Here is a new kind of influencer – the influencer on social media. My friend Derek Scott, who is my kind of financial influencer sent me this – which has interesting comparison with what I have been suggesting in the past few weeks (gulp)
What is building is am “alternative” way among the middle aged aspirants for later life content.
- Property as a means of income streaming (Robbie Fowler style)
- Bitcoin and crypto-currency – a one way stream to wealth
- Tax-planning – especially around inheritance tax – the new scourge of the wealthy old
- Manage your income your way, not the adviser’s way. 7% not 4% – blow the pot before you die.
This will shock many readers because this kind of financial advice is outside the perimeters of the financial regulators. The FCA, let alone the Pensions Regulator has nothing to say to this kind of talk. Pensions UK and the communicators of actuarial normality will find Russell Leeds quite beyond them. Not so Derek Scott, thank you sir.
Within the normality of pension plan, there is a conservatism that will not countenance the blogs of Russell Leeds and Linked in is the acceptable version, I had made excursions into Tic-Toc for more extreme “alternatives”. There is a wish to get rich quick but stay rich longer that has a lot to say for itself across social media. It’s money with a purpose and i don’t mean a liberal purpose to ensure the values of ESG.
Do we get these voices at conferences in due course, or do we hope they die away? Last week, America opened the door to just this kind of thinking.
We are going to have to accommodate new thinking , not refuse to accept that it exists. And in the end , Russell and I are saying the same thing “7% is the new 4%”. In practice the drawdown rates found by Ignition for the FCA is much more likely be 10% for those for whom 4% and 7% is not enough.
Now we have the great argument from Nest, what will it set as its conversion rate for the 14 million people it holds money for? Will prudence lead to disappointment and 4%, will the doors be thrown open to 10% or will they set the drawdown for master trusts somewhere in between?
For I fear that most master trusts will not find much more than a bit of drawdown then buy-out with annuity. I’m with Russell in having rather more ambition than that, even if I don’t think most of the 14m (including me) have the capacity to follow some of them down the path of financial flame-throwing!
The FT doesn’t see most of what it sees as incendiary, just relevant. We may have created through the rules of “advice” a kind of obstacle to free speech which a new generation is throwing out.
You might read Warren Mosler’s book “The 7 Innocent Frauds of Economic Policy” from 2010
Basically his proposition is
How Modern Money Really Works – Simplified
Here’s the surprising truth about money that ties everything together: modern money is basically just a computer spreadsheet! When the government spends or lends money, it’s simply adding numbers to bank accounts. When it collects taxes, it subtracts from those same accounts. When it borrows, it moves numbers from one type of account (reserves) to another (securities).
That’s really all there is to it. The money doesn’t need to come from anywhere special, and it doesn’t cost anything to create. This means the government can’t actually “run out” of money in the traditional sense.
How Money Gets Created
Money comes into existence when the government spends it (or when banks make loans, which also creates deposits). Taxes don’t fund government spending – instead, they serve a different purpose. They create demand for the currency because people need it to pay their taxes. Taxes also help control inflation by pulling money out of circulation when there’s too much spending chasing too few goods.
Here’s the key insight: taxes don’t need to be collected before spending happens. In fact, they can’t be, since the government needs to spend money into existence before there’s any money available to tax!
Why Government Debt Is Different
When a government borrows money in its own currency, it can never be forced into bankruptcy. Paying bondholders is simply a matter of crediting their bank accounts – something the government can always do. The only way a government would default is by choice (financial self-sabotage) or if it’s borrowing in someone else’s currency and runs out of foreign reserves.
Think of it this way: a U.S. bank will always honor a check from the U.S. Government, no matter what the circumstances. The government is the source of the dollars, after all.
You might read Warren Mosler’s book “The 7 Innocent Frauds of Economic Policy” from 2010
Basically his proposition is
How Modern Money Really Works – Simplified
Here’s the surprising truth about money that ties everything together: modern money is basically just a computer spreadsheet! When the government spends or lends money, it’s simply adding numbers to bank accounts. When it collects taxes, it subtracts from those same accounts. When it borrows, it moves numbers from one type of account (reserves) to another (securities).
That’s really all there is to it. The money doesn’t need to come from anywhere special, and it doesn’t cost anything to create. This means the government can’t actually “run out” of money in the traditional sense.
How Money Gets Created
Money comes into existence when the government spends it (or when banks make loans, which also creates deposits). Taxes don’t fund government spending – instead, they serve a different purpose. They create demand for the currency because people need it to pay their taxes. Taxes also help control inflation by pulling money out of circulation when there’s too much spending chasing too few goods.
Here’s the key insight: taxes don’t need to be collected before spending happens. In fact, they can’t be, since the government needs to spend money into existence before there’s any money available to tax!
Why Government Debt Is Different
When a government borrows money in its own currency, it can never be forced into bankruptcy. Paying bondholders is simply a matter of crediting their bank accounts – something the government can always do. The only way a government would default is by choice (financial self-sabotage) or if it’s borrowing in someone else’s currency and runs out of foreign reserves.
Think of it this way: a U.S. bank will always honor a check from the U.S. Government, no matter what the circumstances. The government is the source of the dollars, after all.