Warren Buffett’s 6 Best Pieces of Money Advice for the Middle Class

Warren Buffett’s 6 Best Pieces of Money Advice for the Middle Class

March 22, 2024  by  John Csiszar  Edited by  Amber Barkley

For one of the richest people in the entire world, Warren Buffett, the CEO of Berkshire Hathaway, is surprisingly down to Earth. He famously lives in the same modest house in Omaha that he bought in 1958 for $31,500, and his favorite meal for breakfast is McDonald’s. Between that and his folksy, easy-to-understand wisdom, it’s no wonder that Buffett is so popular with the general public.

Investors no doubt also love his enviable track record, which has more than doubled the average annual return of the S&P 500 since 1965, an incredible run. The bottom line is that when Buffett talks, people listen.

With that in mind, here are some of the best pieces of financial advice for the middle class offered up by the man known as the “Oracle of Omaha.”

Pay Yourself First

Buffett isn’t the first or the only one to recommend “paying yourself first,” but he’s a vocal advocate of it.

Buffett approaches the problem of prioritizing savings through wise budgeting. As the billionaire puts it: “Do not save what is left after spending, but spend what is left after saving.”

The idea behind this philosophy is that if you wait to sock away savings until after you’ve spent all your money in a given month, it’s highly likely that you’ll find there’s nothing left. But if you instead save your money first, you’ll have to budget what’s left so that it stretches to cover all of your expenses.

This serves the dual purpose of forcing you to cut down on needless expenditures, while at the same time forcing you to build up savings, even on a smaller salary.

Some middle class Americans feel that they don’t earn enough to save, but when you flip the equation on its head like Buffett suggests, you might find out that you can save much more than you imagine.

Reduce Your Unnecessary Expenses

On the topic of budgeting, Buffett says that one of the keys to financial prosperity is simply to reduce your unnecessary expenses.

How do you know which ones are unnecessary? If you force yourself to live on a tighter budget, you’ll see right away which expenses you prioritize in life and which ones might be extra costs that you don’t really need. Over time, even a little amount of savings can build into a large amount.

To Read More:

https://www.gobankingrates.com/money/financial-planning/warren-buffett-best-pieces-of-money-advice-for-the-middle-class/?utm_term=related_link_5&utm_campaign=1268537&utm_source=yahoo.com&utm_content=7&utm_medium=rss

7 Poor Money Habits You Learned Long Ago That Are Still Hurting You Today

7 Poor Money Habits You Learned Long Ago That Are Still Hurting You Today

Crystal Mayer  Wed, April 17, 2024

Studies show that money habits are learned at an early age. Some research indicates that these habits, good and bad, may be in place by age 7. Almost all experts agree that sound financial practices should be started in childhood and reinforced throughout early adulthood. Unfortunately, many adults learned poor money management skills during their most formative years, leading to long-term financial struggles.

Money mishaps may have been picked up because of what was modeled in a person’s household, while others are the result of a simple lack of understanding. Money, to many generations, is also still considered a taboo subject, meaning dinner-time conversations aren’t really centered around financial literacy.

At GOBankingRates, we surveyed over 1,000 adults to find out what bad financial practices they picked up during childhood and early adulthood that are still causing them problems. Almost across the board, their answers were the same as what many adults struggle with throughout their lifetimes. Here are seven poor money habits many folks learned long ago that are still hurting them today.

Using Credit Cards Too Much

According to those surveyed, over 33% said they learned the poor money habit of using credit cards too much to buy things during childhood. Another 37% said they developed the practice during early adulthood.

Ann Martin, director of operations at CreditDonkey, said, “As a young adult, I watched many of my acquaintances overextend themselves by relying too heavily on credit cards. Although credit card purchases can sometimes be downright necessary for unemployed (or underemployed) individuals, you can sometimes find yourself on a slippery slope that leads to overspending.”

She continued, “Start by tracking your credit card spending to overcome this poor money habit. You’ll often be shocked to find that you spend far more on your credit cards than you realize. This realization is an important first step in cutting back on spending and repairing your relationship with credit.”

Not Prioritizing Saving

Another common money mishap among those surveyed was not prioritizing saving. A resounding 39% of respondents said they learned this habit during childhood, while 32% said they developed it during early adulthood.

Shawn Plummer, chartered retirement planning counselor with The Annuity Expert, explained, “As someone who understands and uses the best that the traditional and modern money habit philosophy can teach, I’d say a lot of it has to do with learning how to place limits on yourself, and of course, keeping yourself accountable for those limits.

For example, when you decide to spend less or save more money for whatever reason, your first goal should be to set up systems that prevent you from abusing your own limits due to bad habits.”

He added, “Instead of keeping spare cash at your side — have your bank save up to 10-20% of your income or salary without allowing you to withdraw it so easily at the first sign of some inconvenience.”

To Read More:

https://www.yahoo.com/finance/news/7-poor-money-habits-learned-130037127.html

The Biggest Mistake People Make With Their Tax Refund

The Biggest Mistake People Make With Their Tax Refund — And How to Avoid it

March 1, 2024 by  Vance Cariaga

Tax refunds can be used for any number of practical purposes, like paying down debt or building your savings. But refunds can also be blown on things you don’t really need. The good news is, many Americans make smart choices with their money, and you can, too.

According to a 2024 survey conducted by GOBankingRates, 25% of people plan to put their tax refund in savings this year. About 13% said they would use it to pay bills, while 15% planned to pay off debt.

Planning your taxes is another important step, and many Americans do a good job of that as well. About 73% aimed to file their taxes well before the April 15 deadline. More than 43% planned to file taxes themselves, using a tax software program such as TurboTax.

Don’t Make This Mistake

These are all positive trends. But even with roughly two-thirds of people planning to use their tax refund for practical purposes, that leaves about one-third who might make the biggest tax refund mistake — blowing it on frivolous or unnecessary things, such as an expensive vacation or new car you don’t really need.

There are much better ways to use your tax refund so that the money works for you instead of against you. For example, putting your refund into a high-yield savings account means the money will grow at a solid and predictable rate while also being protected by the Federal Deposit Insurance Corporation (FDIC).

One of the best savings options is Milli Bank. Milli is a mobile-only bank owned by FNBO whose savings account pays 4.75% APY as of Feb. 29, 2024, making it one of the highest in the industry. There are no monthly service fees or minimum-balance requirements with the Milli Savings account, and all deposits are insured by the FDIC.

Milli also offers a spending account and a feature called Jars that lets you personalize your savings.

Putting your tax refund into a savings account can help you build wealth for the future. In contrast, blowing your refund on something you don’t need or won’t use could put you in a deeper financial hole.

Look at the Big Picture and Make a Plan of Action

To Read More:

https://www.gobankingrates.com/taxes/refunds/biggest-mistake-tax-refund-avoid-it/

The 7 Worst Things You Can Do If You Owe the IRS

The 7 Worst Things You Can Do If You Owe the IRS

December 6, 2023   By  Jennifer Taylor  GoBankingRates

You’re in debt to Uncle Sam. This probably isn’t a great feeling, but you have to face it.

Maybe you have the money to pay your tax bill or perhaps you don’t. If not, you have many options, so don’t take any of the following.

Using a Credit Card To Pay Your Taxes

Charging IRS debt to your credit card might be easy in the short term, but doing so can be a costly choice.

“The IRS interest rate changes quarterly, but it’s hovered around 8% in recent years,” said Brad Paladini, tax attorney and owner of Paladini Law, a tax law firm. “Credit card interest is usually around 22%, meaning that if a taxpayer uses a credit card to pay their taxes, they are paying almost three times as much in interest than if they paid the IRS directly.”

Failing To Stay in Compliance With the IRS

“The IRS is usually very willing to arrange a resolution for past-due tax debt, whether it be an installment agreement, an offer in compromise or hardship status,” Paladini said. “But the IRS requires that the taxpayer remain ‘current’ with the taxes.”

Going forward, he said this means you’ll need to file all returns on time and pay all future taxes on time.

“If the taxpayer fails to do so, she’ll default whatever arrangement was made with the IRS,” he said.

Ignoring the Problem Until It’s Too Late

“Taxpayers will know there’s an outstanding tax debt, but will ‘bury their head in the sand’ and ignore it,” Paladini said. “Eventually, the IRS will wipe out their bank accounts or garnish their wages to recoup their money.”

If it comes to this, he said it will be much harder to try and resolve than if you had proactively reached out to the IRS to settle it.

Not Understanding Your Options

If you owe money to the IRS, Paladini said, you have six payment options, including an installment agreement, offer in compromise, currently non-collectible status, penalty abatement, innocent spouse relief and bankruptcy.

“Each of these options has separate requirements,” he said. “Trying to navigate that path on your own can be extremely difficult.”

If you need help navigating what’s best for your unique situation, he said you should reach out to a tax professional.

To Read More:

https://www.gobankingrates.com/taxes/tax-laws/worst-things-you-can-do-if-you-owe-irs/?utm_term=related_link_1&utm_campaign=1267849&utm_source=yahoo.com&utm_content=2&utm_medium=rss

The 6 Smartest Things to Do With Your Tax Refund

The 6 Smartest Things to Do With Your Tax Refund

By  Vance Cariaga  February 13, 2024 GoBankingRates

Getting a tax refund can be exciting. It feels a little like getting a year-end work bonus in the middle of spring. Fun as it can be, it’s important to keep in mind that there are smart things you can do with that refund — and not so smart things.

Rather than blow the refund on something you don’t really need, you should put it to use in a way that can bolster your financial situation.

With the 2024 tax season underway, you might be looking forward to a refund from the IRS or your state tax agency. How you use it depends on your own personal situation, but here are six of the smartest things to do with your tax refund.

1. Pay Down Debt

If you’re carrying debt, one of the best things you can do with a tax refund is put it toward that balance. This is especially true of credit card debt, which carries high interest rates that keep carrying over to the next payment cycle when you don’t pay off the entire balance.

Credit cards can stretch out small purchases into ongoing loans by keeping borrowers on the hook for as long as possible, making minimum payment every month while they rack up interest charges.

If you don’t have any credit card debt to pay down, consider using the tax refund to get ahead on car or student loan payments. The extra cushion could come in handy in the future.

2. Open a High-Yield Savings Account

Tempting as it might be to splurge on luxuries with your tax refund, one of the smartest things you can do is put it in a high-yield savings account where it can grow. Even better? High-yield savings accounts are offering some of the best interest rates in years.

One of the top options is Milli Bank, a mobile bank with a savings account that pays 4.75% Annual Percentage Yield, as of Feb. 29, 2024. There are no monthly service fees or minimum balance requirements with a Milli account, and all deposits are FDIC insured.

Milli also offers a goal-oriented savings product called Jars. Milli Jars allow you to personalize your savings goals and set aside funds directly toward them, helping you visualize your progress. Opening a Milli account and growing your money faster with 4.75% APY is one of the smartest things you can do with your tax refund.

To Read More:

https://www.gobankingrates.com/smartest-things-to-do-with-your-tax-refund-2102723/

6 Things You Should Never Do With Your Tax Refund

6 Things You Should Never Do With Your Tax Refund (Do This Instead)

March 4, 2024 by  Vance Cariaga GoBankingRates

There’s nothing like a tax refund to give your finances an immediate shot in the arm. Depending on the size of the refund, it could be used to wipe out your credit card debt or help you build an emergency fund. Unfortunately, many people blow their refunds on something frivolous that does nothing to strengthen their finances.

The best way to look at your tax refund is as an opportunity to grow your wealth, rather than a free pass to spend money. When you complete your tax return and find that you are due a refund, consider it a return on the hard work you put in during the previous year.

One of the smartest moves you can make is to invest the money in a high-yield savings account. This is an especially good move right now, with banks and credit unions offering their highest annual percentage yields in years.

One of the best savings options is Milli Bank. Milli is a mobile-only bank owned by FNBO whose savings account pays a 4.75% APY, as of Feb. 29, 2024. That’s more than 10 times the national average interest on a savings account.

There are no monthly service fees or minimum balance requirements with the Milli Savings account, and all deposits are insured by the FDIC.

Putting your tax refund into a savings account with a high APY means the money works for you, helping you build wealth for the future or cover emergency expenses when the need arrives.

Now that you know one of the smartest ways to use your tax refund, here are some things you should never do with it.

1. Buy a Second Car You Don’t Need

It might be tempting to put your entire refund into a down payment on a second car you’ve always wanted, but it’s a mistake, if you don’t really need one. Cars lose much of their value the moment you drive them off the lot. Putting yourself into a deeper financial hole with a monthly car payment — along with the cost of maintenance  — can potentially set you back for years.

2. Splurge on a Vacation

Unless the rest of your finances are in great shape, it’s likely a mistake to blow your tax refund on a pricey vacation. Look at it this way: If you invest your refund in an asset that can grow your money, the return you get might pay for a future vacation. The best part is, you still have the principle safely tucked away.

3. Spend It At a Casino

There’s a reason casinos make so much money — the odds are firmly in their favor. Hitting the slot machines or blackjack tables might be fun (at least for a while), but they can drain your tax refund in a hurry. There are much better ways to spend your refund.

To Read More :

https://www.gobankingrates.com/taxes/refunds/things-you-should-never-do-with-your-tax-refund/?utm_term=incontent_link_6&utm_campaign=1267849&utm_source=yahoo.com&utm_content=9&utm_medium=rss

4 Surprising Things the IRS Already Knows About Your Finances

4 Surprising Things the IRS Already Knows About Your Finances

Sean Bryant  Thu, April 11, 2024

For many Americans, the IRS and the tax filing process may seem complicated and mysterious. What does the IRS already know about you and your finances, and what can they find out?

It turns out, the IRS has the ability to see a surprising amount of your personal information. However, the IRS is likely to seek out personal information only if your tax return signals something suspicious.

Keep reading as we explore what the IRS already knows about you and your finances.

Reported Financial Records

This might not be a huge surprise to many people, but most of the time, the IRS already knows what your tax return will be before it’s even filed. The reason is because they’ve already received copies of your W-2 and 1099 forms.

Your W-2 reports all your previous year’s wage income, while your 1099s list income from freelancing, stock dividends and interest. By law, your employers must submit these documents to the IRS before January 31.

Non-Reported Financial Records

During an audit, the IRS may request additional financial records you have not already supplied. If you refuse or don’t provide them by the IRS deadline, the IRS can summon the records directly from your bank or financial institution. You can contest the summons if you can prove that the IRS already has the information, that the summons isn’t for a legitimate purpose, or that the information is irrelevant to the current matter.

“You are mistaken if you think that the IRS knows the details of your income alone. They also have insights into your financial accounts,” says Wayne Bechtol, Senior Tax Accounts at Fiona. “Earning more than $10 from a bank account during the year requires the bank to report it to the IRS on Form 1099-INT. Plus, your dividends and stock sales are reported through 1099-DIV and 1099-B. Thus, the IRS has details of your investment accounts. Additionally, payments through merchants like PayPal is also visible to the IRS because of reporting through Form 1099-K.”

Social Media Postings

Postings on social media, like Facebook or X (formerly Twitter), can be accessed by the IRS. Even tweets from years ago can be used as evidence that you misled or committed tax fraud.

Once something is out there on social media, it can be found.

Emails

The American Civil Liberties Union has IRS documentation that reveals that the IRS believes it has the legal authority to open private emails without people’s knowledge and sometimes even without a warrant. Don’t assume your emails are private just because they are not published publicly.

What To Do About It

If you are worried about the IRS accessing your personal information, there are some things that you can do about it. Always file truthful and accurate tax returns, know what is public and what is private, don’t post any contradicting information online, and keep track of legitimate deductions.

File Truthful and Accurate Tax Returns

To Read More Click LINK:

https://www.yahoo.com/finance/news/4-surprising-things-irs-already-110101452.html

4 Money Lessons From High-Net-Worth People That You Need Right Now

4 Money Lessons From High-Net-Worth People That You Need Right Now

Wola Odeniran, CEPF®  Tue, April 25, 2023

Advisors often work with high-net-worth clients and are able to understand the expectations wealthy clients have about managing their finances. The good news is that some of those takeaways can be applied to clients who are not high-net-worth individuals.

Read on to understand four lessons advisors can take from high-net-worth clients – and how they can be applied to any client.

If you are looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform.

Almost Everyone Needs an Estate Plan

Estate-planning practices apply to every client, no matter their tax bracket, says Renee Fry, co-founder and CEO of Gentreo, a company that provides estate-planning document services.

“Financial advisors should take the example of their high-net-worth clients and apply estate-planning principles to all their customers, regardless of income bracket,” Fry says. “Every person has an estate, regardless of their income level, and thus, everyone should have a plan in place to ensure that their assets are distributed according to their wishes.”

Proper planning can help advisors build a bigger client base. “By doing so, advisors can help ensure their client’s financial security, build long-term trust and differentiate themselves from their competitors,” Fry says.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Outside Advice Is Valuable, Even When Clients Are Knowledgeable

Some clients may be titans of business or professional heavyweights, which has helped them benefit financially. “But that doesn’t mean that they know how to budget, how much insurance to have, how to invest or what to do with their wealth in terms of estate and charitable giving,” says Amy Jo Lauber, a certified financial planner and founder of Lauber Financial Planning.

Lauber also says that non-high-net-worth clients, especially those looking to improve their financial situation, often have more financial awareness than those who are wealthy.

“I find people who are living paycheck-to-paycheck are much more aware of their financial situation because they need to be,” Lauber says.

 Index Funds Can Be a Foundation for Client Portfolios

“You do not have to have millions of dollars to own a piece of the largest 500 stocks in America,” says Stephen Maggard, CFP with Abacus Planning Group. “Putting $1,000 into an index fund that tracks the S&P 500 will spread your dollars among America’s 500 largest public companies. And it’s not expensive to do.”

Non-high-net-worth clients have the opportunity to take advantage of index funds that have affordable expense ratios, Maggard says. “These funds are a great way to capture market returns without paying an arm and a leg.”

Combining Money With Financial Planning Is Powerful

https://finance.yahoo.com/news/4-lessons-advisors-learn-high-170850089.html

What Does Your Personality Type Say About How You Handle Money?

 What Does Your  Personality Type Say About How You Handle Money?

The Traits of 5 Money Personality Types: What Does Yours Say About How You Handle Money?

Laura Bogart  Wed, April 10, 2024 GoBankingRates

Sometimes, money is more than money. The way you think about it (or don’t think about it), prioritize it (or don’t prioritize it), spend it (or don’t spend it), and save it (or don’t save it) can reflect aspects of your personality.

Learning more about the various personality types around money – and where you fall into the spectrum – can be a first step in healing, or strengthening, your relationship to money.

Financial experts and professionals encounter people with different personalities around money – sometimes within mere hours.

So, GOBankingRates talked to experts about some unique personality types around money to get a sense of their strengths and areas of healing.

The Compulsive Saver

One of the most common personalities Taylor Kovar, CFP, the founder and CEO of 11 Financial and the CEO of The Money Couple has observed that money is a compulsive saver.

Compulsive savers align with a drive to seek security in money.

“They prioritize stability and security, often opting for low-risk investments and maintaining a sizable emergency fund,” said Kovar. “They are cautious spenders, preferring to save rather than spend impulsively, reflecting their desire for financial safety and peace of mind.”

The Anxious Planners

As a trauma-informed finance professional at the Money Mindset Hub, Alejandra Rojas encourages her clients to consider how their childhood circumstances shaped their adult relationships with money.

She said that people always anticipating what could go wrong with their money and waiting for the other shoe to drop might be primed to expect the worst-case scenario from their youth.

“The way our parents or caregivers managed money plays a crucial role in shaping our financial habits today,” said Rojas. “For instance, growing up in a family that constantly struggled with money might lead someone to be very cautious with their finances, always looking to hold tight to money because they’ve learned to view money as a scarce resource.”

When working with clients who have anxiety around money for any reason, Rojas encourages them to see their past issues with money as old memories and learn how to separate deeper emotions from those memories.

The Strategic Planners

One of the healthier personality types around money is the strategic planner, who applies logic and care to their finances without catastrophizing. According to Kovar, while strategic planners seek security with their money, they emphasize methodical and disciplined financial planning.

“They set clear financial goals, create detailed budgets, and regularly review their progress,” he said. “They prioritize long-term financial security and are willing to make sacrifices in the present to achieve their goals, reflecting their desire for stability and control.”

The Big Spender

To Read More Click the LINK:

https://news.yahoo.com/finance/news/traits-5-money-personality-types-190007682.html

Americans Don’t Understand Inflation — This Is How It Actually Affects Your Money

Americans Don’t Understand Inflation — This Is How It Actually Affects Your Money

Cynthia Measom   Wed, April 10, 2024 at 10:00

Inflation — it’s a word you hear frequently, but do you really understand what it means?

What most people know about inflation is that it makes things more expensive. A simple definition of inflation is that it’s the increase in the cost of goods and services over a time period in an economy, which is usually expressed as a yearly percentage. Inflation rates are measured by price indexes, including the consumer price index by the Bureau of Labor Statistics and the personal consumption expenditures price index from the Bureau of Economic Analysis.

The main effects of inflation are better interest rates for savings accounts and higher costs of living, but there are several more nuanced effects to watch out for as you manage your money. Increasing your understanding about the different types of inflation and how they could impact your life both positively and negatively can help you make better financial decisions, especially when it comes to protecting your money now and in the long run.

Inflation Can Be Confusing

According to GOBankingRates’ 2024 Financial Literacy Survey, out of all current hot money topics — inflation, interest rates, Social Security and taxes — 38% of Americans find inflation to be the most confusing. Here’s a breakdown of the percentage of each age group that finds inflation most confusing:

18- to 24-year-olds: 29%

25- to 34-year-olds: 42%

35- to 44-year-olds: 41%

45- to 54-year-olds: 45%

55- to 64-year-olds: 35%

65 and over: 32%

Overall, respondents ages 18-24 and those 65 and over — members of the youngest and oldest age groups — find inflation to be less confusing than the other age groups. Respondents ages 45-54 find inflation to be the most confusing of all generations, followed people who are 25-34. Additionally, 40% of women versus 35% of men said that inflation was the most confusing of current hot money topics.

How Inflation Affects Your Money

Not all outcomes of inflation are bad. In fact, maintaining a healthy rate of inflation is good for the economy. Here are some of the positive and negative effects of inflation:

Positive: You’ll Get Better Savings Account Rates

Investors with short-term goals might invest in a high-interest savings account if they think they would need access to their funds in the near future. If this sounds like you, your short-term savings could get a boost because increasing inflation often prompts the Federal Reserve to raise interest rates, and banks, in turn, often raise the rates they pay on savings deposits. So you could benefit from a better return on money sitting in your cash or savings account.

Negative: Borrowing Becomes More Expensive

But those aren’t the only rates banks raise. When the Federal Reserve raises interest rates, it makes it more expensive for banks to borrow money from one another. These increased rates are then passed on to individual and business borrowers. The bottom line is that higher inflation means higher interest rates on the money you borrow — and less money in your pocket.

Negative: You’ll Pay More for Stuff

With inflation, prices of pretty much everything start to rise. Medical care and prices for prescription drugs could increase, and your rent could also go up. And unless your paycheck goes up at least as much as the inflation rate, you’ll be trying to pay for the increased costs of items on the same income, so inflation can be tough on the wallet — especially during hyperinflation.

To Read More Click Link:

https://news.yahoo.com/finance/news/americans-don-t-understand-inflation-140003599.html

America’s Biggest Bank Sounds the Alarm Bell

America’s Biggest Bank Sounds the Alarm Bell

Notes From the Field By James Hickman (Simon Black) April 8, 2024

Jamie Dimon, the CEO of JP Morgan Chase, did not open his annual shareholder letter with rosy language about the state of the world, or even enthusiasm about his bank’s record profits.

Instead, he describes “yet another year of significant challenges” including the war in Ukraine, war in the Middle East, extreme tensions with China, higher food and energy prices, turmoil in the banking sector, outrageous government deficits, and even major risks with the Federal Reserve’s monetary policy.

Dimon writes that “America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate,” and that this is a “time of great crises”.

He went on with a few charts and thoughts about the bank’s business and financial performance over the last year… and then dedicated most of the remaining 57 pages of his letter to the serious problems which face the world.

His observations are wide-reaching-- from the decay of social cohesion to the prospect of war and higher inflation, to the serious potential for a reset of the Bretton Woods system (which made the US dollar the world’s reserve currency).

Frankly the letter almost reads as a manifesto written by someone who is completely fed up with government incompetence and positioning himself to run for office. I can’t agree with everything he says, but it’s obvious that his ideas are balanced and well thought out.

There are a few points in particular worth repeating.

1. Keep it in perspective; the world is not coming to an end

“If you read the newspaper from virtually any day of any year since World War II,” Dimon writes, “there is abundant coverage on wars — hot and cold — inflation, recession, polarized politics, terrorist attacks, migration and starvation. As appalling as these events have been, the world was generally on a path to becoming stronger and safer.”

This is absolutely a true statement. It’s easy to get caught up in the negativity while missing the abundance of growth and opportunity.

In the year 1918, most people probably thought that the world was coming to an end. The Great War was at its peak, economies were faltering, inflation was surging, rationing and shortages were everywhere… and then the Spanish flu popped up and killed tens of millions of people.

Bleak times indeed. And yet the next century was the most prosperous in human history… despite a very bumpy path along the way.

This is similar to where we are today. Yes, Inspired Idiots have caused a gigantic mess. But the general trajectory of the human species is still improving.

2. That said, long-term risks should not be underestimated. Especially for the West.

Dimon finds that there is “too much emphasis on short-term, monthly data and too little on long-term trends”, and he talks about inflation as a great example.

Economists and investors tend to be almost singularly focused on monthly inflation reports in an effort to divine if and when the Federal Reserve will cut interest rates.

They’re entirely missing the point, Dimon writes. Month by month, and even year by year, inflation numbers could vary wildly. But if you look at the big picture, you’ll see substantial evidence for future inflation.

We’ve been writing about this for a long time. In fact, since inception we’ve only been focused on long-term trends… and we see these as highly inflationary.

Similar to our view, Dimon understands how “ongoing fiscal [deficit] spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future” are all inflationary in the long run.

The inflation might not show up next month or next quarter, but he believes (as do we) that the coming years are full of “persistent inflationary pressures”.

There are also significant risks to the current US-led global order; America’s influence is waning, and Dimon writes that the “international rules-based order established by the Western world after World War II is clearly under attack by outside forces, somewhat weakened by its own failures [and] confusing and overlapping regime of policies.”

As part of this, he talks about the distinct possibility for a reset of the post-WW2 financial system (known as Bretton Woods) that anointed the US dollar as the global reserve currency. He puts it succinctly: “we may need a new Bretton Woods.”

We’ve been writing about this for years; the dollar’s decline is a long-term trend, but for us, it’s an obvious one. You cannot run multi-trillion-dollar deficits each year and still expect to be the world’s economic superpower.

It’s notable that even someone like Dimon can see this coming.

3. These problems are still solvable.

We’ve written extensively that the problems facing the US and the West are still solvable. For now. But every year that the problems continue to be ignored brings the country closer to a point of no return... where there is no way out but default.

Dimon is not shy about offering up suggestions, many of which we have written about in the past. He talks about border security, streamlining sensible regulations, and economic policies which prioritize growth.

“Unfortunately,” Dimon writes, “the message America hears is that the federal government does not value business — that business is the problem and not part of the solution.”

“There are fewer individuals in government who have any significant experience in starting or running a company, which is apparent every day in the political rhetoric that demonizes businesses and free enterprise and that damages confidence in America’s institutions.”

He says he finds it “astounding that many in Congress know what to do and want to do it but are simply unable to pass legislation because of partisan politics”.

He goes on to list a multitude of government failures and the “staggering number of policies, systems, and operations that are underperforming”, including pitiful public schools, broken healthcare, infrastructure woes (especially the energy grid), terrible immigration policy, Social Security’s looming insolvency, and more.

Dimon states very clearly that the federal government “needs to earn back trust through competence and effective policymaking.”

True statement. But I’m not holding my breath. Because in related news, the White House just announced that Joe Biden is working on yet another way to forgive student debt for 30 million Americans.

He doesn’t seem to care that the Supreme Court already rejected his previous effort to forgive student debt, saying he did not have the legal authority.

It’s pathetic that the cost of university education is so high… especially given how many degrees in an AI-world are useless. Plus many universities these days are just hotbeds of radicalization. It hardly seems worth taking on $80,000 of debt for such a dubious outcome.

But nevertheless, taxpayers have footed the bill for college and loaned out over $1 trillion to students across the country.

This is a basic tenet of capitalism (which Mr. Biden claims to embrace): debts have to be paid.

But because this guy’s poll numbers are so pathetic-- especially with young people-- he’s trying to score points by canceling their debts.

Well, canceling student debt means that taxpayers will lose hundreds of billions in loans that they made. So rather than taking steps to strengthen America’s balance sheet, the President is once again violating the law to make the balance sheet worse… all to improve his image among young voters.

This is hardly a way to restore trust in government. So again, I’m not holding my breath.

Dimon’s letter is worth the read if you have the time. You might not agree with everything he says, but it is rather telling that the CEO of the country’s largest bank is speaking so plainly about obvious risks.

It’s another reminder of why it makes so much sense to have a Plan B.

To your freedom,

James Hickman (Simon Black)  Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/americas-biggest-bank-sounds-the-alarm-bell-150673/