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Janet Yellen Believes You Can Get Rich By Going Into Debt
Janet Yellen’s latest talk was very telling.
The title of her talk was:
The Importance of Asset Building for Low and Middle Income Households
The title alone is very telling. Fed policies under Bernanke and Yellen have proven absymal at creating jobs or boosting incomes. The only thing the Fed has done is push housing and stock (asset) prices higher.
Thus, for Yellen, the means of improving one’s lot in life has nothing to do with obtaining a higher paying job. The best way to move up in life is to own stocks… or a house… or preferably both.
This is how the Fed thinks: in terms of asset prices and leverage. These are items that only the top 0.1% of Americans really benefit from. Indeed, the Fed’s very policies (low interest rates, plenty of liquidity) benefit the wealthiest the most because these individuals can use their wealth as collateral in order to leverage up and benefit from rising asset prices.
This is the very strategy Larry Ellison has been using for years to live beyond his even ample means:
How Larry Ellison Actually Funds His Lavish Lifestyle
One of the mysteries surrounding Larry Ellison is how he can afford so many mansions, islands, yachts and planes, all while retaining his shares in his company.
Yes, the Oracle CEO is one of the richest men in the world, worth over $30 billion. Yet he sells only small amounts of stock under a schedule stock-sale plan. And last I checked, yacht builders don’t take Oracle stock for payment.
Now we have some clues as to how Ellison funds his acquisitive lifestyle.
According to Oracle’s proxy, filed this month, Ellison has pledged 139 million shares “as collateral to secure certain personal indebtedness, including various lines of credit.” In other words, he’s got over $4.2 billion worth of stock pledged for personal loans.
http://www.cnbc.com/id/49194482/How_Larry_Ellison_Actually_Funds_His_Lavish_Lifestyle
The multi-millionaire or billionaire can leverage up to invest in real estate or stocks… the average american cannot. Indeed, over 95% of Americans cannot buy a home in cash. So buying a home means going deeply in to debt, not generating wealth.
Indeed, the only way of building wealth through real estate for most Americans would be if you bought a home and the home’s price increased substantially to the point that selling would actually turn a profit beyond closing costs, taxes (both capital gains and property taxes for the duration of your inhabiting the home), and moving.
This means:
1) home prices have to increase dramatically
2) you have to a LOT of variables work out in your favor.
The fact Yellen believes in this stuff is telling. You won’t hear the Fed talk about incomes or jobs because the Fed has no clue how to create either. But asset prices are easy to boost… just spent $3 trillion and you’ll get a roaring stock market.
This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://phoenixcapitalmarketing.com/special-reports.html.
This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.
Best Regards
Phoenix Capital Research
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Nor is it the Fed's responsibility to create jobs.
A great deal of our economic system is about debt. It is important to remember not all debt is created equal. A mirage is a naturally occurring optical phenomenon in which light rays are bent to produce a displaced image of distant objects. Joining the idea of a mirage and contagion with the reality of collapsing debt forms an interesting subject.
It is important to remember all debts and obligations do not come due at the same time. Also, it must be noted when a bill is not paid or defaults it often starts a long and drawn out legal battle, this collection process that may extend years without harsh consequences. This my friends is the reality of modern life in America and much of the world. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/05/debt-mirage-always-moving-into-di...
Both people and governments have lived beyond their means by taking on debt they cannot repay. Over the last several decades we have created entitlement societies built on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances. Promises were made on the assumption that the advantages we enjoyed would continue.
Ever greater prosperity and entitlements were to be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about evermore growth. Now reality has begun to come into focus and it is becoming apparent that this is unsustainable. The entitlements and promises that have piled up have become overwhelming. More on why this system will fail and why debt is important in the article below.
http://brucewilds.blogspot.com/2014/08/modern-monetary-theory-is-wrong-d...
http://www.zerohedge.com/news/2014-09-18/next-crisis-part-1#comment-5232621
Posting the same billboard twice, I see.
Ahh.. Dam't Janet is right 1% of the time.
The 1% can borrow to the hilt and come out ahead every time.
If debt is an asset then yes everyone's already rich.
Actually, you can get very wealthy going deeply in debt, ask Donald "got a bad hair-day" Trump.
"The best way to move up in life is to own stocks… or a house… or preferably both."
No, no, no, you're doing it wrong: you leverage the house with a mortgage to buy stocks.
Seriously, why not just mortgage, finance, max credit and cash withdrawls,... and then liquidage and buy gold with the cash??? Oh, then declare bankruptsy of course to reset the clock... but with millions in gold in your pocket for that fresh start. Or is this a bad idea?
Borrow from the fed at 0%, buy US treasuries at 2.5%. It's so easy. Why don't more Americans do this? Oh, right, that's only for members of the Inner Party.
Right, son.
The worst has already happened . FrankenMarket is still shambling around , but it is functionally illiquid. All the players do the same thing , as derisking has removed diversity . This means everybody will try to sell everything when der tag arrives . No buyers . No way out except Splat .
Buy physical gold while you can.
Larry Ellison is nothing compared to Wall Street itself.
I laugh when people talk about lending out 90 cents per the dollar. How about 9 million berzillion per dollar instead?!!!!
Wall Streets lives to lever (CDO's "squared"? Bwhahahahahahaha) ...hell of way to fight a war. Are we winning??????!!!!!!!!
you people are missing it. there is zero tax on loans. if sells the stock and spends it = taxes. borrow the money and spend it = no taxes
Janet, it only on WS that welfare payments are large enough for Asset Investments....
On Main Street, they can only use it to buy pink slime.
"Janet Yellen’s latest talk was very telling."
She openly mocks the poor. 46 million on food stamps have no means of building assets.
Middle class people, who's real income is falling, are less able build up assets.
What Yellen said is incredibly insulting to the middle class and poor.
Let them eat cake!
Those poor people should have bought stocks in 2009, then they'd already be rich. You have to follow the plan!
If only the poor had been rich in 2009 and bought tons of stocks ... those stupid poor spending whatever money they have on food and housing and stupid crap like that!
she is correct, go into margin debt by levering up 20x via long e-minis. You will make 10-20% return per day as all the market does is go up .5 - 1% per day.
we are at all time highs and you should buy the breakout, whats the worst that could happen? We maybe trade back down to 2000 on our way to 6000?
The worst that can happen is that a 5% fall in the value of your leveraged asset (bought at already overstretched valuations) wipes out your capital base....and you are insolvent. Welcome to modern day capital markets.
You wanna know whats the worst that could happen? Just keep watchin. It's going to be interesting.
What are those secret compensations that Federal Reserve Member get... think there was an article last week.
- $4 Trillion of Federal Reserve Balance Sheet
- QE to Infinity
- Bernanke and Yellen might be getting a percentage
- Federal Reserve Chairman is elected by the strongest banks in the USA from within their own ranks, then they give TARP & QE funding back to the Prime Dealers which are the same Big Banks that selected the Fed Chair
- You think there is a bonus for Bernanke after he left the Chair, you think he had stocks & Options before he entered the Fed Chair
- $17.7 Trillion Federal Debt, think Janet get's a percentage for pushing it higher instead of saying "stop the presses!"
In-breeding and nepotism combined. Guarantee to failure. Certifiable.
The more you owe,
the more you must be worth.....right????
Isn't that the financial corollary to "the more you pay, the more it's worth"?
A new Orwellian twist. Ignorance is strength. Debt slavery is freedom.
"Ignorance is strength"
in numbers.
"Janet Yellen Believes You Can Get Rich By Going Into Debt"
Rich Dad agrees too!
http://youtu.be/_0R5RIQZwJ0