Cash-flow investing, means purchasing an asset that provides income at regular intervals versus Asset purchases solely based on price appreciation(Rising Interest Rates Symbolism) – January 21, 2022,
It’s not a surprise for people like me when we see the immorality of modern society in 2022, investing for capital appreciation based primarily on Zero Percent Interest Policies(ZIRP) has for the most part propped up exotic bartering alternatives like Bitcoin. It’s pretty obvious to most of us that Bitcoin has no value in a normal interest rate market and by a normal interest rate market, I’m referring to a financial system that is more closely aligned with a bartering system.
a Central bank is a communist institution, I don’t blame the Left Wingers for trying to imagine a giant welfare State in modern society, because since The Nixon shock in 1971 in which United States President Richard Nixon severed ties between the Gold Standard and its international convertibility with the U.S dollar, we’ve been using Rule by Fiat money. Meaning that the money in circulation all over the world is for the most part based on confidence.
Simple enough right? But imagine this confidence-based money couldn’t even NORMALIZE interest rates because modern government economic policies are so bad that normalizing interest rates would crash the entire economy, that’s built on a rule by fiat monetary system? If you really think about the modern monetary system, who can blame anyone for assuming that Bitcoin will be $100-or-200K in the very near future?
With that established, what is cash flow investing really? Cash flow investing equates to a positive return, a quality investment, the producer can get more out they put in, so much so that the company can pay you for investing in their company, which allows that company privilege to borrow more money if it needs it. Despite what some imagine a Gold Standard is not necessary, it’s merely preferred because Gold is always in demand.
Gold is a storer of value, in Venezuela now that their currency is worthless, some people are trading in Gold and Silver, why? Not only to store their wealth but to also get some cash flow in the form of resources.
You see even if have Gold and Silver the idea is to use your Gold and Silver to provide you with resources that will improve your quality of life. What good is Gold and Silver if you have no food or shelter? But in an economic environment free of government, wealth is subjective.
Sure you can be a pirate, but most merchants aren’t going to want to do business with you no matter how much Gold and Silver you have, because the RISK is too great. When government continuously steals to redistribute in order to enrich itself, the government eventually creates an immoral society that starts to think the way a pirate thinks.
Capital appreciation is short-term thinking, cash-flow investing in long-term thinking, when you’re investing for cash-flow you’re keeping your capital in the system, thereby investing in the system for the long term. Investing for capital appreciation means that you’re attempting to strip society of its resources. When the government has control of the money supply, the government fiat monopolists will dilute their fiat money supply to give the government monopolists capital appreciation.
Politicians and corporatists like this method because history has shown that “The Wealth Effect” works. The government claims to the wage employee I helped you get a wage increase if the wage earner imagines that the cost of living increases are the result of private-sector being purely evil, the wage earner will agree with the politician, thereby granting the politician the ability to raise the cost of doing business on the private business person even more.
To avoid going bankrupt, most business people will opt to go out of business, now, for the consumer, they might initially be happy that the evil business person charging high prices is gone, however often when a private business goes bankrupt or closes its doors, it’s not replaced or if it’s replaced, it’s replacement will often charge even higher prices, which the consumers might welcome, because money whether it’s fiat money Gold or Silver is worthless if it can’t buy you the things you need to improve your quality.
Once you understand this economic relationship it’s easier to become a cash-flow investor, because you’ll know that money has to go somewhere. I’m a believer in Freedom, but I accept the fact that most humans, will trade their freedom for perceived security via The State. I Fight for cash flow, but when I see price appreciation becoming all the rage, it’s a clear sign to me that society is headed for economic collapse.
What does economic collapse mean for a cash flow investor? It means that you should have a liquid position. That liquid position could be mean fiat cash, Gold or Silver. Potentially the liquid assets. Some people pull all of their money out of the markets, in preparation for a crash, which I understand, but if your money is making money, you should have pulled your initial investment out long ago.
By that I mean, my dividends tend to buy my stocks, the other money I make via my labour is mine to keep. Now, sure investors who invest purely for capital appreciation may make more money than I make, but I find my strategy easier and less reliant on destroying society. You have to remember that in a free market economy when prices and the economy are the same, so when consumer prices deflate the cost of living is SUPPOSED to come down also.
In the immoral society will live in today, when the economy deflates, the fiat money monopolists will create a wealth effect and infuse the economy with fiat cash created out of thin air, not derived from any pride or labour, so when the socialist left-wingers see money appearing like magic, just the way the politician described, they get a sense of euphoria, worse is that their immoral behavior is now justified.
I didn’t work, but money showed up in my bank account from the government? What a sucker I was for even thinking about working in the past, there’s free money to made and free resources being handed out. I’m going to gobble up as much of it as I can while it’s here. The Pirate mentality is a lot like the capital appreciation mentality. Take money out before it’s too late!
Anyway, the cash flow investor, learns that all investments aren’t the same, as far as stocks go I do purchase stocks that don’t pay a dividend, but not many, and most of the stocks are paid for via my dividends. a real estate investor uses the cash flow or even the capital appreciation to purchase more cash flow producing real estate. The flipper on the other hand is merely trying to buy low and sell high, meaning that without the assistance of the government, the house flipper is buying a house the way a gambler plays a game of Black Jack.
We’re now in an era, in which everyone imagines that prices will keep going up. Are they right? Sure they might be, but I remind you that a higher cost of living often equates to more poverty, which equates to a shrinking middle class, which equates to fewer customers, which equates to cash flowing into QUALITY assets.
Interesting times ahead!