Waterbury Financial Strategies Inc CEO / Founder Rahim Thawer post this week “Entrepreneurs: US Dollar Analysis for your Business.”
Entrepreneurs, start your engines! The Goal is uncomplicated, make money during the recession. The US Government has two options to recoup the funds it has injected in the market, one being raising taxes which is very unlikely due to the state of the economy. Second, the most favored is inflating the US Dollar. Intelligence is a commodity in today’s market, which brings not only intangible value but also tangible and that is the very reason the term ‘insider’ is referred to at times.
Many times we have speculated and said ‘if I had only known.” Say for example, would you have bought Apple stock when it was trading for less than $5 dollars and at present at $184.00? My fellow entrepreneurs, you have access to that information at the current time, knowing that the US Dollar is going to be inflated and you need to capitalize on that whether it be investing in foreign currency or simply making wise decision in regards to future dealings.
One of the key obstacles many business owners will encounter is liquidity due to the banking regulations and lack of funds. Capitalizing on current state of economy does not necessarily require monetary resources but rather a right strategy with an impeccable conceptualization. What are you going to capitalize on? Your daily operations! They will need to be agile and flexible enough to wither the storm.
As a business owner you will need to factor in anticipated inflation or deflation in all the financial activities of the businesses as this is crucial to sustain not only your short term operations but also long term. You will need to convert your cash flow from constant to actual and apply appropriate formulas like use of discounting payment factors rather than compounding. Many businesses fail due to under capitalization but more so due to failing to understanding how critical it is to allocate appropriate resources for future use.
A simple way to understand this concept is to recall what a dollar used to buy over 10 years ago and what does it buy today. This concept of understanding inflation and devaluation of US Dollar is going to be one of the driving indicators of many businesses. This concept is more important than ever before especially for the manufacturing sector who exports their products since we are now dealing with foreign manufacturers who are exploiting on the fiasco caused by the US markets. So be very smart in your dealings.
My Thoughts: As an Entrepreneur, make sure to evaluate every revenue stream and apply appropriate inflation models on current and projected cash flows as well as on the outstanding debt. This concept can also be employed by investors and it is just as important as your ROI. So be wise and run a lean organization with strong future projections!
Rahim Thawer /
CEO of Waterbury Financial Strategies Inc
http://www.waterburyfs.com
Showing posts with label Inflation. Show all posts
Showing posts with label Inflation. Show all posts
Monday, September 21, 2009
Tuesday, September 8, 2009
Federal Deficits keeps soaring and prolongs Recession.
Waterbury Financial Strategies Inc CEO / Founder Rahim Thawer post this week “Federal Deficits keeps soaring and prolongs Recession”
As the Federal Deficits soar, it puts our economy in a perplexing position amongst the foreign investors who are holding these notes and are reluctant to offer any further resources regardless of zero default by the federal government. The question they face with, whether the US can service its debt not to mention the ticking time bombs, the Medicare and Social Security. The federal revenues also keep declining based on a various external factors such as loss of jobs which restricts the consumers to spend money which in return lowers the sales tax. There is also a formidable struggle for the local businesses as the bankruptcy filings have gone up to almost 62% reflecting 55,000 business filings.
The small businesses account for 70% of the employment and we don’t see any funds allocated in the stimulus package. Well, if you studied economics you would know that there are two distinct possibilities for the government to pull out of this recession. First, the government increases taxes through which they can increase their revenues to recoup and offset all that spending. Even with that being said, this would be a challenge simply due to the nature of the current financial system being in a chaos. A number of businesses are already paying taxes in excess of 50% when combined with federal employment tax, social security, state taxes, federal, sales tax, etc.
Second option for controlling the recession would be by simply printing money as the gold standards are not applicable. This will simply create inflation and also raise the prices and devalue the dollar. Based on the current rate that the Federal Reserve is printing money, we will see a huge drop in the dollar valuation in the upcoming 12-18 months. This would perhaps be the most favorable option for them due to simple economics. When you are in inflation, the dollar is devalued and the prices go up. Once the dollar is devalued, the government collects more money quickly. However this is also a very risky game especially for foreign investors. Not only we will be in inflation but the Federal Reserve will need to pull all that money back, so we are caught in a catch 22. After all, we do not want to end up like Zimbabwe with inflation rising exponentially.
This is perhaps the very reason why the foreign investors are concerned with the current state of the US Economy and not knowing which way the current administration is going to turn to overcome this recession. We are already seeing the government burdening the new generation with exorbitant debt and obligations, what is going to be next? The Chinese have been proposing of an idea to use a global currency system to replace the dollar. If that happens, not only are we going to lose the upper hand in the global arena but also in the Oil trading platforms and currency. We just took a back seat this week based on a report out of Geneva, Switzerland that American is now the 2nd most competitive economy in the world after Switzerland.
My Thoughts: Make wise investments and possibly diversify your holdings in a Global Market. Position your companies so that they are on the gaining side and not losing. All the best Men!
Rahim Thawer /
CEO of Waterbury Financial Strategies Inc
http://www.waterburyfs.com
As the Federal Deficits soar, it puts our economy in a perplexing position amongst the foreign investors who are holding these notes and are reluctant to offer any further resources regardless of zero default by the federal government. The question they face with, whether the US can service its debt not to mention the ticking time bombs, the Medicare and Social Security. The federal revenues also keep declining based on a various external factors such as loss of jobs which restricts the consumers to spend money which in return lowers the sales tax. There is also a formidable struggle for the local businesses as the bankruptcy filings have gone up to almost 62% reflecting 55,000 business filings.
The small businesses account for 70% of the employment and we don’t see any funds allocated in the stimulus package. Well, if you studied economics you would know that there are two distinct possibilities for the government to pull out of this recession. First, the government increases taxes through which they can increase their revenues to recoup and offset all that spending. Even with that being said, this would be a challenge simply due to the nature of the current financial system being in a chaos. A number of businesses are already paying taxes in excess of 50% when combined with federal employment tax, social security, state taxes, federal, sales tax, etc.
Second option for controlling the recession would be by simply printing money as the gold standards are not applicable. This will simply create inflation and also raise the prices and devalue the dollar. Based on the current rate that the Federal Reserve is printing money, we will see a huge drop in the dollar valuation in the upcoming 12-18 months. This would perhaps be the most favorable option for them due to simple economics. When you are in inflation, the dollar is devalued and the prices go up. Once the dollar is devalued, the government collects more money quickly. However this is also a very risky game especially for foreign investors. Not only we will be in inflation but the Federal Reserve will need to pull all that money back, so we are caught in a catch 22. After all, we do not want to end up like Zimbabwe with inflation rising exponentially.
This is perhaps the very reason why the foreign investors are concerned with the current state of the US Economy and not knowing which way the current administration is going to turn to overcome this recession. We are already seeing the government burdening the new generation with exorbitant debt and obligations, what is going to be next? The Chinese have been proposing of an idea to use a global currency system to replace the dollar. If that happens, not only are we going to lose the upper hand in the global arena but also in the Oil trading platforms and currency. We just took a back seat this week based on a report out of Geneva, Switzerland that American is now the 2nd most competitive economy in the world after Switzerland.
My Thoughts: Make wise investments and possibly diversify your holdings in a Global Market. Position your companies so that they are on the gaining side and not losing. All the best Men!
Rahim Thawer /
CEO of Waterbury Financial Strategies Inc
http://www.waterburyfs.com
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