Tags: kleinfeld | denis | cash | flow

Protect Your Cash Flow In This Volatile World

By Monday, 22 August 2011 08:21 AM Current | Bio | Archive

A long time ago, one of my early, successful clients gave me a small booklet entitled "Happiness is a Positive Cash Flow."

There is a lot of unhappiness and fear in the Unites States — mainly because the cash is no longer flowing. This also explains the Tea Party Movement and why a lot of American investors and businessmen are saying, like the fictional character Howard Beale in the movie Network: "I’m mad as hell and I'm not going to take this anymore."

That the economic world has been turned on its head because of our governmental mismanagement of every aspect of public, economic, and social affairs in America is virtually self-evident.

All three branches of the U.S. government have been letting the American people down. The current government is merely accelerating this trend at a pace that is no longer comprehensible.

The courts are more interested in protecting government expansion than personal Constitutional freedoms. The Congress is a pit of corruption. The previous administrations have been failures and the current administration is topping any prior government failure at an exponential rate.

Investors and businessmen are suffering from the effects of our own government undermining the U.S. economy. The clearest indication of this failure is the lack of cash flow in the private sector as the government sucks up capital and increases costs.

We have all heard President Barack Obama claim that big corporations making large "profits" and everyone accused of being "rich" are not paying their "fair share."

It doesn't take much to quickly realize that this is an outright attack on the free-market capitalist system by our own political leadership.
Clearly, they want their "fair share" not of "profits" but of "cash."

Even socialist/Marxists understand the difference between profits and cash flow.

The economy is run on cash, not profits. Paper profits are useless in the real world. My banker, my broker and my office landlord want a share of my cash, not a share of my profits.

Government wants to taxes paid in cash. And the news media and information experts and strategists want their pay to be in cash.

Only the investment gurus who are primarily proficient at losing their clients’ money seem to be fixated on "profits" as a basis for making investment decisions on your portfolio. But they take their commissions in cash.

Relying on a balance sheet and profit and loss statement is to rely on an accounting illusion. These are produced according to GAAP, which is static accounting and don’t reflect the dynamics of an ongoing business.
It isn’t unusual for a company to show profits but have poor cash flow and vice versa.

This is often, too often, overlooked by so-called financial professionals. Enron comes to mind as an example.

Cash is king. Surviving an economic crisis isn’t necessarily a matter of generating profits, but it is a matter of generating cash flow. Protecting and stabilizing that flow is the absolute key to financially surviving at a time of economic volatility and quite possibly catastrophe.

Cash can take a number of forms. For most, it is the fiat money that is issued by the Federal Reserve.

Is this really money?

The Federal Reserve, which prints our money, has always been a private for-profit bank not owned by the U.S. government. Its actual financial position is unknown as are its inner workings.

The Federal Reserve's pieces of paper, called U.S. dollars, have no hard assets behind them. It's hard to think that a private bank can issue its own pieces of paper which has the full faith and credit of the United States behind it. There seems to be something constitutionally wrong here.

Can the fiat money from the Federal Reserve be relied upon to preserve value measured in terms of purchasing power?

There are a lot of people who don't think so. These are the investors and businesspeople acquiring hard assets which historically maintain value and purchasing power. Gold, silver, other metal commodities, water, farms are just some of the alternatives to taking the risk on fiat money.

How are you going to protect these assets from the risks of lawsuits, inter-family or inter-business strife, or governmental expropriation and other politically generated threats to private ownership of valuable property?

In fact, assets can be protected from these liability risks, but it takes some sophisticated planning to achieve that goal.

This is a multi-disciplinary exercise which requires the services of a team of legal, tax, and financial asset protection specialists. There is no one-size-fits-all plan.

Like life itself, each situation tends to be a lot like other circumstances yet each has its unique factors and considerations that have to be taken into account.

We are facing great and growing adversity. There is no doubt about that.
Perhaps the greatest risks to our economic well-being and stability are caused by our own politicians who seemingly will stop at nothing to take from the productive to give to the unproductive voting masses who keep them in power.

Whatever asset forms you think represents ongoing value in terms of purchasing power, those assets must be protected from legal liability and governmental risks. Your economic survival, that of your family, and your business depends on it.

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A long time ago, one of my early, successful clients gave me a small booklet entitled Happiness is a Positive Cash Flow. There is a lot of unhappiness and fear in the Unites States mainly because the cash is no longer flowing. This also explains the Tea Party Movement...
Monday, 22 August 2011 08:21 AM
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