We as a nation are obsessed with wealth, but all too often from a spectator's point of view. We see the rich and famous with their decadent lifestyles, but we think to ourselves that this isn't attainable outside of being a famous musician or movie star, or being a hedge fund manager or winning the lottery. People love money and dream about what they would do with all that wealth, but they do not, for the most part, spend time thinking about how to actually acquire it. It is truly amazing what the effect of years of careful, regular savings and investing can do for one's net worth, but for a disturbing majority of people, this is simply something they do not think about. Or, if they do, it is only in the abstract. Why? Several possible excuses, all of which I've used:
"I don't make enough to save."And this seems to be a universal problem. The idea of an automatic savings plan fascinates me. Does it smack a bit of paternalism? To me, yes, but Shiller says it should be automatic but not compulsory. It would be easy for one to withdraw his money and spend it in whatever way he chooses. I think this is a great idea. Something has to be done on a national level. It requires education and reform on a tremendous scale. It requires changing the fundamental way in which most people go about their daily lives. It is the responsibility of good government to ensure its populace is economically viable. A nation of savers would, it seems to me, be far better off than a nation that outspends its ability to pay, and creates an increasingly unsustainable economic house of cards.
"I'm young; I don't have to worry about retirement."
"I don't understand IRAs, stocks, bonds, or mutual funds. I'm not smart enough to do it right."
Out of sight, out of mind - In their twenties, most people are worried about having fun and getting laid, not saving for the future.
Read Shiller's article.
(Note: All my economic theory is based on about a week of intense internet research, so take it with a grain of salt.)
3 comments:
Nice post. I'm glad to see that you read and enjoyed the article.
"It is the responsibility of good government to ensure its populace is economically viable. A nation of savers would, it seems to me, be far better off than a nation that outspends its ability to pay, and creates an increasingly unsustainable economic house of cards."
Unknowingly, you have really hit on a major point of what is going on right now in the U.S economy. If you want to know more about the lack of economic responsibility our government has taken over that last number of years and how that has translated into an unsustainable economic house of cards, I suggest you read more about the current subprime mortgage crisis. Far worse than just having a nation of non-savers is what we are faced with now: a nation of non-savers who are also about to find themselves in huge amounts of unmanageable debt (a la their home mortgages and rapidly depreciating home equity). In years to come, this will undoubtedly be viewed as an extreme example of greed and lack of proper government regulation. As a result we are on the brink of an unprecedented economic crisis in this country (I'm talking Great Depression) and most do not understand the extent of what is about to happen. Our "responsible" government now thinks that they will save the economy with $600 tax rebates and interest rate reductions, all the while running the value of the US dollar into the ground. Don't be surprised if the average roll of toilet paper will cost you $10 a year from how, which may be worth more than the $100 bills that I will then be wiping my a** with. In the mean time, buy gold.
R.W. Buffett
Well, I don't think it was "unknowingly." I have been reading up on a lot of this stuff about the subprime crisis. I am attempting to educate myself on both a personal and macroeconomic level.
But yes, tough times may be ahead, although there are plenty of voices who seem to think panic might be exacerbating the problem.
Either way, I agree - all my savings will be put into gold bullion.
"although there are plenty of voices who seem to think panic might be exacerbating the problem."
These are the same people who never thought there was a problem with our subprime lending practices in the first place.
-R.W. Buffett
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