Reader Feedback:In my last newsletter I posed the question, “Is The Economy Facing Its Napster Moment”. One reader let me know the tie to Napster wasn’t clear. It made me think I likely missed the mark. Here is a snippet of his feedback: "The tie to Napster isn't necessarily clear. Napster was generally regarded as illegal in the day (since you weren't really sharing your copy, you were giving it away to everyone), and hasn't survived, unlike streaming audio/podcasts, It was also about sharing information. So, it isn't clear what you mean by Napster moment.” - Terence I really appreciated his feedback and thought the note might be unclear to other readers. My goal was to bring awareness to the changes that have taken place in the banking industry. I believe those changes are the following: Mobile deposits and online banking Increased Legislation (Dodd-Frank https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act) Federal Reserve: holding interest rates at 0 and rapidly increasing rates.
I agree with Terence. The Napster headline likely wasn’t clear. I was trying to highlight how technology like mobile banking coupled with legislation and external forces is preventing banks from lending. In June I spoke to 3 bankers, 4 builders, 10 investors, and attended 2 meetups. There was a theme that new construction has slowed, business lending is decreasing, and investors are having a harder time finding deals that cash flow with higher interest rates. It’s hard for me to quantify “slowed” however it’s noticeable with the length of time between deals for some investors that I know well. The punchline is that these conditions are causing a slowdown
that the middle class is feeling. The big questions are: For how long What can individuals do?
I believe some of the answers are in a book I recently read, “The Richest Man in Babylon.” (https://www.amazon.com/Richest-Man-Babylon-Complete-Original/dp/1250803802/ref=asc_df_1250803802/?tag=hyprod-20&linkCode=df0&hvadid=533302342524&hvpos=&hvnetw=g&hvrand=7878969853536420272&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9026283&hvtargid=pla-1512775149807&psc=1). I find it fascinating that principles written by George Clason in 1926 are still relevant today. I appreciate these reminders when surrounded by media with headlines about interest rates going up, and bankruptcies. https://www.cnbc.com/2023/06/24/high-interest-rates-economic-uncertainty-boost-corporate-defaults.html What the book really taught me is that it likely doesn’t matter for how long, individuals in a free economy can always thrive with timeless principles of saving and investing. The key is adapting modern tools to these timeless principles. That is why I founded BMD Invest. To help individuals transition active income into wealth. I believe this will empower communities to promote freedom and prosperity. Here are 3 tools that can help anyone apply that are based on the principles from “The Richest Man in Babylon:
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