Fake Wealth

This is definately not the best our society can do! We need to look back at our mistakes and LEARN FROM THEM! Consider it expensive schooling, but remember we are in control! Now that we have touched the fire and know it is hot, we need to educate our children (and possibly ourselves) to prevent this from happening again. We will recover, and when we do we will be stronger and hopefully smarter

With so many influences out there telling us what we need and what we’re worth, we struggle to really know who we are and what we’re suppoed to do here. Just recently my fiance and I bought a townhome in Washington State. We were sick of paying rent for something we didn’t own, and figured we would be happier owning something. We bought at $309,000, our minimum payment is $1750, 44% of our monthly income. At the time we signed on the dotted line we didn’t realize that paying the minimum payment meant we would be negatively amortizing. In addition, we aren’t allowed to re-finance until our pre-payment penalty time frame expires in another year, (total of 3 years of moving backward). Too bad we were introduced to the “American Dream Project” after we purchased our home… However, in a strange way I feel fortunate, because at least we’ve learned something, have steady jobs, and know how to climb out of the hole we dug for ourselves. Others aren’t so fortunate. My advice for those wanting to change their situation is to live within your means and learn from your mistakes; look for happiness within yourself, your family and friends and not your posessions. And most importantly, concern yourself with making a difference.

Focus on Individual Economies… I am far from an economics expert, but I have decided over the past few years to focus my energy and effort on my economy. Of course what happens with my local, state and national economy has an affect on me. But I really don’t know what to do when it comes to fixing problems at that level. Vote in new leadership??? Make some policy changes??? This would be simply replacing “satan with the devil”. Hence, I propose that most Americans turn off the TV and work to mend/repair their individual economies. This entails (1)Getting their personal debt under control (2)Putting together their personal financial plans (3)Improving their personal financial literacy. These are things I can do and and feel the impact of immediately. I believe the best thing that I can do to improve the national economy is for me to improve my invidual economy. If I do that, then I can insulate myself from the decisions make in Washington

As a country, we’ve transitioned from one that used to save and produce to one that consumes and borrows. While most pundits Americans for this poor behavior, the root cause is government policy.

How? For one, the government overconsumes and overborrows. That puts pressure on the dollar via inflation. People are naturally instinctual. They would save if they felt it offered a reasonable return that would cause them to forego consumption today. And people are right. The real value of savings has been viciously attacked by government deficits and Federal Reserve monetary policy. Since 1913, the dollar has lost 96% of its value.

How does it affect you? Well, it affects your standard of living, your desire to save, and your ability to meet your needs (i.e., - to not borrow). I can’t blab on about how these macro policies have ruined generations of Americans, but they have. And it’s all done unknowingly.

So I disagree with Detrick: Washington has a greater say in your economic life than you know simply because taxes are the biggest expenditure for most people, and the government creates the money upon which all our “fake wealth” is based.

People, please wake up. Be aware. The Federal Reserve is an institution of the government and elite to steal your wealth, savings, and fruits of your labor away from you. Only one man running for President wants to change this. His name is Ron Paul. http://www.ronpaul2008.com

One more thing. A lot of young people are struggling today with low wages, poor job prospects, and higher costs whether they be houses, education, etc. How come they can’t even have half the prospects their parents did?

You heard the saying that excess federal deficits will bankrupt our kids? We are living it right now. The government doesn’t go “bankrupt” because it can simply print more money. The bankruptcy happens through the lower standard of living for future generations that come with currency depreciation.

These very housing and credit market and stock market bubbles are all a result of easy monetary policy. The effects are obvious: the people who bought these stocks and homes years ago when they were cheap are doing well, the people who have to buy them now (young people) are suffering. If this isn’t a restribution of wealth via government policy, I don’t know what is.

Americans work really hard. They sacrifice their families, their time, their health to make an extra buck. If only they knew that it was a bad investment not only because the other things are more important, but the buck is viciously devalued by the government and its elitist cronies.

Best of luck to all of you.

I see the economy as part of a larger issue, although somewhere along the line, I think around the 1980s, people in the U.S. decided that money and things were more important than people, than the environment, than many of the now extinct or soon-to-be extinct species on this planet. In fact, the only people who seem to have had any lasting value, as evidenced by what they earn, appear to be CEOs, entertainers, athletes and politicians.

I think the only people who would agree with you that we need to invest in ourselves are people who value not only themselves but others. Most Americans appear to be so inwardly directed and so competitive that they could never come together for any purpose that might possibly benefit others, including other Americans.

This is why unions are dying out, why wages are stagnant, why the same politicians are re-elected, why there will never be healthcare for everyone in this country, why there is no “OurSpace”. Americans are not forming a group with a single voice; rather, a few are trying to make a difference individually, and each voice is being drowned out by the voices of other groups: immigrants, political parties, lobbyists, corporations.

Individual Americans viewing one another in a competitive way might be good for business, but I think this view is detrimental to our country. As long as we feel that we have lost because a neighbor or colleague has gained some tangible or intangible thing, we will never be able to come together as a group to make a difference not just for ourselves, but also for our neighbors and colleagues.

To bring about change in this country, we must come together as a group and speak with a common voice. Historically, this is the only way I have seen people able to effect change.

My fear is that the economic woes to come are far worse than we expect; there are pockets of real estate in popular markets that are going to become loss leaders and have an excessively detrimental effect, further pulling down an already unstable economy.

My hope is that the resulting “wake up call” will reset our endless obsession with conspicuous consumption - especially when we see that the Jones’ we have been trying to “keep up with” are bankrupt and miserable.

I understand the great disparity between what we need and what we want ( I have four successful businesses here in San Diego, but can’t - or won’t (!) afford to own a home here), but I am alarmed at the blame being aimed at vendors of sub-prime mortgages: consumers should know better! I agree that easy money creates problems, but isn’t there a more serious, underlying issue? Namely, that a person feels compelled to spend 50 or 60% of his/her gross income to have the latest and greatest, or is willing to gamble their paycheck on a “turn-and-burn” scenario. I have faith that most of us know that what we’re signing is not congruent with what we can afford in these cases.

Let’s educate the American public about real value, as opposed to expecting government to step in and protect us from ourselves.

We now have a federal government which has become the captive of large corporations including the banking establishment. The Federal Reserve uses a fiat currency, not backed by hard assets like gold and silver, to inflate the value of assets and paper-over economic any distortions like the current sub-prime mortgage mess. We as taxpayers and consumers all pay for these ‘mis-allocations’ of capital through higher taxes and inflation.

It was no accident the the Federal Reserve Act and the federal income tax were create at about the same time. Both were slipped through Congress, despite many protests, and have given the Federal government unlimited power to tax and spend. The Federal Reserve is a private banking system that makes money from our nation’s debts - why then should it be any surprise that we have now have become the biggest debtor nation in the world? I would like to believe that some politicians would have the fortitude to stand up to the Federal Reserve system, but it may be too late for that.

On a personal level we need to be more satisfied with what we have, save, live within our means, work for ourselves or socially responsible companies, and support our local economies by shopping at local farmer’s markets. Tear up our credit cards, stop believing in political ’saviors’, and stop sending politicians campaign contributions - the rest will take care of itself in time.

Learn From the Fall of Rome, US Warned
By Jeremy Grant
The Financial Times

Tuesday 14 August 2007

The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.

David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations.”

These include “dramatic” tax rises, slashed government services and the large-scale dumping by foreign governments of holdings of US debt.

Drawing parallels with the end of the Roman empire, Mr Walker warned there were “striking similarities” between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government.”

“Sound familiar?” Mr Walker said. “In my view, it’s time to learn from history and take steps to ensure the American Republic is the first to stand the test of time.”

Mr Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the US Congress.

While most of its studies are commissioned by legislators, about 10 per cent - such as the one containing his latest warnings - are initiated by the comptroller general himself.

In an interview with the Financial Times, Mr Walker said he had mentioned some of the issues before but now wanted to “turn up the volume”. Some of them were too sensitive for others in government to “have their name associated with.”

“I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.

“One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term.

The fiscal imbalance meant the US was “on a path toward an explosion of debt.”

“With the looming retirement of baby boomers, spiralling healthcare costs, plummeting savings rates and increasing reliance on foreign lenders, we face unprecedented fiscal risks,” said Mr Walker, a former senior executive at PwC auditing firm.

Current US policy on education, energy, the environment, immigration and Iraq also was on an “unsustainable path.”

“Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernise everything from highways and airports to water and sewage systems. The recent bridge collapse in Minneapolis was a sobering wake-up call.”

Mr Walker said he would offer to brief the would-be presidential candidates next spring.

“They need to make fiscal responsibility and inter-generational equity one of their top priorities. If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably.”

[…] Your Response to “Fake Wealth” Posted on August 14th, 2007 by Will Marre. Categories: Leadership, Education, Community, Lifestyle, ADP Diary.When I posted “Fake Wealth” late last week, I unleashed a torrent of wisdom from many of you who had thoughtful things to say about our hyper-consumption economy. You talk about the need for all of us to become financially literate and to think for ourselves. Most of all, many of you reflect the wisdom and judgment of an increasing wave of citizens who want America to become more than we currently are. I am impressed, and genuinely encouraged by your consistent, thoughtful comments and responses. […]

We need to make changes at the government level but the biggest impact we can make NOW is at home. We need to live within our means and increase our savings. Debt free living should be our goal. This is easy to say and harder to do. Especially for those of us that have launched a new business.

Most politicians for not saying all are bunch of crooks they sell out to the rich and to be rich their selfs too, they have very little concern about citizens or nothing and it is a shame that most of us are quiet living them act as they wish. The country has the governmenta it reserves. Thanks to programs like this are making a little difference.

It is quite sobering to read the latest Will Marre article. Reason being because it is true. I am stuck between the Gen 21 and the Gen Xers so I think I have a unique perspective. I just bought a house and even though i can afford it, I fear that the housing market may go down and that in 10 20 years, my house will be worthless just in time for me to be retiring. But at the same time, i dont want to make someone else richer in the process by renting. I have a few toys but I do spend most of the money on travel instead of “Stuff”.

We have moved so far away from the principles and philosophies that created this country. No government is perfect but ours was about as close to it as one has ever gotten. The unfortunate fact is that things are and need to get much worse before they get better. Its the natural course of things especially capitalism. It will take a series of catasrophic events, ie market crashes, inflation, more wars, poverty, disease etc. before ALL OF US will take a good hard look at what we and the polititions have done. Change, real change wont happen in the current environment. I wish it didnt have to happen but history is full of examples. “When you lose, dont lose the lesson.” Our Government has “Lost the lessons”.

[…] I’ll just leave you some fun facts here from Will Marre’s latest blog post. […]

Aren’t we Americans encouraged to be good little consumers because its supposedly what gives Americans their jobs? How true is this anymore? Whose jobs are we really supporting? China’s, India’s, etc. I have never been overly materialistic and have always lived within or below my means. American citizens need to wake up and realize that abusive consumership will be one part of our country’s economic demise. How can we demand economic responsibility from this country’s leaders, if maintaining a well grounded personal economic lifestyle is a foreign concept to the majority. I recently did a paper for school and discovered that America presently has the lowest personal savings rate since the Great Depression. At the time of my last research, the country’s personal savings rate was negative $139 billion dollars. Thats right NEGATIVE $139 billion. Wake up people. How can we collectively be indignant and demand change of the leaders? The leaders come from the big American pool of non savers. As a country, we have bought into the consumer mentality, and for what? An IPOD, a digital camera, plastic surgery, a bigger house with the “everybody has them” granite countertops. For heaven’s sake … turn off that sales box sitting in your living room that is costing you a more a little every few months for the privilege of being brainwashed into this sick culture. Do you really need that bigger house? And is that neighborhood as bad as you think it is because the houses are a little more reasonbly sized. You don’t need 3 bedrooms and 2.5 bathrooms just because that is the “norm” if you are a family of two. Take back charge of this country one household at a time because you cannot count on those leaders to tell you what you really NEED to hear.

Everyone is worth a basic amount of money in their lifetime…the banks know this…after they adjust for your taxes and some basic food and water they target the remainder…they organize …fees…credit…car payments and mortgages around getting every penny of what you will have left in your earning years…and you are TREADING WATER as they live on an Island being served by slaves that YOU pay for…

There are many here who talk about personal initiative. I wholeheartedly agree that people need to take personal responsibility for their lives, and one of the first orders of business is to become more responsible and self-reliant.

Perhaps there is this false belief in American rugged individualism, that we can and should conquer ALL adversity single-handedly. In fact, people are a more evolved form of animal; every animal intuitively responds to the incentives and stimuli put to them.

And in this regard, our government, economy and society have provided the stimuli that promote this behavior. Much of it subconsciously without us knowing it. Billions are spent on advertising research to manipulate you to buy a product or service. Government trumps up some misguided policy to prove to you that it is protecting and serving you.

When this housing bubble collapses, it will take the stock market and millions of people’s retirement savings with it. It’s funny. When the stock market first came about, it was viewed with suspicion and risk and because real savings could get you by. These days, savings in a bank means jack - confiscation through inflation - and people now view the stock market as their savings. Reading CNNfn or any popular financial website confirms this. Now whose fault is that? Is that the individual’s fault? I don’t think so.

While I agree with those who say that we all must live within our means, and have always lived debt free, with the exception of my mortgage, I have been alienated by others who felt that I wasn’t going along with the crowd, so to speak.

I must thank my late father, who grew up during the Great Depression and who was 50 when I was born, for teaching me that if I want something, I must save the money to buy it. So I have always excelled at saving money. In addition, I have never enjoyed shopping and I have so many things, I certainly don’t need anything else. At this point in my life (in my early 40s), with my home nearly paid off, I have been selling and giving away as many things as I possibly can because I have too much.

As to living a debt free life, the only negative I have experienced has been with my homeowners insurance rates, which recently increased because I do not have much of a credit history. But at least I am not afraid that if I don’t work, I will lose everything I worked and saved so hard for.

The other negative is this: I have furniture purchased about 12 years ago that is still in fairly good shape, but people who walk in my house say my furniture is outdated. So what? If you ask me, I think it’s the opinions and criticisms of others that make the majority of Americans overspend and overextend.

And it’s this competitiveness that also keeps us from coming together to speak with one voice to the politicians, the corporations, the lobbyists who pressure the legislators, etc. Individually, we can write letters, send e-mails and make phone calls, but I can tell you from experience that contacting my representatives using these methods has, for the most part, proven fruitless. Despite all my communications over the years, I received a response from only one.

Sandy wondered how we could collectively be indignant and demand change from our leaders if we are not working individually to save money. I have always worked hard at saving, but despite a college degree, vocational schools and a great deal of education, what I earn is very low. And I have been told again and again, even as I worked 14-, 16- or 18-hour days that someone could be hired for less. Why can’t I make what I used to earn? Because, as I’ve been told, “these jobs don’t pay that anymore.”

If our government officials could enact laws that keep American corporations in America rather than encouraging them to set up shop in China, for example, where they don’t have to adhere to U.S. rules and regulations and where they can pay each employee $1.74 a day, this might be a start. Again, I agree that to a point, we need to be responsible for ourselves, but for those who earn minimum wage, it is extremely difficult to save anything more than perhaps 25 cents a week. And for life’s emergencies — a leaky roof, a child who is diagnosed with leukemia, a car with failing brakes, a beloved pet with kidney or heart disease. One has to earn quite a bit in order to prepare and plan for the unexpected.

If jobs that have been outsourced and offshored, supposedly for our good (although it’s the CEOs who seem to benefit), would return to the U.S., I think that many more Americans might be in a position to live a better life. But politicians don’t seem to concern themselves with this. Why? I presume because they realize that they will never again have to worry about their economic futures. They will always be financially secure.

Go Sandy, JDH, Melissa, Jared, Dr.Welsh, TomK. et al!!

It’s one thing to wait for a new type of leadership to arise in this country, in order to achieve the new American dreams. It’s another to begin educating our youth, early on, to ensure that the values and morals we want for our future are propagated. I believe that affecting children’s education will have the largest impact on America’s future.

When was the last time anyone learned about financial responsibility in school? High schools are teaching Calculus and other “high-level” math courses… while youth are pressured to dress in $100 jeans, and to want what they see on tv or in movies. Children today have $200 ipods and $50 video games for an entertainment system that costs hundreds of dollars.

I believe that if we taught our youth financial responsibility, civics, leadership skills, and showed them (through their participation) the benefits of community service, we would have a new America, where any dream could be achieved.

In the next two months, I will be working on creating a series of after-school workshops for a local elementary school. My vision is for the workshops to be offered free to kids, and for them to be taught by volunteers from the school staff, faculty, and the surrounding community. I am starting this initiative in at least 1 school in Northern California. My American Dream is for every school in America to take part in empowering our youth with the skills that they need, so they can create a future they would want to live in to.

Email me at a_possibility@hotmail.com with your comments, suggestions, and offers of assistance.

Will, once again I seem to agree with everything you’ve said and once again I blog about your post.

You’re doing and talking about things that are on the regular person’s mind. It seems like this post has inspired more comments than ever. I guess that’s a sign that you’ve struck a nerve. I really, really hope that your work and influence grows, and that you’ll help lead we American’s from our collective sleep, delusions and denial.

Our economy is a house of cards and has been for years. I fear a collapse not unlike the great depression. I sure hope I’m wrong, but there are so many similarities it’s a bit scary.

Calin–RE: teaching students about money and practical math and finance.
I’ve been saying that I was going to start something like that for years, but it’s always been on the back burner.
Expect an email from me to talk about it. Nice going.

In response to K.V. I also agree and wish to acknowledge your valid points about not ALL people being able to live within their means because their means aren’t enough to cover the basics. I also recognize that there are some people who get hit with other catastrophic life emergencies that force them into financial ruin or crisis. These are very valid points, and I agree something needs to change, but I am not astute enough to know what changes those should be. Health care reform, a living wage instead of a minimum wage and education may be some of the keys, but ultimately I think community effort will make a bigger difference than government ever will.

In good conscience I should revise my original point and state that people who ARE ABLE to live within their means should make every attempt to do so. For example, my employer makes 10 times the money I do (truly) yet he fails to live within his means while I easily live beneath or within mine. There are significant amounts of Americans who have the means to live within their means, but are simply not doing so. The term fake wealth for me conjured up images of the average American materialistically trying to keep up with their neighbors. Unfortunately, I know lots of people who attempt to keep up with their neighbors but lack the money to back up their wants. Some of my friends and family members are caught in this cycle, and have come to me to borrow money to pay for their needs because they spent their money on their wants. One such person even told me at some point that I planned too much for tomorrow and that I should live for today. I am not feeling too good about financing their today at the expense of my tomorrow. Just my thoughts.

Kate…

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Don’t Worry, Be Happy! =)