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5/27/12: Economics, Politics and Freedom – Making Financial Decisions in an Election Year

What do The Federal Reserve, the IRS, the income tax, Fannie Mae, Freddie Mac, FHA, HUD, the mortgage interest deduction, Section 8, accelerated depreciation, the 1031 tax deferred exchange and our personal “favorite”, inflation, ALL have in common?

Each of them are creatures of politicians.  Of course, we could add to this list (for days), but you get the idea.

It’s impossible to pay attention to your investments without paying attention to politics.  Some think that politicians drive economics, but we tend to think that economics drive politicians. But at the end of the day, does it matter?  The bottom line that the two are linked – like the chicken and the egg.

So with the U.S. headed into one of the more interesting political seasons in recent history, you can bet the rhetoric will hit high gear and a lot of it will be focused on “the economy, stupid”.

As real estate investors, we care a lot about the supply and cost of capital, job creation and tax rates.  Like it or not, politicians like to “manage” these things.  And while we can’t control what politicians do, we sure want to anticipate it – especially if big changes are being proposed.  End the Fed?  Return to a gold standard?  Raise taxes on capital gains?  Tax the “rich”? Eliminate the mortgage deduction?  Lions, tigers and bears – or just a lot of bull?

What’s an investor to do?

We think a good start is to pay attention to people who are paying attention and are qualified to have an opinion.  To help you, we packed up our portable studio and headed to the Las Vegas Money Show where we hit an interview jackpot!

In the silver state, behind The Real Estate Guys™ silver microphones for yet another spin of the radio roulette wheel:

  • Your dynamic dealer of dialog and host, Robert Helms
  • Your crapped out co-host, Russell Gray
  • Special guest, author, lecturer, Ph.D and really nice guy, Dr. Mark Skousen

This is Dr. Skousen’s third appearance on the show, but the first time face to face.  Our experience is that getting together face to face is WAY better than phone, internet, Skype, texting or running string between cans.  Before we ever get on the microphones with Mark, we enjoy a nice conversation, talked through the show, and then discussed some things we’d like to work together on after the interview is over.  More on that later…

So lesson #1:  Get out and meet people face to face.  Yes, it’s more expensive and time-consuming.  But the results make it one of the best investments you can make.

But back to this episode…

In addition to having a big education, as the founder and promoter of Freedom Fest (one of our personal favorite conventions of the year), Mark is probably one of the most connected people we know. He knows politicians, businesspeople, money managers, academics and media pundits.  That means he has perspectives that are bigger and broader than the average person.  So we’re always anxious to hear what he has to say.  Fortunately, as you’ll hear, he’s not afraid to share his opinions.

So right out of the gate, Mark tells us that he’s concerned about the path the U.S. is on. No shock there.  A lot of people feel the same, though there are certainly a big group who believe we just need to give the current direction more time.  So Mark isn’t sure what the voters will decide.  Only time will tell.

Nonetheless, we’re interested in knowing what the think is happening and how it compares to what he thinks should be happening.  And we’re specifically interested in jobs.  It isn’t that we aren’t interested in same-sex marriage, abortion, birth-control, or even whether 9/11 was an inside job or if President Obama really was born in Kenya.  Those are all interesting topics.  But when a prospective tenant fills out a rental application, we don’t ask them those things.  We just want to know if they have a job.

So Mark says Uncle Sam has been making it harder for the American businessperson to create jobs and get the economy moving again.  And he thinks America needs new leadership. More importantly, he tells which policies help and hurt.  After all, Mark says, economics is political and vice-versa.

So what policies are most likely to stimulate economic growth?  Well, no one can predict the future, but Mark is a free market guy who thinks that more regulation hinders growth.  With Dodd-Frank looming, healthcare reform rolling out, and the Fed being active with stimulus, there’s a lot of tinkering going on.  He’s not a fan because when a business is directing time and money into government and compliance, they aren’t competing for customers and improving productivity.

Then we ask him what he thinks about real estate right now.  You’ll have to listen to get the full answer, but he sees real estate as one of the better places to be right now.  We humbly agree. 😉

Of course, we couldn’t let him go without talking about Freedom Fest. We were already excited about it, but hearing him got us even more enthused.  So, off mic, we told him about our recent Investor Summit at Sea™ with Robert Kiyosaki and G. Edward Griffin, which got him excited.  Before long, we agreed to talk to Mr. Kiyosaki and Mr. Griffin – and next thing you know, both of them are now speakers at Freedom Fest!

We told you.  Good things happen when you get out and get face to face with people – especially, the right people.  So make your plans to come join us at the next Freedom Fest.  Who know?  You just might get lucky.  Meanwhile, enjoy this episode of The Real Estate Guys™ radio show!

Listen now:

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.



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