Great article, as usual. Peter, can you write or discuss your thoughts on transferring these billions or trillions from Boomers to their offspring as they pass away? I'm curious about the macroeconomic impact.
I would think that the impact would be to keep the money siloed in a small segment of the population where it is now . It will just be in different bank accounts.
There is no doubt that a convergence of factors has made it almost impossible to save money today. Another factor is financial ignorance. If people (especially young folks) are not taught the value of saving, they likely won't save. If you were in school in the last half of the twentieth century, you likely had a bank account in the form of passbook savings. The banks (and your parents) encouraged you to save a percentage of your allowance (or parents gave you the money) each week. Once a month the bank posted your interest (4 or 5%). You were able to literally watch your savings grow. You had to be 18, or have your parents do it, to make a withdrawal. Aside from something special you really wanted, withdrawals were seldom made. By the time I was 18, I had over $3000 in my passbook. I never spent birthday or holiday gifts-- they all were deposited. Today, youth don't understand things like compound interest or "pay yourself first". Today, the young people have no money smarts. Never mind saving, they are taught to borrow at a tender age. How can anybody get ahead when they are encouraged to be debtors?
Paper currency and now electronic currency have no ties to physical limits when the money supply is manipulated to fine-tune economic activity. Years ago, money experts discounted any linkage between money and productive effort. The price we pay for that ignorance is the fiscal chaos of our times.
You're right on every point. You might have mentioned that ballooning income taxes on middle and low earners left even less available spendable income from which to invest. Legislators have less motivation to hold or reduce rates of lower earners because the get much more financial support from high earners, not only in generous campaign donations, but in bribes for generous legislation, like bought and paid for monopolies for power, internet, and phone providers.
You have to cultivate the mindset of saving before spending early in life. I remember saving up for purchases in the late 1960's after getting my first real job. I have always been a saver before being a spender. Even retired on a relatively fixed income, we (my wife and I) can still save money every month and our income is well below average.
But the real kicker was using some of those savings for investments that lost money and spending money on a bunch of useless things. Then you look out at the world where corruption reigns supreme and you get to thinking what future am I saving for? I can understand the younger generations losing trust in the system.
The debauchery of the currency has penalized the low income saver. Coin silver and the stability of the value of the currency will incentive savings.
Great article, as usual. Peter, can you write or discuss your thoughts on transferring these billions or trillions from Boomers to their offspring as they pass away? I'm curious about the macroeconomic impact.
I would think that the impact would be to keep the money siloed in a small segment of the population where it is now . It will just be in different bank accounts.
This is good, I’d like to see this too.
There is no doubt that a convergence of factors has made it almost impossible to save money today. Another factor is financial ignorance. If people (especially young folks) are not taught the value of saving, they likely won't save. If you were in school in the last half of the twentieth century, you likely had a bank account in the form of passbook savings. The banks (and your parents) encouraged you to save a percentage of your allowance (or parents gave you the money) each week. Once a month the bank posted your interest (4 or 5%). You were able to literally watch your savings grow. You had to be 18, or have your parents do it, to make a withdrawal. Aside from something special you really wanted, withdrawals were seldom made. By the time I was 18, I had over $3000 in my passbook. I never spent birthday or holiday gifts-- they all were deposited. Today, youth don't understand things like compound interest or "pay yourself first". Today, the young people have no money smarts. Never mind saving, they are taught to borrow at a tender age. How can anybody get ahead when they are encouraged to be debtors?
Excellent article – always succinct and straight to the bullseye of the issue. Thanks Peter!
Paper currency and now electronic currency have no ties to physical limits when the money supply is manipulated to fine-tune economic activity. Years ago, money experts discounted any linkage between money and productive effort. The price we pay for that ignorance is the fiscal chaos of our times.
Appreciate these insights
You're right on every point. You might have mentioned that ballooning income taxes on middle and low earners left even less available spendable income from which to invest. Legislators have less motivation to hold or reduce rates of lower earners because the get much more financial support from high earners, not only in generous campaign donations, but in bribes for generous legislation, like bought and paid for monopolies for power, internet, and phone providers.
You have to cultivate the mindset of saving before spending early in life. I remember saving up for purchases in the late 1960's after getting my first real job. I have always been a saver before being a spender. Even retired on a relatively fixed income, we (my wife and I) can still save money every month and our income is well below average.
But the real kicker was using some of those savings for investments that lost money and spending money on a bunch of useless things. Then you look out at the world where corruption reigns supreme and you get to thinking what future am I saving for? I can understand the younger generations losing trust in the system.
Yes. Thank you. Why this isn’t general conversation in society, I don’t know. Exactly the same as you describe in Australia. Once again, thanks!