Have you ever noticed when we see pictures or film regarding “The Great Depression”, they are in black and white. I think the black and white images provide an even more drastic impression for the unfortunate financial times of our country at that time.The parallels of that time and today are surprising.  I have considered writing this blog for the last two years, finally, I think its time has come.

Two years ago (2008) our country was, what economists said, at the verge of financial brink. The answer? A very large injection of capital into the market. A stimulus of dramatic proportion. Seven hundred and Eighty Seven billion dollars to be exact. At the time, I thought, wow, that is an awful lot of money to inject into an economy with a gross domestic product of 14 trillion. I wondered why so much stimulus was needed for the problem? I also wondered were the United States would get such an amount of money?

O.k., lets answer the first question. Why was so much stimulus needed? A popular form of economics is called the Keynesian theory, based on the ideas of John Maynard Keynes. In a depression or a severe recession, Keynesian theory says that a government needs to do anything possible to “stimulate” the economy. Think of it like CPR for a person who has drowned or had a heart attack. Our government has and currently does believe in this theory of economics.

One of the main issues of the depression of the 1930’s was a lack of liquidity for the markets. The feeling by our government during the 2008 crisis, was the need to prime the pump or jump start the economy by injecting a massive amount of money through stimulus. (Keynesian Economics) That stimulus would be used for projects that would put people back to work, thus having those employed people spend their paychecks as consumers. Fingers crossed, problem would be solved.

Well, our government felt that the $878 billion was not quite enough, and acted upon several other stimulus measures, such as the cash for clunkers deal and the first-time home buyer rebate. This among other things has brought the total stimulus to nearly one trillion dollars. A lot of money…

Now, lets answer the second question. Where would the United States get such a large amount of money to pay for the stimulus? The United States sells treasury bills and bonds to raise cash. In other words, we sell a security, backed by our federal government, mostly to other countries (China and Japan) The security pays a certain interest rate and has a maturity date (1 year, 3 year, 10 year). Once the treasury has the commitment for the bills/bonds, then we can start printing the money to put towards the stimulus. The United States has been doing this for years.

So what’s the problem? Well, we have to pay the interest rate to the buyers of the debt monthly. In addition, when the maturity dates are up, we have to pay the principle amount of the debt back. Think of it like a balloon loan that is due. You still might say, John, I still don’t see what the problem is?

Well, lets think back to basic accounting and look at the financial statement of our country. There are two sides to a financial statement, one side is the cash flow side. The other side is the balance sheet side. Lets look at the cash flow side.

If we look at the cash flow side of our financial statement, you will see that we are running our country at a deficit. Meaning, each year, we spend more than we bring in. This year, 2010, we will spend approximately 1.4 trillion dollars more that we bring in. Where do we get the 1.4 trillion dollars? You guessed it, we use the same process that we discussed earlier, we borrow it. That deficit of 1.4 trillion dollars flows onto the second portion of our financial statement, the balance sheet.

The balance sheet shows typically the assets and liabilities. The assets are enormous when you consider the value of what the country owns, but overshadowed by our massive debt. The problem lies in the liabilities. We have short term debt approaching 14 trillion dollars. We have long term debt and unfunded liabilities (social security, medicare, etc.) approaching 111 trillion dollars. Because of this we having fewer countries buying our debt. The ones that are buying our debt are demanding a higher return. Because we will be borrowing at a higher interest rate, we pay more. Adding yet again to our cash flow problem. Our debts gravity is causing a downward spiral that seems hard to escape.  This is what our economy is dealing with now as its major challenge. It is the silent thief stealing our freedoms and future.

Our everyday things like employment, lending, housing, stocks, etc. are now starting to be changed and viewed in a very different way. Why? Well, its because of what’s coming next and not many people are talking about it. This week, the Federal Reserve came out and said that they are ready to take additional action to address the failing economy. They said that they would participate in something called “Quantitative Easing”.

Quantitative easing is when the  government increases the money supply. It actually puts more money in supply by lending it to financial institutions. The interest rate it charges to banks and other institutions is close to zero. In other words, it lends money at a zero interest rate to banks so that they can lend out to the public. It creates the money ex nihilo (“out of nothing”). It prints the money, with no one buying it as debt. The government also purchases mortgage backed securities, corporate bonds, etc. to put the cash into the market place. When I heard this statement from the Federal Reserve, last week, I knew I had to write this blog.

I waited on writing this particular blog because I wanted to see what the 1 trillion dollar stimulus would do for our economy. What did it do? It did very little, but get us into more debt.  Now that I am starting to see the government’s next moves I wanted to let you know what my concerns are.

In my opinion, I think two things are going to happen. First, we have already started a process of deflation. Where prices are starting to go down. (current pricing of housing, cars, etc..) Goods and services are now starting to exceed demand.  Demand has been suppressed because of high unemployment and lack of lending. This will be magnified as we start to pay higher taxes and interest rates starting in 2011. In the short term, that is a good thing. You will pay less for items than you did say a year ago. But its whats coming after that, that startles me.

Think of it like the tide that receded just before the 2004 Indonesian tsunami. People were curious why the water had receded so much that they had to go out and see for themselves. When prices go down and the market gets flooded with money from savings, the stimulus, and quantitative easing, it will be too late to get out of the way to safe ground. (quantitative easing has taken place)  Then from nowhere, there is a giant 100ft. tidal wave coming at you. That tidal wave? inflation… Our market will be flooded with too many dollars chasing too few assets.

Normally, with our current economic situation, I would say a little inflation is good for our economy and real estate. As inflation goes up, the prices for things like rent and houses will go up. In a somewhat normal economy, that is a good thing. However, the type of inflation we are headed to is hyperinflation. The cost of goods and services goes up because it will take more dollars to buy things because our dollar will be worth less and less. Hyperinflation is different that normal inflation because it happens much quicker. I feel that it will also happen because of the fact that we do not manufacture things here. Our money goes to other parts of the world, because we import as a nation of consumers. Our money that gets created “out of nothing” will also have a negative impact on the rest of the world. A lower valued dollar will not help their economies either, as this will turn into a global problem. In a sense, it is just like the supply and demand with real estate or anything for that matter. More supply(money), less demand(goods and services), less value.  With quantitative easing comes the beginning of our dollar crash as a currency.

The deflation positioning is starting to take place now.  I feel as the inflationary positioning will take place more rapidly during 2012. Which will lead to a depression in “living color”. Does that mean the world is going to end? No, quite the contrary, I believe, longterm, it is going to lead to the greatest prosperity in history.

So how am I preparing? You will have to read my next blog! Believe me, I think you will be shocked… Remember, wealth has nothing to do with money, success has everything to do with failure and life is as simple as you want to make it! – Johnny D.

33

The number 33 typically brings about the idea of old record albums. 33 was the speed (33-rpm) at which the albums played correctly. I have been thinking of how that number applies to other areas in life and business.

Last year, I moved from my house of nine years. The house was 7500 square feet of living space. I guess you could consider it one of those “McMansions” that they talk about that was so popular during the real estate boom. The house included every amenity including a 12 seat movie theater, gourmet kitchen, and even a library filled with books. I moved from that house because I realized that I did not need the space (or the expenses).

In thinking about the 7500 square foot space, I only used 2500 square feet. Only about 33%! Sure I went to the other parts of the house, but only really used 2500 square feet. So I decided to move. An investment company that I am involved in built a 2000 square foot home on a nearby lake. I decided to sell the big home(which unfortunately is still on the market) and move to the lake. My only concern was the “lack of” space. I decided to do a self study on the new space that was moving into.

It’s now been almost a year of living in the smaller house, and something has surfaced that is amazing to me. In this 2000 square foot house, I really only use about 700 square feet! About 33%! I thought that this was the strangest thing! I immediately thought about all of the waste that occurred in my life, from financial things like taxes, insurance, utilities, etc. I often wonder, could I have spent that money in a better way? Could I invested it? Could I had given it away to people less fortunate than myself?

I wondered if this could be a staggering life and business lesson for me? I thought I would give it one more test. For years, I drove very large expensive SUVs. Everything from a Hummers to Cadillac Escalades. My most recent vehicle was a 2009 Pearl White Cadillac Escalade. Could I buy something at 33% of the price and still be happy? What was my purchase? A 2010 4-Door Jeep Wrangler. I love it!

It is one of the most freeing vehicles that I have driven! Especially with the top off and the radio playing my favorite music. I really don’t miss the Escalade (or the expense) at all! I also think that the Jeep will be a perfect vehicle for my upcoming, permanent move to the Florida Keys!

Since understanding a bit about what I was transforming into, I wondered where this new found sense of value was leading me? I have tried to apply what I learned into other areas of my life. I have made what seems like 100 trips to the local Goodwill store. Donating things like clothes, plates, electronics, etc. I have to say that it has been, and continues to be a freeing experience. I believe we truly need about 33% of the “stuff” that we have. We all could find ways to “be more with less”. Try this quick test. What are the main rooms you spend time in your house? Add up the square footage. If it is less than say half, you probably have a lot more things in your life you could get rid of. It may free up extra money, time, and enjoyment!

Remember the library? Well, I am donating all of those books to a local church, and have since bought a Kindle (electronic reader). The Kindle doesn’t use any space, and I can store a lot more books than any library! It’s not only a space and money thing. I don’t have to worry about things like cleaning a library.(not that I cleaned the library much anyway – Ha, ha, but you get the point!) I can use that time to more constructive things! (Like writing my blogs!) So I decided to go further with my new found life efficiency platform. I also took every picture that I had ever taken and digitized them so that I could have a permanent copy. I am in the process of giving away pictures to loved ones and friends. I also am able to utilize my pictures better for viewing through my computer and digital picture frames.

In other words, I am continuing with the mantra, “Less is More”. With the state of our economy, if your not currently simplifying, your playing a fools game. I am learning that we don’t need all of the things we think we do. There is richness in our simplicity.

To thrive in business and life today we have to be simple. The people of this country have been victimized by excessive consumerism. We are bombarded with things like low interest rates, easy credit, and advertising campaigns that practically take the money from our wallets. We have lived for too long with the idea of the right to indulgence. We have lived too long for ideals that are based on status. I am trying to shake that characteristic in my life. Its not easy, but I think a necessity if we are to thrive in business and life.

As I continue my journey with simplicity, I can’t help but enjoy the true blessings we have in life! I don’t care so much about impressing people, I now care more about knowing and understanding people. Sometimes that means you lose people in your life. You have to be o.k. with that and ask, what were they really there for in the first place? If they are not there for who you are and what you are, instead of what you have, do you really need them? A person once told me that here in America, “we buy things we can’t afford to impress people that we don’t like.” I believe that we will all do better when we return to focus on the things that are important to us. We always return to those things before our life is over. Things like health, time, and family. Sometimes, unfortunately, it’s too late. I challenge you to see how you can simplify your life and enjoy what is truly important.

Remember…Wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it! – Johnny D.

2010 and 2011 are years of simplification for me. I thought with my new blog site, I would write about why. With the economy continuing to struggle, I feel that American’s are involved in a very cleansing time. I have decided to “get clean”. The first thing I am focusing on is Breathing. It’s one of the simplest things we can do to remove the clutter from our minds, and our lives. I have been collecting clutter for a long time.

After college, I jumped immediately into the corporate world. I spent ten years there. The next ten years would be spent in the world of the entrepreneur. I have spent twenty years learning from both sides. I have learned major things from both.  Neither teaches us how to breathe. Stay with me here for a moment.

I have been trying to understand breathing in life.  The pressures from the corporate world and entrepreneur world are quite similar. Think of one as a Python and one as a Boa Constrictor. They both have the potential to constrict your airway. Sometimes the constriction happens over a number of years and in other times it happens in an instant. Whether it happens quickly or over a longer period of time, it will be hazardous to your health and well being.  Because breathing is rhythmic, and expressed with time so much, I believe they are related.

Were you ever asked as a kid, “how long can you hold your breath?” Time for you starts and stops with your first and last breath on this planet. Elderly people sometimes say, “where did the time go?” People seem to always be catching their breath while chasing time.  So what am I getting at here you ask?

Obviously, breathing is a necessity of life. I believe it also provides some other very important benefits.

1)    A Realization of Being; Focused breathing makes you aware of your presence in the Universe.
2)    A Redistribution of What’s Important in Life; Our world and society being driven by consumerism and keeping up with “The Jones’”, pales in comparison to the valuableness of things like “time” and your “last breath”.
3)    A New Understanding of Color and Clarity of Life; Take your time and breath! Taste your food, smell the flowers, see, hear and touch what our beautiful world has to offer.
4)    A New Definition of Time; Focused breathing makes time slow down. Focused breathing is the gateway to making time our own instead of giving time up foolishly.

Try something for me. In the next 60 seconds try to focus on your breathing. Breath in and out at a comfortable pace. At this point just focus on your breathing and nothing else. (I wonder if you are finding this as hard as I did when I first tried this) Do you find it difficult because your mind is wondering? Do the distractions take over from the focus? Those distractions, or the ability to have a lack of focus, is what I am referring to when I say, “get clean”. When I first tried this experiment, I couldn’t do it. My mind was too busy! I have committed to practicing this on a daily basis.

Think about it, if we can’t take advantage of what focused breathing can give us, are we really experiencing life at its fullest? This is one of the reasons that I think things like yoga and athletics are so healthy for us. Both pattern our breathing so that we can develop the natural rhythms that deliver peak performance, both physically and mentally. That’s the good part.

The bad part is the fact that most people don’t even know that their breath is being constricted (until it’s too late). How do you know? Try the test that I gave you above. If you tried the exercise and found it as challenging as I did, you probably were being constricted just as I was. My mission is not over, this takes much practice. You will not perfect it for a number of years.

My advice in closing, is to make sure you learn (or relearn) to breath. You never know what you can accomplish when you remove the clutter in your mind by focused breathing. It very well may make room for you to be creative and productive beyond your wildest dreams!

Remember…”wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you want to make it!” – John Dessauer

Johnny D.

The Dessauer Group is changing gears! In a changing environment, you have to be open to new ideas and opportunities! Change is a part of life, and I hope you will start to embrace change as I am doing in my life! In the coming weeks and months, you will see that we, as a company, will be delivering some exciting things! The time for change has come and it looks very exciting! Some of the changes will include a new direction, a new website, a new book, and finally…a new location!

After all, how do you expect to expand your mind, if you only deal with what you know?

Please send this newsletter to people who you think would want to take part in our new direction: Simple Wealth, Simple Success, Simple Life!

I hope that you enjoy the article below about change from a staple website/blog that I visit often. 2010 for me is the start of a two year simplification process that I have committed to. This site helps me to understand for instance, that less is more! I have got a lot of great ideas from the site and hope you will to during your journey! The site is zenhabits.com and it owner and author of the blog is a guy by the name of Leo Babauta. Check it out!

Remember…”wealth has nothing to do with money, success has everything to do with failure and life is as simple as you want to make it!” – John Dessauer

Johnny D.

The elements of change

‘Without accepting the fact that everything changes, we cannot find perfect composure. But unfortunately, although it is true, it is difficult for us to accept it. Because we cannot accept the truth of transience, we suffer.’ ~Shunryu Suzuki

Post written by Leo Babauta. Follow me on twitter or identica.

Change can be a difficult thing. Most people want to change their lives, in some way, but find it difficult to either get started or to sustain the change for very long.

I’m happy to report that after years of studying it, I’ve become fairly good at it (though happily failing all the time). I actually relish change, not because I feel I need to improve my life, but because in change, I learn new things. Constantly.

What have I learned from my changes? I could write a book on this (and probably will someday), but the essence can be found in the space between the inevitable fact of change, and in the incredible resistance to change inside ourselves and in the people around us. We want to change, and yet we don’t. How do we resolve this tension?

It can be incredibly difficult, or it can be wonderfully joyous. I’m here to show you the elements of the joyous path to change. The difficult path … I think we can each easily find that on our own.

My Recent Changes

I’ve made dozens of changes over the last few years (read My Story for a partial list), but here’s a short list of a few I’ve made just this year:

• Lost over 40 lbs since last year. I’ve not cared as much about losing weight — it’s just a number — but more about losing some fat and getting fit. The weight loss has really been a side effect of that focus. I’ve tried a lot of different methods, but I’ve found that only two things matter, and they’re ridiculously obvious: cut back on calories and increase the calories you burn through activity. Finding ways to do those two things has been the fun part.
• Gave up our car and walk, bike or use public transit everywhere. I’ve slowly been reducing how much I use a car, and increasing biking and walking. Then we drastically made the change just a few weeks ago when we sold our van, moved to San Francisco, and have been car-free ever since.
• Began walking more. Obviously this goes with being car-free, but even when we had our van I would walk for an hour or three on many days, just for the simple pleasure of it.
• Eat foods with no or little packaging. From bulk bins or farmer’s market, with reusable containers, if possible. I strive for fresh fruits and a variety of veggies, plus beans and nuts and whole grains and seeds. None of this needs packaging, all of it is great for you.
• Gave up almost all of my possessions. I was slowly whittling away at my possessions, then took a huge leap when we sold or gave away almost everything and moved to San Francisco. We’ve bought some furniture (mostly used) but haven’t come anywhere near the (modest) amount of possessions we had before.
• Started working less. A task needs to meet a high threshold of importance for me to consider doing it these days. This means I work fewer hours but am more effective during those hours.
• Drastically reduced the time I spend online. I love online reading, and connecting with others, but it can really eat up your life if you let it.
• Focused more on being in the moment.
• Stopped setting goals and planning so much. I used to be a rigid planner and goal setter, just a couple years ago. You can see it in my old posts here on Zen Habits. I’ve dropped that habit, mostly.
• Instead, embraced going with the flow.

Again, this is a short list — there are others that are less noteworthy, and probably a few I’m forgetting.

The Elements of Change

So what’s the joyous path to making these changes and others? I’ve broken it down into six elements, many of which overlap and have very blurred lines. They’re useful, though, in considering how to make potential changes in your life.

1. Beating inertia. We all have inertia — that resistance to change, especially major change that disrupts our living patterns or way of thinking. Sometimes it’s not difficult to overcome — we can get excited to make a big change and want to overhaul a certain part of our lives. The joyous path, though, is in the middle ground between no change and drastic change. It’s in small changes — as small as possible. Small changes mean it’s not hard to get started, but also that the change is sustainable. If you make a drastic change, there is a great likelihood that it won’t stick very long.

If you’re feeling that inertia, set out to make as tiny a change as you can — just get out and walk for 5 minutes, or start writing or painting or playing your violin for 5 minutes. You can do anything for 5 minutes — it should seem ridiculously easy, but that’s the point.

2. Beating the resistance of others. This resistance can be even tougher to beat than your own inertia — very often people in our lives do not want change. They’ll be negative, or even actively try to stop us from changing. There are various strategies for beating this: ask for their help and get them on your side, or negotiate a way for you to make change without disrupting their lives too much, or if necessary, cut them out of your life for a little bit. Read more.

3. Finding the joy. Here is the key to it all. Forget the rest of these steps if you need to, but never forget this one. Doing something you hate is possible, for a little while, but you’ll never sustain it. If you hate running, you’ll never keep up the habit for long. You need to find the joy in doing the activity, and when you do, you’re golden. So either choose an activity that you love, or find something to love in the activity, and grab on to that.

4. Keeping the joy alive. Joy can be fleeting, and to keep it going, you need to nurture it. This is an art form, and I can’t give you step-by-step instructions here. If I could, I’d be a billionaire, as it would change the world. But some advice: be grateful for your joy, every day. Be in the moment with that activity, instead of having your mind drift elsewhere. Refresh your joy often, by starting over or approaching things from a new angle or doing something a bit differently. Find new people to share this joy with, people who love it as much as you.

5. Celebrating the little victories. We often get discouraged because we’re not as far along as we’d like: we don’t have those six-pack abs yet (after a month of exercise!) or we’re not a full-time blogger yet (after three months of blogging!). But we forget how far we’ve come. Every step along the path is a victory, not because we’ve accomplished a goal but simply because we made the step. Celebrate those steps — jump up and down in joy, scream Halelujah, brag about it on Facebook, post a victorious message in bold marker on your fridge. You rock.

6. Making it a part of your life. Whether a change stays with you forever or not, making a change has value, in the momentary joy you get from doing it, and in what you learn from it. But making a change stick can be a great thing. To integrate change into your life, it must become a part of your daily routine. If you want to meditate, you need to do it at a regular time: right after having your coffee and before showering for work, for example. Having the coffee becomes your trigger for this new habit, and as the coffee is already integrated into your life, it becomes an anchor upon which this new habit will be grounded. The more times you do the new habit after this trigger, and the more regularly you do it, the more firmly it will stick.

And lastly

One last note, to anyone making changes: you will fail. I don’t say that to discourage you, but to release you from the fear of failure … because if you already know it will happen, then there’s no pressure to avoid it. Failure is an inevitable part of change, and in fact it should be celebrated — without failure, we’d learn nothing. Fail, fail often, and learn. Then you’ll be better equipped for the next attempt. Find joy in every attempt, in every victory, in every failure, and the change will be a reward in itself.

‘Try again. Fail again. Fail better.’ ~Samuel Beckett

Make money in today’s market? Most people would say I’m crazy! Hi, My name is John Dessauer and I am a seasoned Real Estate Investor, Teacher, Public Speaker and author. I’m here to tell you now is the BEST time to be purchasing certain types of real estate… and YES, you can make money doing it ! I can show you how.

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