Mad Money Machine

MMM-118: Where Does Money Come From?

Avoid non-systematic risk. Where money comes from… you will be surprised. Inflation… then deflation. Lunch with Warren. Online outline tool. Stocks are on sale.

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MMM-118: Where Does Money Come From? [ 30:09 ] Play Now | Play in Popup | Download

The Mad Money Machine is proud to be sponsored by Index Funds Advisors at ifa.com

  Topics in this week’s show include:

• Mark Hebner explains William Sharpe’s definitions of systematic and non-systematic risk. The difference is that the risks inherent in owning individual stocks are not rewarded to investors.
• Where does money come from? Simply, it is created when someone takes out a loan. It did not exist prior to that event. And when the loan is paid back, the money disappears.
• So, because of fractional reserve banking, when money is created, what is it that you are paying interest upon anyway? And why are the banks so sad when loans go into default?
• With all of the credit expansion of recent years due to low interest rates, lots and lots of money was created. More money means inflation. Inflation results in higher prices. But now that money is being destroyed through tightening credit, will we experience the effects of deflation? Lower prices. Maybe a few years down the road. Maybe stocks are being deflated currently while other things take longer to feel the effects.
• Lunch with Warren Buffet. Cheaper to read his annual report.
• Our Tool this week is LooseStitch.com an online outliner. Something I’ve been seeking for years now. Would be great to merge Natara Bonsai with LooseStitch and have them sync with each other.
• Are you glad June is over? 10.2% loss for the DJIA. Congratulations to those of you who are still in the accumulation phase of investing!
• WSJ: How to Buy and Hold (And Sleep at Night)
• WSJ: Five Lessons from a Wild First Half
• A review of the Lazy Portfolio Smackdown
• The Investing sub-category is back at iTunes!
• Richard writes to say he is going to try the Couch to 5K running plan.
• Please visit IFA.com and take their Risk Capacity Survey.

Music from music.podshow.com:
ALTA PLAZA – XRAY DOGS
Crazy on You – Heart
Dead Not Quick – XRAY DOGS
Runaway Train – Under Feathers

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