Finance & Fury Podcast

Welcome to Finance and Fury, The Say What Wednesday Edition I would like to start by saying a big thank you for the knowledge you have passed onto myself and the community. My question lies around equity, if you have a considerable amount of money in shares, say 200k, and you are wanting to buy a house at 400k are you able to use this as leverage? Also, with negative interest rates possibly coming, keeping money in an offset account and lowering the interest for the mortgage of a property is not going to be the best, so placing them into shares is possibly a safer place to keep capital?   Thanks for getting in touch and great question! You are more than welcome, glad to hear you are getting value out of the podcast! Two parts – Go through shares as genuine savings in application process and deposit at time of loan Go through negative rates and offset accounts – thought experiment on this and hasn’t been seen   Application time – Assessment and Genuine savings Just to clarify - shares as collateral – if mea

Welcome to Finance and Fury,  Last week – talked about Goodhart's law - "When a measure becomes a target, it ceases to be a good measure." – yet central banks have made inflation the policy target – Went through permanent QE and lowering rates and cashless economy Today – talk about fiscal expansion from govs and the need for deficit monetisation (helicopter money) and final step of abandoning dollar as reserve currency – effects on economy To start - Step 3: Fiscal Expansion and Deficit monetisation The QE and lowering interests will flood banks with ‘liquidity’ = lots of money to lend out – to themselves (wall street) or main street - If this doesn’t work - government may eventually assume the role of resource allocator, through public spending financed by a permanent increase in the money stock If government spending does not help either, then helicopter money might, which is to allocate resources directly into the pockets of households – either cutting taxes or UBI Fiscal expansion – The government spen

Welcome to Finance and Fury, the Furious Friday edition Today is a Bonus episode on most recent series – Current events unfolding – Extinction Rebellion – Today focus more on the economy - Talk about How eco-warriors will collapse the economy – a self-fulfilling prophecy If you have friends who are protesting – share this episode - don’t mean to be offensive but they are being used as pawns – being manipulated by the industries/corporates who are going to profit from their activity Ironically - Serving the very people the same people were protesting against in the occupy movement – the elite banking groups - they are going to benefit from their eco-activism – while the overall economy struggles Art of War – Controlled opposition – gone through it but Environmental activism/societies originally funded by the Dutch Royals (Shell Oil), British Royals (BP), M Strong (Canadian Oil Billionaire), backed by Standard Oil (Rockefellers) – why would the oligarch’s band together to put themselves out of business? Cont

Welcome to Finance and Fury, The Say What Wednesday Edition This week the question is from Dan I am 21 and have about 70k in a term deposit and 5k in VHY and VGS ETFs. I am wondering whether over a period of 20~50 years I would be better diversifying into VAE or VGE and VAP or whether you'd stick to VAS and ETFs which have a franked dividend and not just potential capital gains. You have mentioned in previous podcasts bubbles, though these ETFs have much larger market caps and therefore are less likely to default. Thanks for the great question – Break down investing in ETFs, diversification issues with ETFs – Feedback loops and self-fulfilling prophecy – Global asset managers, Vanguard and iShares continue to dominate the ETF market in Australia. Account about 56% of all money invested in ETFs - BetaShares is the third-largest Low-cost passive vehicles have gained popularity on Main Street. Passive investments have now taken over nearly half of the stock market as more investors shun stock pickers and flock

Welcome to Finance and Fury Talked about the inflation targets, interest rates and monetary policy over the past few weeks – Today – go further into looking at a completely controlled economy by Central Banks – To start – look back to an RBA paper from 1975 – this was where a thing called Goodhart's law originated – from economist Charles Goodhart – Phrased as "When a measure becomes a target, it ceases to be a good measure."  Applied in economics – based on the economic idea of rational expectations Entities who are aware of a system - rewards and punishments - will aim to optimise their actions to achieve their desired results E.g. employees whose performance in a company is measured by some known quantitative measure (cars sold in a month etc.) will attempt to optimise with respect to that measure regardless of whether or not their behaviour is profit-maximising – Sell all the cars at $100 – looks good for your performance but sends the company bankrupt – now your performance doesn’t matter as you don’t

Welcome to Finance and Fury, The Furious Friday Edition.    The final episode in the mini-series for the SDGs - Covered a lot – today - Summary wrap up and piece together next step One sentence – UN's Agenda 2030 wants us giving up sovereignty to a global unelected socialist government – Went through the 3 Founders – Roosevelt praised fascism, thought it was the best kind of Gov and acted like it in USA, Stalin - loves him some communism and mass genocide, then Churchill – Not a fan of Indian’s ‘beastly people’ – 1943 Bengali Famine for 3m people starved to death thanks to his policies to take all the food out of the area This sort of thing can’t happen today unless we want this – hard to hide true crimes like the past The founders of the UN weren’t good leaders, they loved Authoritarian rule – Why would anyone want to live under a Nazi, Communist or Fascist? What if it is done in the name of climate change? That is the propaganda - SDG4 -method of building international socialism – the aim has always

Welcome to Finance and Fury, The Say What Wednesday edition – Every week answering your questions – Hi Louis, thank you for the great content and the research you put in! I have another question you might be able to tackle: why do central banks target 2-3% inflation? what are they trying to accomplish by having it in that range? And in a world where inflation is less than 2% and interest rates are around 0%, what happens to people who rely on defensive assets (fixed income) like retirees? It seems like this would be a world where UBI (universal basic income) would have a place. What are your thoughts on this? Thanks, Gab Great question – break this down into two parts Why does the RBA have an inflation target, why it is set the target to 2-3% p.a. Looking at retirees/savers   RBA - The Reserve Bank of Australia's – RBA - central bank that conducts monetary policy Purpose is providing stability in the financial system and promoting efficiency and competition in the payments system – indirect functions throu

Welcome to Finance and Fury We live through transformational times – new environment for finance and investing   We are fast reaching the limits of monetary printing - markets are still trying to work out how to price that in Past model – print money Get GDP growth through aggregate demand increase – mainly consumption Therefore – due to velocity of money (turnover) – get multiplier effect – more times money changes hands the bigger the effect = $1 might lead to $3.2 Trouble is that turns out inflation is mostly driven by behaviours/psychological phenomenon GDP growth, inflation, productivity are all missing in action despite 9 years of declining rates and 6 years of monetary doping and financial engineering the world over. If you increase money supply – money needs to go somewhere – sometimes through existing off investment managers or pension funds or new bonds issued from the bank RBA will give CBA $1bn of newly printed money – in return gets CBA Bond to the value of $1bn with a coupon Bank uses n

Welcome to Finance and Fury, The Furious Friday edition Today – cover Resource control over an economy/society – Energy, food, water – Many SDGs – 7, 13, 15, 16 – Mainly focus on 7 and 13 – this is the core of most SDGs – justifications for them anyway Goal 13: Climate action - "Take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy." Started in 2015 - climate deal Paris Agreement – tool used for countries to meet the sustainable development goals UN states that tackling climate change will only be possible if all SDGs are met = climate action needed – SDGs plan Official “economic development and climate change are inextricably linked, particularly around poverty, gender equality, and energy” – Okay? Economic climate change and Gender equality just thrown in there The UN encourages the public sector to take initiative in this effort – Government policy 2018 - International Panel of Climate Change (IPCC) - UN body for assessing

Welcome to Finance and Fury, the Say What Wednesday Edition Back to answering individual questions - Two questions this week – follow up to recent eps on gold and economy First from Mario – just a quick one - I listened to a recent podcast you made about gold and wanted to understand why people would own gold outright and keep in their possession? Is it purely because they don't trust keeping in a vault? Also with Gold ETFs in the case of a crisis gold ETF doesn't really mean much do they.   Why hold gold personally over a vault? The major reason to hold gold personally would come down to personal preferences and insurability, rather than not trusting a physical storage vault. The gold can be hard to personally insure and requires special additions to a standard home contents policy. The issue can come back to the valuation of gold, as the insurance policy might value up to $10,000 but the price of gold changes and might be higher than the insured value. people would need to constantly be updating their pol

Welcome to Finance and Fury Passive Investing is the Flavour of the day – Central banks entered the markets to provide a feedback loop Central banks Trying to create the wealth effect - Bernanke’s easy money policy was intended to boost economic growth by boosting shares as well - November 2010 he argued: “Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.” Think of a financial market as a forest – Aus seen some fires recently – arson can be a cause – but if the Greens won’t let burn offs, then throw fertilizers around and forests grow out of control – enter a dry period – small spark leads to massive fire that can destroy everything in its path – Tell-tale sign - lower volatility and the unprecedented magnitude of Central Banks’ interference in markets Peak Quantitative Easing - never before this high: $300bn+ monthly asset p

Welcome to Finance and Fury, the Furious Friday edition Last week - went over partnership programs and potentials for coercive monopolies – today – implementation of policies in the circular economy – SDG12 Today’s ep – go through google and the largest companies on earth will determine how we produce and consume – or how they want us to produce and consume – all to benefit their own pockets and the global government they back – under the climate change guise These companies are the ones in charge of providing the recommendations for pilot programs for the ‘circular economy’ Circular economy will destroy the modern economy – it is built on consumption – Economists like Krugman can't have it both ways – they say consumption is the key driver – I say it is innovation and supply-side They say this will create growth – but this will do the opposite – reduce innovation Stop and pause for a minute – want to ask if hypocrisy exists in climate strikes and proponents of warming   Honest question- are you terrifie

Welcome to Finance and Fury, the Say What Wednesday Edition Today's episode is about building wealth and getting ready for retirement Keeping with the Theme – Solving the economic problems Using the resources you have (income, savings, equity, etc.) to get what you want Today – run through considerations to take when looking at accumulating wealth for retirement Like last few episodes – doesn’t have to deal so much with age – but you own situation Some want to retire at 50, others 70 if ever First step – What are your retirement lifestyle costs like? Types of expenses to account for Essential costs – Food, bills, - what your basic budget looks like Discretionary costs – Holidays, dinners out – enjoying the good life What will this cost you? Asic money smart – has benchmarks – But work it out for yourself What do you spend today on the essentials and what would you like to spend? By the time you become FI – probably won't have a mortgage – so can neglect this cashflow requirement if paying it off

Welcome to Finance and Fury   Today – Talk about goals based investment – setting up buckets of investment allocations to meet needs Approaches to portfolio construction three common approaches in building the framework of a client’s investment solution: traditional (asset-only) or liability approach, Today - goals-based investment (GBI) approach.   The traditional, asset-only approach to investing is based on the seminal work of modern portfolio theory (MPT) - 1952 most common approach - build optimal asset allocations for investors based on their aversion to risk (as measured by investment return volatility). Liability driven – Governments or Insurance companies – meet large payment obligations – need immunised investments for short term funding cash inflows are likely to match and cover their obligated cash out flows   Goals-based ‘bucket’ approach People have many complex and competing funding needs (e.g. living expenses, children’s education, health costs, holidays) To aim to achieve these - GBI

Welcome to Finance and Fury, The Furious Friday Edition Today – Run through SDG Goal 17 – Sneaky side to the SDGs along with the method of creating global monopolies – part 1 of two – today 17, next week 12 – they go hand in hand SDG17: “seeks to strengthen global partnerships to support and achieve the targets of the 2030 Agenda - bringing together national governments, the international community, civil society and the private sector” The partnership programs for the UN – Who are these actors? National Governments – self-explanatory – The bringing together of Aus, China, Belgium, etc – every nation The international community – used in geopolitical terms to refer to everyone in the world – global citizens is another term Civil Society – NGOs and activist groups Private Sector - Companies – but only the giant multinationals this will benefit – I know I didn’t get an invite I originally thought that the private sector would say no to these policies – they are meant to make profits But a lot of the largest

Welcome to Finance and Fury, The Say What Wednesday Edition special series – running through the catalogue of questions and concerns The series is broken down into three stages – 50 years or so timeline – last week was basics and the first stage https://financeandfury.com.au/how-do-i-start-my-journey-to-financial-independence/ Teenage to young adults (16-25): 10y - The focus of these years is to learn the basics of money finish schooling/education - next step is setting up the basics in last weeks ep Family and home (25-45): 20y - Whether your goals are to buy a house, start a family, education costs or anything else - the biggest part of this stage is preparing for the financial responsibility that comes along with each goal – this week Accumulating to Retire (45-65): 20y – Normally have larger disposable incomes – set sights on accumulating more to fund rest of life – next week     What is life normally like before the 20s? Up until this point – have been a consumer – younger people are naturally

Welcome to Finance and Fury,   Today – next gold rush – Final part of capital preservation – Allocation as a hedge for a financial meltdown - should preserve capital, withstand market volatility, and provide diversification across a portfolio Gold – an asset which is virtually permanent, with no significant erosion of quality over time, could arguably be considered a safe haven – good evidence that Gold has provided a hedge against collapse – limited supply at about 1.5% p.a. increase   What is Gold's true role? – Capital preservation – but also Money – Base money for most of history - 1912 when J.P. Morgan was called to testify before Congress. Congressman - I want to ask you a few questions bearing on the subject that you have touched upon this morning, as to the control of money. The control of credit involves a control of money, does it not? JP - A control of credit? No. – Congressman: But the basis of banking is credit, is it not? JP - Not always. That [credit] is an evidence of banking, but it [credi

Welcome to Finance and Fury, The Furious Friday Edition   Today – SDG9 - How infrastructure spending helps an economy - Anyone who knows basic economic and GDP has learnt that Infrastructure spending leads to GDP growth – so the theory says – Very hard to measure benefits/gains – Direct through spending in GDP equation – flow on effects Go through Economic theory backing this – stimulus spending for GDP growth – First – estimates Research provided from McKinsey and UN – MK established the Global Infrastructure Initiative (GII) in 2012 MK Two reports – 2015 to 2016 – World spent $9.5trn (14% GDP) $9.6trn follow year Transport, power, water, telcom – $2.5trn, Social infrastructure, oil and gas, mining – $2.4trn, Real estate - $4.65trn Spending trajectory points to a shortfall of about $350 billion a year to what we are told we need – but triples when including funds needed to meet the UN Sustainable Development Goals Report states – meeting is critical for the future of undersupplied regions such as Africa

Welcome to Finance and Fury, The Say What Wednesday Edition Series to cover a number of questions asked – FAQ on stages of life Hard to get through all questions – from questions compiled – put together run through of steps Go through 3 or 4 – stages of life – cover the process from start to finish – considerations to take, give an outline Process – Stage, typical situation, goals, focus, and tips – priorities and strategies – pros and cons Get the planning books – access through the member's section - https://financeandfury.com.au/member/ Investing in yourself episodes at the start of the year as well – purpose careers Today – First part - Starting out – run through the basic stage of setting the foundations – The first part is very important – even if feel like you have gone through it, know someone who this can benefit – please share to help them This part, not really age/situation-specific - regardless of ages/circumstances finances can be difference from decisions What does the Starting sta

Welcome to Finance and Fury -  This Episode – Look at Where to not invest in negative rates world – if it comes to that – other options First – what does the world in negative rates look like? – dive further into this to start – look at other countries, Japan, Denmark and how this affects an economy – Also - what sort of investments won't fare well - run through alternative assets Going to be 2 parts – go further into alternatives next week What asset classes may be at risk – financial sector Negative interest rates are terrible for banks - They destroy the business model for banks. Put further pressures on banks margin (profits) - make future bank collapses more likely because banks cannot build capital to absorb losses Commercial banks act as streams in the modern economy – Glacier (Central Bank) melts and the money flows through commercial banks and financial systems No ice – no flow – but no rivers – water nowhere to go – a dam that breaks and floods everything European banks are looking to be in po