Taxation Without Representation. How it Affects Us Today.
Release Date: 01/08/2025
If Houses are not Selling, Why are not Prices Dropping?
Your Personal Bank
Many people are confused. If houses are not selling, why are not prices not falling? There are several reasons. Cause: Housing prices increased an average of 50% from 2019 -2024 in the US. Some areas increased up to 100%. Strong purchasing demand plus limited inventory was the primary reason for prices increasing. Housing affordability is at historical lows due to significantly higher mortgage interest rates and higher purchase prices. This has destroyed buying demand. The average American household can no longer afford to purchase the average home in...
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How High can US Debt go before it Triggers a Financial Crisis?
Your Personal Bank
Excessive government debt has contributed to inflation and is pushing interest rates higher. The government continues to add to the debt by spending more than it receives. The US government receives about $5T in revenues annually. They spend about $7T per year. Higher interest rates and increasing debt is increasing interest payments on the debt at unsustainable levels. Many are concerned the debt will lead to a financial crisis. The big question is how high can US debt go before it triggers a financial crisis? Government debt is currently...
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Stocks have not been this Expensive Relative to Bonds in nearly 25 Years
Your Personal Bank
Pimco released a report recently and stated stocks haven’t looked this expensive relative to bonds in nearly 25 years. Bonds look better than they have for a long time. Pimco states "The traditional world order — in which economics shaped politics — has been turned on its head,” according to a new five-year Pimco outlook co-written by Richard Clarida, now a global economic adviser at Pimco and formerly a Federal Reserve vice chair from 2018 to 2022. “Politics is now driving economics, especially in the U.S. and increasingly in how other countries respond.” Pimco...
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Why are President Trump and Elon Musk Bickering Over the "Big Beautiful Bill"
Your Personal Bank
Although I do not like Trump and Elon attacking each other, the conversation is very valuable and could lead to good results. Elon is bringing attention to the fact our government is taxing us too much and spending much of it on waste and fraud. The spending cuts are pathetic. The $1.5T in spending cuts is over 10 years. $150 billion per year in spending cuts is only about 2% of the approximately $7T annual spending. Our government increased spending 50% from pre-COVID levels. Our population increased 2% in the past 4 years. We need to push our representatives to do better. I don't believe...
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The Inventor of the 4% Withdrawal Rule has Updated His Recommendation. It is Significantly Less than Guaranteed Lifetime Income Benefits
Your Personal Bank
Bill Bengan published a study in the Journal of Financial Planning in 1994 that introduced the 4% withdrawal rule. His study recommended initially withdrawing 4% from your portfolio to ensure you will not run out of money in retirement. The financial industry ran with this recommendation ever since. JP Morgan projects the following on a typical portfolio: Withdrawal Rate Likelihood of not running out of Money 3% 95...
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Moody's Downgrades US Credit Rating, 30-Year Treasury Hits 5% (How to Increase Your Retirement Income Guaranteed)
Your Personal Bank
Moody's downgraded the US credit rating for the first time in history. This is the last of the 3 major credit agencies to downgrade the US credit rating. The primary concern is the increasing level of government debt. As a result, the 30-year treasury bond yields rose to 5%. This is the highest level since 2007. Bond buyers will demand higher interest (yield) to purchase government bands due to the increased risk. Bond yields and higher borrowing costs will be higher until the government addresses fiscal responsibility. Higher bond yields are one of the...
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The Tariff War with China has been Paused
Your Personal Bank
China and the US have agreed to pause the 145% US tariffs and 125% Chinese tariffs for 90 days while they negotiate an agreement. If the high tariff rates had gone into effect, it would have been similar to a trade embargo. Both countries have realized a trade embargo would be devastating to both economies. The US imports about 5 times more from China than China imports from the US. The US is the largest purchasing economy in the world. The buyer has the power. This gives the US a powerful position in this situation. We finally have a president that...
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Retirement is not about a Number, It is about Cash Flow
Your Personal Bank
Many companies and people focus on a number to achieve a comfortable retirement. Retirement is not about obtaining a number. It is about cash flow. The 4% withdrawal rate is often recommended to ensure you don't run out of money with a high degree of certainty. Guaranteed Lifetime Income products provide 5-7% withdrawal rates guaranteed for life depending on your age. The older you are, the higher the withdrawal rate. This would increase income for most retirees 25 - 75% guaranteed for life. This ensures you don't run out of money in...
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More Americans Worry about Running Out of Money in Retirement than Dying
Your Personal Bank
The 2025 Allianz Retirement Survey key findings: 64% of Americans worry more about running out of money in retirement than about death. The primary causes of their concerns are: - 54% cite the increased prices of goods due to inflation - 43% fear Social Security will not provide enough financial support as needed - 43% state high taxes negatively impact their economic situation Your withdrawal rate largely impacts the likelihood of success of not running out of money in retirement. The 4% withdrawal rate is often...
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Will the US-China Economic Cold War Lead to a Recession?
Your Personal Bank
The tariff policy is not just about tariffs. This is about economic power and control. China and the US want to dominate future technology. China and the US are decoupling economically. This is similar to the Cold War with the Soviet Union. That was a military conflict. We are in the beginning of an Economic Cold War with China. Divorces can be amicable or messy. So far, China is fighting back. This may take some time. The primary question is how long will this take? The Trump administration is changing decades of tariff policy. The transition will be...
info_outlineSome of the problems we have as a country can be fixed rather quickly. The border can be closed. Illegals can be deported. We can stop funding other countries and supporting forever wars.
Other problems will take more time. You don’t pay down $36T of debt overnight. Even if the Trump administration does everything right financially and Elon and Vivek with DOGE reduce waste and increase efficiency, it may be years before the debt is reduced to healthy manageable levels.
Record levels of debt requires record selling of bonds. This pushes bond interest rates higher.
Until the government starts paying down debt, bond interest rates will remain elevated.
At the same time, the Federal Reserve is lowering borrowing costs by reducing interest rates.
This creates an opportunity.
Your Personal Bank allows you to earn dividends (likely increasing) while accessing funds to pay off debt, purchase items, or invest in assets.
If dividends are higher than the borrowing costs, you keep the difference. This creates positive cash flow (positive arbitrage) on your money.
We are likely headed to a historical positive arbitrage scenario.
Historically, positive arbitrage has been available 24 of the past 28 years. The other 4 years the dividends and borrowing costs were similar. The average annual positive arbitrage was 2-3%. This is interest you earn on money you spent or allocated elsewhere!