OLD BRIDGE, New Jersey
American MountiesAnother Great Depression?
It's no secret that our US economy is faltering. Is this merely a perception? No. Not if you take part in daily life in any part of the country. While it would be easy to place the lion's share of blame on government, government had help from its best allies---We, The Consumers. We just don't have what it takes to discipline ourselves no matter which generation the focus is on. Denying ourselves and confronting our "wants" as opposed to our "needs" seems anathema these days.
But, what goes up.....Must come down---eventually. That includes Consumerism, the financial markets and the economy. Whenever a society focuses so exclusively on consuming natural resources at a rate faster than nature can restock or rehabilitate, what would make anyone think we are not to blame? Add to that societal instinct for satiating the inner child's wants on a daily basis and no amount of self-discipline makes even a dent in the vicious circle consumers have created.
Watch the people you see in line in a department store. Take inventory of what they are purchasing. How much of it is something they can do without? Do without? Make a little sacrifice? Not going to happen in this lifetime. Thus, we spend money we don't really have on things we can live without and then when we exceed the bounds of our regular paychecks we simply use other financial tricks like credit cards, debit cards etc to fill in gaps we created. Soon enough, credit, just like money, always runs out. Then, we, the consumer, behave as if we've gone into shock. What? You mean my credit is maxed out? How can that be? Oh, it be alright. Remember that $7,000 Plasma with FIOS you just had to have 2 years ago that requires an entire wall of your living quarters? You really needed that, didn't you? Or, how about that splurge on that $20,000 vacation. Splurge? It was more like Hog Heaven, wasn't it? But, we console ourselves with the consequences by justification: We work, we deserve, we want, we get.
The sky's the limit! All of those fools who claim the sky is falling are reading from Chicken Little's script, right? Wrong, wrong, wrong. There is only one limitlessness in reality---the universe. And, as less intelligent humans than the astronomical higher life forms, we can't even be sure of that.
We humans are fools without the ability to self-discipline. Check out advertising. People, very foolish ones, have no compunctions about spending $750 for one pair of shoes. But, those ultra pointy toes, 6 inch stilletto heels are worth all the pain and the bankrutcy if you can just prove to one other individual besides yourself that they are worth it. In actuality, it comes down to a child's game: "Look What I Have That You Don't Have". And, that entitlement grows in all areas of society from rich right on down to the poor. The rich feel that their money is evidence of entitlement to anything and everything Caligula can dream up. The poor feel entitle to some measure of quality of life before they leave this planet forever. Those in-between satisfy themselves with creature comforts they fool themselves into believing places their status above the poverty line.
Psssst......Did anyone tell you that those $750 shoes are the reason that high flying Neapolitan is a billionaire? Not to worry. He's getting nervous. It seems money has grown tight and common sense is haunting the brains of the undisciplined ultra -consumers.
It may take another Great Depression to knock some sense into Wall Street. Speculating exclusively on oil is all that remains of a once grand market. Every day, these modern day financial philosophers grind away trying to get that last nickle into their bank accounts even if the rest of the country suffers.
The First Great Depression began the same way: Speculators focusing on the last remaining item of value. Soon, banks began to close and people's life savings vaporized. But, before the banks began to go down, one by one, prices began to grow out of control on the most ordinary goods. Sound familiar?
There are those who, just as before the first market crash occurred, are rah-rahing thinking they won't be affected and their money will be safe. As safe as the people who losts millions from companies like Tyco, Enron and WorldCom? As safe as the people who think their mutuals are guaranteed secure by the government? And when government goes belly up? How safe is that version of "safe"? How safe can it be when the dollar across the planet is as weak as its been since 1928?
Americans never learn lessons of the past. We are destined to repeat history lest we graduate to a higher level of intelligent life form. Unsecured loans approved by people who value their profit from commissions more than they do the economic health of their country opens a road to disaster. Spending billions upon billions for the military has gotten us what? Free Trade Agreements with countries whose economy is worse off than ours has what advantage for us? Witlessly agreeing to spend twice the average cost for milk, bread and rice is pandering to those for whom price gouging is an art.
The irony of the this oncoming financial disaster? Those who were poorest won't even notice the difference. Those who were richest will do what those financial geniuses did in 1928---take up sky diving from 28-story buildings.
As for frugality, no one has lived more frugally than I. Divorced women always know economics from the standpoint of zero plus zero equals zero. Then, we work from there. I grew up on a farm and learned self-sufficiency at age 2. There is frugality and then there is legalized extortion via price gouging that is more akin to a game of Pac Man Extortion where government cronyism erodes every paycheck no matter how much you try to save. Couple that with salaries in the US that have stagnated since Bush took office, higher cost of health care even with your employer's plan and you have a recipe for economic disaster.
However, I am definitely with you on 'consumerism'. Wife and I have practiced frugality since day 1. We never drove anything other than a 4-cylinder car probably saving 10's of thousands of dollars through the years on interest costs (lower loan costs), gas, and overall maintenance by keeping those cars at least 8 years. We got into camping in order to take inexpensive vacations (turned out we really liked it and now camp all the time). We have scratched cooked for 25 years saving thousands on food bills (had to learn how to cook first so was not a 'day 1' thing). We've been reading and researching (though magazines such as Comsumer Digest) everything we've purchased so we always knew what we were purchasing and if it was a reasonable 'deal'. The crowning 'acheivement' was to purchase only one home that was easily 15-20% less than we could afford at that time, bucking what was the common advice to "purchase as much home as one could afford" as your income would go up along with the value of your house. We fixed up the old house, never upgraded.
Result: Retired at 56 years old and 54 years old respectively (with no pension or benefits of any kind).
If you're my age and have not practiced this kind of frugality, good luck. To the younger people reading this, all I can do is to encourage you to find that you can be perfectly happy with the less-than-perfect house, the older/smaller car, a 'normal' TV, coffee at McDonalds, and cooking yourself. Happiness is not over consuming. Happiness is having financial freedom.
We have all had our encounters with the demon "gimmie gimmie gimmie"
It is truly time to get back to basics.
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