Personal Finance Meltdown Makeover – Take the Long View
Americans on Main Street have been urgently asked to make the leap with Treasury Secretary Paulson and Ben Bernanke to bailout Wall Street’s bad debt to the track of $700 billion and counting. We had been advised that this must manifest on the way to not only stabilize Wall Street, however, the monetary gadget itself. Or else! As of this writing 9/29/08, the House has simply voted to reject the bailout.
If a bailout invoice does, in the end, get exceeded, it might not be a magic bullet and we as a kingdom will keep floundering in uncharted monetary waters. But perhaps greater importance, hundreds of thousands war to keep their equilibrium when it comes to family finance.
Personal finance authorities have taken front and middle, weighing-in at the news and communicate shows. They beat the drum of “whatever you do, do not liquidate” and please live calm. Stay calm?
My concern is what the personal finance professionals aren’t telling Americans. Their recommendation to John and Joan Q. Public as regards the pleasant approach to decision-making in mild of the present day financial meltdown is flawed. Why? Their solutions do no longer replicate the-elephant-in-the-residing -room-root reason. Instead, we are told the monetary disaster is because of the sub-high loan crumble, mortgage defaults and the following downturn in housing charges nationwide. Yawn.
The Emperor’s New Clothes
It’s the mainstream media that has served up this handy cowl tale. As inside the Hans Christian Anderson tale of The Emperor’s New Clothes, even though the king is maximum surely bare as he parades down the road, definitely all the spectators of the royal parade see the king as he himself desires to be seen; wearing impressive gowns. Only whilst a child inside the crowd declares the king’s nakedness is the mass delusion of the townspeople shattered.
Thanks to the Internet, the “youngsters” with eyes to look and ears to hear the truth approximately money are developing in variety. As a result, many cracks exist inside the respectable tale line about why we are inside the financial mess we are in and what we ought to do to get out of it. There are tons greater to realize.
The actual root reason goes again to the time of sizable expertise of ways interest-based money lending, additionally called usury, corrupted the material of relationships and of society. In cutting-edge times, usury has become taken into consideration enterprise as usual thru a worldwide community of relevant banks. Almost no one nowadays gives it a second thought.
The central-banking gadget is international and changed into cautiously designed to be a debt-primarily based in nature: Money is issued into lifestyles on the time it is loaned at the hobby. The interest that compounds over the years will become both sales for the system’s shareholders and inflation inside the cost of dwelling for you and me while debt service receives brought to the fee of products and offerings.
To the general public’s amazement, The Federal Reserve, the U.S. Significant bank, isn’t truly even part of the government but a personal for-profit corporation with shareholders. However, as in The Emperor’s New Clothes, do not count on TIME magazine to run a cover story on this any time soon.
The System of Money
My affiliation in the 1980’s with R. Buckminster (Bucky) Fuller led me to recognize the knowledge of the saying “the entire is extra than the sum of its components”. Money is, however, a part of an economic (significant banking) device inside the equal manner the earth is, however, one issue of the solar system. It’s not possible to absolutely understand earth as a planet with out knowing the device that carries it.
A greater complete image of cash comes into view with the big picture of the economic device. As we were changed forever while we noticed the whole earth from the area for the first time, getting the huge image of the economic gadget modifications the way we think about cash.
A comprehensive view might put a completely unique spin on the Paulson Plan for a mega-bailout. A complete assessment could tell us that going $700+ billion greater into countrywide debt in a debt-based totally system will best delay the inevitable bottoming out of an already heavily indebted machine. Such an injection of capital could be much like giving a heroin addict a bigger injection to keep on the way to revel in their excessive.
It’s virtually no special. The financial device via layout desires large and larger sums of credit score (virtual money) to pay down debt and get right of entry to running capital. It’s an insatiable beast desiring increasingly new credit score to hold the wheels turning. As an end result, I humbly put up that what we’ve got is a totally unsustainable financial system.
For worldwide, countrywide and private economic answers to be more than Band-Aid measures as a mega-bailout is positive to be, the whole system needs to be reformed thru a complete-systemic makeover. As Bucky taught, structures in the long run shape and determine the opportunities in their shifting components.
You’re on Your Own
Until national leaders make economic reform a top coverage priority, ordinary Americans are on their very own to discover the pleasant approaches to navigate their non-public finance concerns. Each of us is stricken by the mechanics of a debt-based totally economic gadget by using a manner of lost buying power. What’s extra, authorities purchases of Wall Street’s “poisonous property” will simplest accelerate this ongoing technique.
Yet almost no monetary advisors will inform you. Actually, it comes as no actual wonder since the expert training of maximum certified economic advisors by no means covers vital banking one hundred and one and its privacy implications. Advice without understanding the private impact of the economic system is brief-sighted at fine.
The Long View
Like nuclear waste to waste dumps, masses of billions of greenbacks of extra debt due to the acquisition of “poisonous property” will pass somewhere. That someplace, after the liquidity injection-high wears off all over again, could be immediately out of our wallet as lost shopping strength and tax will increase.
Job-outsourcing, bankruptcies, foreclosure, and debt have meant hundreds of thousands of Americans have traded peace of thoughts for the persistent strain. Enough is sufficient! Individuals, families, and communities stand to gain from (with a bit of luck) an eventual financial reform but want actual answers proper away.