.

That is the grand experiment. For the first time in history, we have a world reserve fiat currency.

The $US, the world reserve currency, is not backed by anything, well actually it is backed by the “full faith and credit of the United States”.

And unfortunately, there in lies the problem……

It is sad to say but how much faith do we have in the US financial system and how much credit to they have?

For example, in his first 3 years in office, Obama has increase the US debt more than the last 43 presidents combined.

The Boy Scout Motto!

It is difficult to talk about a Tsunami with the pictures of devastation fresh in mind from the coverage of Japan.  A true human tragedy, my heart goes out to those who have seen and currently face the hardship and destruction.

No one could know the timing or size of the earthquake yet could know one was coming.   How it would show up is one thing, that it would show up is another. 

They knew they lived on highly active tectonic plates and that a strong earthquake was possible along with an accompanying tidal wave.  Yet they chose (not all had a choice) to stay and get prepared as best they could.

We may not know the timing or size of the next financial earthquake but it is being suggested that we could know one is coming. 

We received a major shock wave in 2007/08 that came very close to bringing down the world's financial system as we know it. 

---

Part of an interview with Peru Saxena the week of March 11, 2011(Puru Saxena is the founder of Puru Saxena Limited, his Hong Kong based firm which manages investment portfolios for individuals and corporate clients.

“The financial system is recovering but I would argue that it is because of money printing and bailouts.  The end result is that the economic activity has picked up some what over the last couple of years and the world has avoided the Armageddon type scenario that everyone was looking at after 2008 and the bankruptcy of Lehman’s Brothers (bank).

So although the money printing and the quantitative easing (QE) is just a band aid solution to these problems, I’m afraid that if governments had not have done anything, we would all be staring at massive unemployment and a complete failure of the banking system. 

So while I believe that the money printing and QE are morally unsound and absurd, there was no other option.  If the governments had let these banks fail, you and I would not have a job today, and millions and millions of people would be homeless.   If bank deposits and saving had disappeared in the bank accounts we would all have nothing today.”

---

These problems have been temporarily postponed, with the “can” being kicked down the road, only after Trillions of dollars have been borrowed and printed.

Most watch the Japanese Tsunami on TV and give thanks that they have escaped this type of destruction in their lives.

Yet is our financial Tsunami still coming?  Does it seem impossible or highly unlikely?  Is it time to have a conversation about this and if so, with who? 

Do we need to start getting prepared, as we have fresh in our mind the damage that can be done.  

My prayers go out to those in Japan and their families, and my prayers go out to those of us who may face our own financial Tsunami.  

Lets choose to work together in community and start getting prepared for what ever may come.

I Want Money!

Our water cloaked intruder calls to us from the distance; it has a voice and speaks directly to our mind.  I am here, I am coming and nothing can be done.  Stunning and deadly, like a trapped animal escaping its cage, its power will soon be unleashed for all to witness. 

More song than spoken word, we falter in our strength and fall under her alluring spell, momentarily forgetting her weapons of devastation carried beneath her watery veil.  She will be arriving soon.

As we wait, like a tree statued by a blizzard, we ponder the question;

What happened 40 years ago? 

After World War II, a system described as a "gold exchange standard" was established by the Bretton Woods Agreements.

Under this system, many countries fixed (pegged) their exchange rates (their currency) to the U.S. dollar. The U.S. promised to fix its currency to the price of gold at approximately $35 per ounce.

Implicitly, then, all currencies pegged to the dollar also had a fixed value in terms of gold.  

Up to 1970, France reduced its dollar reserves, trading them for gold from the U.S. government, depleting the US's gold reverves.   

This led President Richard Nixon to end the direct convertibility of the dollar to gold in 1971, resulting in the system's breakdown and at which time nearly all nations had thus switched to

“Full Fiat Money”.       

It is difficult to manipulate a gold standard to tailor to an economy’s demand for money, providing practical constraints against the measures that central banks might otherwise use to respond to economic crises.

Representative money and the gold standard protect citizens from hyperinflation and other abuses of monetary policy.

Not any more.

http://www.youtube.com/watch?v=N1yAVh5qFj4&feature=fvwrel

Real Money?

Our stowaway has committed the ultimate sacrifice in the execution of its sole purpose, the delivery of its contents; of which we are now in possession.  Two very old and unique pieces of paper are at this point very difficult to read.

One looks like it is mostly writing and the other looks like it could be a map, difficult to determine.  If a map, to what, and will its discerning guideposts be washed away in the up coming Tsunami?  We hope not.

Have pirates been to this island centuries ago?  Have they entrusted their precious cargo to this little oasis?

Treasure, the age old cry of pirates who’s daring and boldness has led to riches, danger and death and from which bounty is not relinquished easily.

So what goes into a coveted treasure chest?  Anything that has a store of value and the more condensed its value, the more precious it is.  Then, upon its liberation, it can be exchanged for goods and is recognized around the world.  What did the pirates prize above most things, what was the great treasure….gold and silver!!!

Our dollar bill can pass the “Transportability” test and it can pass the “Relative Value” test. 

However, for the last 40 years, it “Fails” the “Duplication” test.

“As a result, our currency the Dollar (Canadian or US) is NOT real money.” 

Nor is the British Pound, the Japanese Yen, the Chinese Yuan or many other currencies.

This is the flaw, the fraud if you will, that has led us to today.  It has taken 40 years to get here but the future has arrived.  This is the seed that has systemically grown and led us to the brink of crisis. 

To successfully sail your financial ship through the waters ahead, we must be able to answer the questions;

What happened 40 years ago and more importantly,

What Is Real Money???!!!

Time Will Tell

It was not far to the top and the trail is already a passing memory.  No one had seen a Tsunami before.  Some of the crew had experienced tidal surges and flooding but not this. 

Is it a coincidence that a group of sailors find themselves on land, at the top of an island, just as a Tsunami hits?  Unlikely. 

The power and force is enchanting and hypnotizing yet the damage and destruction that it can cause is disturbing and horrifying.  Nevertheless there it is, marching toward us like an army of faceless soldiers to nature’s rhythmic drumbeat. 

So what is a Tsunami? 

It is a result of nature’s forces coming back into harmony; a messenge to those far and wide that there is a price to pay for living out of balance.  It is the shock wave of re balancing; cause and effect in action.  

It is the righting of nature’s frauds and forgeries.  Potentially, the longer the truth held captive, the greater the shockwave. 

Is our financial system being held out of balance?  Are we experincing fraud and forgery, are we on the verge of a major shift in our tectonic plates and thus in for a major readjustment?

Do we trust our government and politicians to take care of us a little too much?  Should we be taking steps to take care of ourselves?  

If we were to take some common sense steps to protect ourselves would we be open to that?     Would we be able to find the time?  Could we let go of our need to be right and to know the answer?  Would we be able to change our daily habits enough to make it happen?  Could we stand strong against those who would tell us we are on the wrong path?

Like a prisoner under the influence of a truth serum………..

Time will tell.

The Holy Grail?

As if back on the sailing ship, everyone jumps into action.  All our training has prepared us for this moment,  breathe, don’t panic, focus on the task, trust the team and trust the captain. 

Glancing around, the confident determination on the faces of the people around us is a familiar sight as we have been tested under pressure before.

The vision of the tsunami is forever etching itself on our mind; a moment remembered forever, its slow unforgiving pace toward us is truly daunting.

Then comes the mental math, how long to pack up, how long to get to the top, how long until the wave arrives, how high is the wave and how high are we, does anyone need help? 

What caused the Tsunami?  What sudden force, what flaw in the foundation, has imposed itself on the water? 

Are there flaws in our financial world big enough to cause a Tsunami?  Will the impact of these flaws be great enough for us to need to seek out higher ground?

We wait the testing of our financial foundation through the understanding of money.  We know two tests, durability and divisibility, others include;  

Transportability - money must be easily transportable, that is why oil, gas etc is not money. 

Relative Value.- the value must make it feasible to be used as money.  Ie Copper at $4 per pound is not

                         feasible.

Duplication - how easy is it to create more? 

So is this the Holy Grail; is this the path that leads us to enlightenment, “Tests of Money”??

Not sure it is clear yet but….. in the mean time, we have some walking to do. 

Are We High Enough?

We awoke unexpectedly to the sound of excited shrieking and raised voices, how untypical.  The crew is graceful and fluid in the quiet and efficient delivery of their assigned morning duties.  

We race and fumble with our clothes in an effort to get outside and see what is going on.  Everything now seems to take twice as long including the fly on the tent as we clamber out into the brisk morning air.

The crew has gathered at the edge of a drop off that creates a magnificent view of the ocean’s horizon.  Some are pointing as others rush to see the event.

We finally arrive at the edge.  A great white line can be seen off in the distance parallel to the horizon as a voice shouts out “What is it?”

A crew member calmly turns his head “It is what our Captain has expected and feared since we left port” with a slight shrill in his voice he says “It’s a Tsunami!!”

A financial tsunami is coming; it can be predicted and is created by the fractures and fault lines in the foundation and tectonic plates of our monetary system.  We have felt preliminary shock waves which included the subprime / CDO debacle and the 2007/08 credit crisis. 

Temporarily the situation has been stabilized, with the printing of trillions of dollars, but the tsunami has just been postponed. 

A stunned silence now momentarily envelops the camp as we stare at the marvel.  Then a firm and trained voice of reason rings true, “Pack up, we are leaving.”

One question is running through everyone’s mind, are we high enough!!

Diamonds, a Girl's Best Friend?

Another misty day brings us present to the sanctity of simplicity.  The silence and emptiness can be like soulful nourishment and healing.  The quiet that is the balance for all that our senses reach out to take in; for all that interpretation and meaning making.

As we peer into the rabbit hole that is the neck of our stowaway and try to penetrate the darkened glass, her secrets are not revealed.  Few choices are left, like the christening of a maiden voyage, our stowaway’s outer shell is to be broken. 

The contemplation of her historical protection and the need to peer inside is exactly what we are doing with money.  We must know what is behind the darkened glass to be able to evaluate her message.

Certain characteristics make up real “money”; an entity that is a medium of exchange and a store of value. 

Durability

The first is that it is “Durable”.  It has to keep its value and not be easily destroyed or decay.  So spices, milk, wheat, most food items etc are not an enduring medium of exchange and do not hold there value and so are not money.  

For the most part, a Dollar bill passes this test; it will eventually wear out but gets replaced. It can burn and be destroyed but for the most part we will say it gets a pass.

Divisibility

The second is “Divisibility”.  Can you divide it up and have each section carry its proportional value? 

This is why diamonds are not really money; you can’t divide up a diamond and have each half equal to the value of the whole. 

Here is a good distinction, diamonds can be a great store of value, but are not a good medium of exchange and so will not work as money.

The Dollar passes this test in that you can exchange a $10 bill for 2 $5 bills for example. 

It is a little contrived but we will give it a pass.

Well the Dollar is 2 for 2, so far I don’t see a problem???     

Do We Dare?

A cloudless star filled night has turned to a cool misty morning rain.  We can hear the sounds in the forest but can’t see them; they feel close but enjoy the curtain of anonymity.   

Proportionately the world shrinks and our attention shifts to more immediate things including our captive stowaway, a perfect day to lurk in the shadows and probe the mysteries of its contents under the cloak and dagger of the haunting mist.

Like the daring acts that follow the enchantment of a first romantic encounter, revelling in the excitement of possibility and yet braced for the heart break of disappointment.  It is with salty conviction we remove the cork and dare a look inside. 

The apprehension of daring to look, where else does this show up in our lives?  In the darkness, accountability is but an abstraction.  What imposed change might be just outside our door reaching for the bell in the middle of the night to make an uninvited request to enter our lives? 

We can long for stability and hope the foundation beneath us is sound.  We must, as we build our hopes and dreams on this foundation. 

Our money, the wealth we work hard to build and then try to store, is not the “why”.  It is part of the foundation on which our hopes and dreams are built, but is not the dream itself.  Few would choose to build on and trust a foundation that is not sound.

Yet if we are to be accountable for the outcome, the obtaining of our dreams, we must choose to pull back the veil of darkness and examine the solidity of our foundation…. money.  Can we blindly trust that our foundation is solid and our store of wealth, the means to our dreams, is sound?          

Can we afford to blindly ignore the cries that the foundation may not carry us?  Are we at least willing to listen?

Do we dare? 

With the Stars to Guide Us

Last night was a beautiful cloudless night and the stars were in full attendance.  For hundreds if not thousands of years the stars have been a lofty guide showing us the way, should we choose to listen to their story.

We have stars in the financial sky as well that are willing to tell their story. 

Like the North Star and the Big Dipper, we can listen to the story of “interest rates” and “debt levels”.  They tell us what waters to take and how to find our way.

With record high levels of debt and record, artificially low levels of interest rates, they tell us that the markets and our current lifestyle is an illusion and that there is a tsunami coming. 

They tell us that to navigate safely, at this part of the 80 year cycle we best know what real money is and to get ready for colder temperatures.

Three tests determine if something is real money. 

1. It is a means of exchange

2. It is a unit of account

3. It is a store of value. 

Interest rates have fallen for 30 years and have been pushed to extremely low levels.  In the last year and a half, they are now started to rise. 

Have we started to change our thinking and our actions to account for this fundamental celestial change in the sky?

The Future May Be Here ......Finally!

An early start has us looking at the sun rise though the gently swaying leaves.  The momentary glimpses of its golden glow says hello like an old friend. 

The forest opens up more and more as we have climbed higher, the view allowing us to see further into our future and our past.  The horizon line seems to have an unsettled precision to it this morning. 

Our ship can not be seen from here but we know it is patiently waiting our return, trusting and faithful.  Beautiful in its dedication, it does not have the choices that we do, would I be that brave? 

Does its heart slowly break in our absence or does it cling to its intention with single mindedness.  We may never know so we get to choose and then take heart in the power of knowing one’s purpose.      

We are getting close to the top and are told of one more major stop.  That if we can get this lesson, financially, the pieces will start to make sense and will have our footing as we move bravely forward in a new economic landscape. 

With all this printing money, borrowing and spending with little concern with who will pay our debts back in the future, with all this living out of balance and on borrowed time, it begs a basic question.

                                  "What is money?"

If we can get clear on this one, if we can understand this, it will all have been worth it.

If we can understand what money is and what it isn’t, we will have a critical financial building block to secure our financial futures. 

I am so excited that we have made it this far together. 

If we can be in a conversation about what money is, it is my belief that the future will never be the same.      

How Big is Big?

Again the vegetation opens up and we get a chance to look out to the horizon.  The views are becoming more spectacular the higher we climb.  Our ship continues to grow smaller and smaller, it looks like from here that it is sitting on the sand, it looks like the water has gone out of the harbour. 

A lot of animals live on this island and every day that goes by we are seeing more and more of them.

Fun and Scary Facts about the US Debt.

• Under President Obama: The debt started at $9.986 trillion and escalated to $13.7 trillion, a 38 percent increase over two years.

• According to the 2008 Financial Report of the United States Government, an official US government report, the total liabilities of the United States government, including future Social Security and Medicare payments that the U.S. government is already committed to pay out,

                                       now exceed $65 TRILLION.

• Total US government debt as a percentage of GDP is 94 percent in 2010.

The US uses a different method of accounting than we are use to, they don't use GAAP (Generally accepted accounting Principles).  Consequently, any money coming in, like social security payments, are treated like a revenue and not a future debt obligation.

If we were to add up all the future debt obligations and the future revenues and price them in today’s dollars (ie Net Present Value) the

                      “US Government would owe $202 Trillion!!!!”

• A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times.  That amount of money would still not be enough to pay off the U.S. national debt.
• In 2010, the U.S. government will issue almost as much new debt as the rest of the governments of the world combined.
• The U.S. government has to borrow 41 cents of every dollar that it currently spends

The U.S. government has such a voracious appetite for debt that the rest of the world simply doesn’t have enough money to lend to them.

So now the Federal Reserve is buying most U.S. debt, and the only reason it can do that is because it can create money to lend out of thin air— at the mint’s printing presses!

This is what a currency crisis looks like!!!!! 

·        The more the US prints dollars out of thin air, the faster each existing dollar looses value. 

·        The faster the dollar looses value, the less anyone wants to hold or lend dollars to the US. 

·        The less they want to lend, the more the US has to print to buy its own debt. (now
            cycle back to the top) 

And the cycle keep going on and on until the Dollar is worth nothing or they default on their debt (tell people that they cant pay back the money that was lent them).

In times of fear and instibility, people have run to the $US for safety, this has changed. 

We've come a long way baby!

The heat has dissipated and it is a more tolerable walking environment. It is clear that our destination is the top of a high rocky ridge we can see and is not that far off. The view from up there must be amazing for those who will dare to look.

Speaking of daring to look, I had two big fears about writing a blog.

The first is that people don’t want to hear bad news, like a coming winter storm. They don’t want to hear about stuff that could potentially be depressing and so won’t be interested.

It was reassuring that while difficult to hear, if there are things people need to know to prepare for themselves and their family’s future, they will choose to listen.  Like a winter storm, you may not like it, but you start to prepare for its affects and get ready for its impacts.

The second is that if people were just told what to do they wouldn’t take action. They wouldn’t trust it or understand it or believe it and would end up doing what they have always done, what is familiar.

Like stepping stones across a pond, if we can take a bunch of small steps, we can get across the pond without falling into the water or having to take too big a leap of faith.

A third fear is people may have wanted the answers by now or that the individual pieces are not coming together fast enough.

To that I would just like to comment that we have come so far and the tying the pieces together is near. The action steps are near and hopefully they can be taken with understanding and conviction.

Preparation can take effort, the whole objective being that it is very much worth it.

The impacts of a winter storm can be beautiful if we are ready for it!!!!!

If you have any thoughts on the above, feel free to send me a comment at hebingham@shaw.ca.

I look forward to hearing from you.

Like a Mistress

Heat and humidity is our test today. At over 30 degrees, a gentle breeze is but a whimper in the wind in its efforts to cool us down.

Our mind strains for a distraction from the heat. Desperate, it drifts to our stowaway, like a mistress, a secret companion who is seductive and alluring. She is independent from our world, immune from the day to day burdens of reality.

Her only demand is to be taken to those dark and dangerous places where our passions have never seen the light, where hidden secret doors guard places we desperately long for but dare not dream of; a chaotic and carnal place.

Also desperate, hundreds if not thousands of counties have gone broke over the last century or two.  Like a mistress, this event is not that uncommon.

One way to judge if a country is doing an poor job of managing its fiscal policy and thus risking going broke is to compare its;

“Total Debt” to its “Gross Domestic Product”.

Gross Domestic Product is a very economic sounding word.

It is basically the total value of all products and services that has been sold (lets say in a year).

This ratio helps answer the question:

How much debt is too much debt?

If a country is approaching a 1 to 1 ratio, the size of its debt is starting to overwhelm its ability to serve that debt (pay back interest and principle).

It helps measure the risk that a country can not pay its debts back.

Of course, this is all hypothetical, because that could never happen to us…….

The Monkeys get it...Hang in There

The trail welcomes us again, each time from a little higher altitude as we climb deeper into the island’s interior. For a moment it has broken open on a rocky outcropping and pulled back its green vale. We can see our ship moored in the harbour below.

It is getting smaller as we ascend; its sturdy patience awaiting our return. It rests in very shallow water; it must be low tide with the moon exerting it's influence.

Crew members are carrying a heavy load on their backs, an unusual heavy load. Their solid frames carry it well but why? It is revealed that they are carrying as much as they can as we may not be heading back to the ship.

Rumours have it that what the captain is doing is for a very specific reason, yet the crew have never seen him act quite this way before. It does seem an unusual amount of time on land for individuals who have the calling of the sea in their hearts.

Thoughts of the yesterday’s deficit have been rambling around in my mind. I remember that each deficit gets added to all the previous deficits to create the total debt owing. $1.6 Trillion deficit, what is a Trillion, my mind has nothing to grab on to, nothing to put that number into context.

I look around and no one seems to be that worried about it. The occasional fringe pointy head seems concerned but not the government or the banks or the media or our parents or neighbours or friends. In fact just like the weather on this island, the economy seems to be getting better and better. The storm is passing and good times, while arriving slowly, are getting closer.

The next station they will probably give us the total number of the outstanding debt. What will we do with that number? Will it mean anything to us? How much debt is too much debt, how will we know? How many years are they going to say that our debt is a problem?

As if to read our mind, one of the crew members pulls us aside and asks us to be patient, it will all be pulled together soon and our questions will be answered. He goes on the say that things have fundamentally changed, some of which we have a sense of, and that few people will understand it and be prepared.

What we are learning are new building blocks that will serve us for many years to come.

The monkeys seem to get it, atleast they are hanging in there!

Yo Ho Ho and a Bottle of Rum!

Stiff and sore muscles talk to us and are company on the next leg of our journey.

With a recently found reserve of energy I take a deep breathe of all the surroundings. Is it an unvetted taking or a spiritual gift and the soul’s whisper of connectedness; another ancient resonant reminder of true balance and joy? Both experiences hold each others hand in this place.

A soundless voice keeps invading the sanctity of my mind forcing an image of a long abandoned stowaway. The waxy substance holds the cork with a deeply committed embrace and like a soul mate its bond is beyond time.

It is with a sense of unholy betrayal and trepidation I consider the separation of this tested union as I try to concentrate on what is being presented.

To get clear on what’s coming financially, we have to get clear on what’s happening in the US. We talked about a deficit, in any given year if we spend more than what we make, the difference is called the “deficit”.

In the US, for 2012, what they are forecasting is:
Revenues   2.1 Trillion
Expenses - 3.7 Trillion
Deficit      - 1.6 Trillion

The Deficit (negative 1.6 Trillion) is almost as big as there entire source of Revenues.

Obama says he will cut the deficit by 1.1 T over 10 years. This is 100 Billion a year. He is $400 Billion over for 2011 and it is only March!!!!!

There is no incentive in the US to cut spending.

Then there is the debt……I hope they are serving rum at the next location.

A Grand Experiment

Anchor has been raised and the path beckons. Proceeding, the canopy starts to thicken and engulf us. The trail is made of soft dirt, not so dry as to cause dust and not to wet to stick to our boots. It cushions our step and allows us traction. Unencumbered by roots it allows for almost perfect hiking conditions.

While on the beach the other day, I caught a glint of something nestled in the rocks and sand. I never would have seen it if the sun had not been at the perfect angle and it was only for a moment.

As I freed the prisoner from its wet tomb I could see that it was a darkly tinted bottle. It feels empty but the cork a top its long neck has been resealed with what looks like a wax. It looks very old and remains unopened in our backpack.

Opening up just enough in some spots along the way the canopy allows us to scantly make out part of our little islands shoreline.

The undergrowth now gives way and leads us to an opening thickly covered by a ceiling of vegetation. The noise of the animals close by is strikingly loud but fades into background as we get started in our next location.

It used to be that most countries had their own currency and backed it with something of value, often by gold or silver. (or their currency/coins may have had gold or silver in it) This includes the United States whose constitution states that the government can not create currency beyond what is backed by silver and gold.

As the US became a more dominant player in the world and their currency was backed by something of value, other countries decided to either use the US dollar for their currency or peg their currency to the US dollar.

(Pegging means that as the US increases its money supply so would the country, keeping the exchange rate the same, ie. China pegs their Yuan to the US$)

That way their currency was backed by something of value and they could free up their gold and silver to be sold or used for other things.

The US Dollar then became the "World’s Reserve Currency"; a currency used and recognised around the world backed by a reserve of value. It used to say right on the US dollar that it could be exchanged for gold.

This gave the US a lot of influence as it could then affect monetary policy world wide.  Oil, gold and other commodities are priced and exchanged in US Dollars so most counties have to have US dollars in their treasury.

The US Dollar as the worlds reserve currency worked very well up until about 40 years ago when something was fundamentally changed and we started a grand experiment.......

When is the day where someday becomes today?

Ravenous, we dive into the fruit and food that has been laid out for us at the first station.

A simple place, the bamboo thatched roof does a welcomed job of protecting us from the heat of the sun.

While we are boldly making our way into the, for us, uncharted interior, the sound of the ocean waves can still be heard. The little elevation gain has been part of an enjoyable saunter.

1st station - warning a little dryness inside all this humidity.

In an effort to balance the federal government’s budget, there are four choices; raising taxes, cutting spending, borrowing or printing money.

Cutting spending is very visual and is felt immediately, consequently it can be difficult for a politician to do. It does contribute directly to balancing the budget.

Raising taxes, again, is very visual and the impacts are felt right away. If taxes are not too high, it can also contribute directly to balancing the budget. .

Borrowing money and printing money is far more insidious. They are not as visible and and they are a way of spending now and have someone else pay later.

With borrowing money, except for some of the interest, most of the costs of paying back the principle and interest are carried by a people in the future, a future electorate, and potentially a future generation.

The impact of printing money again isn’t felt right away.

Few people follow where we are debt wise or the impacts of printing. Does anyone know what their federal government borrowed last year? Does anyone know how much currency their government printed last year?

Even if you knew the number, would it mean anything to you? What do you compare it to? If we did know the number and what to compare it to, do we care?

The impacts are paid by a different electorate and people in the future and we are focused on problems right now; we will deal with that bridge when we get to it... right?

If we keep borrowing money to fix the problem, it is not really a fix. The system isn’t in balance. If we keep printing money to address the issues, that is not a fix. It just makes the problem bigger later.

Is it possible that later can get so out of whack, that it can’t be fixed by making adjustments?

Can our debt get so big that it can’t be paid back?

Can our need to print get so big that people no longer trust and want to hold the currency because it is loosing value so fast?

Well the answer is yes and it has happen many times before. So for us……

Where is that day? When is the day where someday becomes today?

The answer, apparently, is it takes 40 years!

There will be a reckoning!!!

The rain has stopped, the sun has come out and we have started down the path where our mysterious destiny awaits. Light is glistening off the dewy leaves joining the connectedness and beauty that fills our experience.

All senses are alive and seem to have a listening for the rightness of this place. Everything is as it should be, in balance, pure, natural. In this place the connectedness of all things can be felt. It is like all the cells of our bodies have a longing for and start to resonate with the union of us and these surrounding.

She was here before us, we are from her. Every cell in our bodies comes from and is in alignment with who she is. In this place there is a felt ness that she will nurture us and sustain us if we live in harmonious balance with her. Our role is to learn about her and respect her.

It is at this moment there is a knowing that we have some how lost our way. (when I say "we" I don’t mean "each of us", I mean the sum of our collective interactive parts which speaks to the power of relationship)

Natural law and economic law were here before us and will be here after we are gone.

Along our journey, we have some how put economic law above natural law and in the doing so disrespected nature and natural law. We have made economic law the mightiest god in the heavens and worship it above all else.

The irony is that we have also disrespected economic law and have not lived in balance with this law either.

When you live outside the balance of natural and economic law, there will be consequences.

We have lived outside economic law for many years, this financial day of consequences is upon us and it is this day that we are preparing for and learning our financial sailing skills for.

Make no mistake;

“There will be a reckoning!!!!!”

A storm this way comes

A storm blew in over night and it is now pouring rain. It is warm rain with little wind and so is coming straight down in sheets.

All the crew is huddled in under the thatched bamboo roofing that has been assembled by previous island explorers. Given how hard it is coming down, it is easy to see why someone has gone to the effort.

The Captain has been telling us this morning that he has set up stations in different parts of the island and we will be moving from station to station.

He goes on to say that there are some skills we need to develop and concepts we will need to know that are absolutely essential for what we are about to face.

These skills may seem unimportant or at times academic but to trust in the process and have faith.

It is not like what you may see on the TV where the information is overwhelming or unconnected with the viewer left to try and put the conflicting pieces together.

What we are about to learn we can learn now, and financially allow us to drink up stream from the herd (James Dines), or we can learn it after the damage has been done as part of a post-mortem with many years of hard work accumulating capital having been hit by a financial hurricane.

Of course, we will wait until it stops raining….