What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The first principle in dealing with government is: Don't be awed by it. What little the government achieves is almost always due to the voluntary participation of its citizens. Those who don't want to help the government can go their own ways without running into much trouble.
National Treasury Union President Colleen M. Kelly recently described the 2014 IRS budget allocation as “woefully inadequate.” But the agency has not proven itself to be an efficient steward of taxpayer dollars. Here are ten ways the IRS lost the trust of the American people.
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
The financial world is plodding along like a drunken sailor avoiding debt collectors by keeping no cash in his wallet. It’s not the kind of calm that’s going to last or end well. But the storm will have to wait until after the Olympics.What a game! We’ve never watched ice hockey closely before. But watching […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Amidst all the revelations about how the American people, many of whom are absolutely convinced they live in a free society, have their telephone calls, emails, website visits, and who knows what else under surveillance by their own government, let’s not forget the massive infringements on financial privacy that have gone on for decades.Consider, for […]
The exercise had an awesome name, inspired by the movies: “Quantum Dawn 2.”On July 18, scads of U.S. banks, stock exchanges and government agencies took part in a digital fire drill — a practice run in the event all of Wall Street came under massive cyberattack.This isn’t the first time banks have come under an […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
No other price pops during a boom like that of condominiums. The common view among savvy real estate types is condos are the last to jump and the first to crash. A decade ago, Bernanke’s post-Sept. 11 easy money fueled condo prices and in turn high-rise residential construction from coast to coast.In downtown Miami, 22,200 […]
Our grandparents believed in the value of thrift, but many of their grandchildren don’t.That’s because cultural and economic values have changed dramatically over the last generations as political and media elites have convinced many Americans that saving is passe. So today, under the influence of Keynesian economists who champion government spending and high levels of […]
So Janet Yellen’s first hearing took place a few nights ago. It was fairly boring. She’s expected to sail through and become the next chairperson of the Federal Reserve. Given that the last few years of extraordinary monetary policy have achieved a miserable recovery, what’s she going to do differently?Nothing. Just more of the same. […]
Imagine that everyone in your community is issued a credit card with the same account number. At the end of every month, the bill is totaled and divided equally among you. Suppose that during the first month, you choose not to use the credit card, yet you receive a bill for $100. The next month, […]
From the Tongue-in-Cheek Department of Laissez Faire Books…Washington, D.C. – Jeff Incast, a Democratic representative from California, has tabled a bill that would expand current insider trading laws.He said he was “distressed” by the acquittal of Mark Cuban, whom a jury cleared of civil charges of insider trading brought by the Securities and Exchange Commission […]
Hanging out in Rome, surrounded by ruins of all ages, you can’t help but have big thoughts about the state of the world. Here are a few of mine.No generation during the long fall of the Roman Empire was really aware of it. Each generation accepted the conditions they inherited and worked to survive as […]
I just spoke to a friend, Skinner Layne, who is from Arkansas, but now lives in Santiago, Chile. He emigrated there and is now heading a startup enterprise that is showing great promise. It is called Exosphere. I asked him about the backstory to the company. It turns out that he moved in 2008, six […]
The dream of virtually every American is to retire as early as possible. Who doesn’t want to have each and every day to do exactly what he or she wants to do?Sure, for some people, that would be work. They like having somewhere to go every day, being valued for their services, and the interaction […]
It’s come to this: A typical family’s health insurance costs as much as a typical family car.If you’re a typical American family, your “health” will set you back $20,728 every year. That figure comes gratis of Milliman, a benefits consulting group. A base-model Toyota Camry… the typical family’s most-popular make? It costs $22,055.Milliman’s numbers account […]
The study of crowds has always fascinated people in finance. It’s not hard to understand why. Markets can go to crazy extremes, extremes no one can make sense of. So, one favorite way to explain it away is to say that crowds do dumb things that individuals, upon cooler reflection, would never do. In a […]
Since before the tech bust, we’ve been suggesting that while Americans “think” they’re getting richer… they’re actually heading in the other direction. They’re getting poorer.This proposition has been easier for folks to entertain since housing busted and the financial crisis reversed the “wealth effect” in 2008. With that in mind, let’s take a look at […]
People will be paying more and getting less from their governments as health costs and pension obligations will force state and local governments to adjust their budgets over the next 50 years, according to a new report.The new report from the Government Accountability Office, a nonpartisan congressional agency that audits federal programs, paints a dreary […]
The countries of the developed world are experiencing a new class of refugee — members of the middle and upper classes. These rungs of the socioeconomic ladder are realizing that their countries of residence are in many ways going rapidly downhill without much hope of a short- or medium-term reversal. This is particularly true for […]
The dream of virtually every American is to retire as early as possible. Who doesn’t want to have each and every day to do exactly what he or she wants to do?
Sure, for some people, that would be work. They like having somewhere to go every day, being valued for their services, and the interaction with fellow employees and customers. But most people, provided they have enough money to live on, would just as soon hang up their timecards and play gin poolside.
The retirement plans of millions were ruined by the 2008 stock market crash, not to mention the real estate crash of the same year. If their stock portfolios didn’t take enough of a beating, Ben Bernanke’s zero interest rate policy will keep them punching a clock for years more, long after their backs, knees, and patience are crying out to call it quits.
According to a Gallup survey, the average retirement age is up to 61. That’s a four-year increase from 20 years ago. The average working American now plans to work until age 66. That’s up from age 60, which was the plan back in 1995.
“Because most of the uptick came before the 2008 recession, this shift may reflect more than just a changing economy,” Gallup’s associate editor Alyssa Brown wrote in her report on the study. “It may also indicate changing norms about the value of work, the composition of the workforce, the decrease in jobs with mandatory retirement ages, and other factors.”
That’s putting a positive spin on the data. But it’s hard to imagine people working longer if they don’t have to. According to Gallup, 37% of nonretired Americans claim that they will quit working after age 65. A decade ago, that percentage was 22, and in 1995, only 14% guessed they’d be retiring after 65.
Is it possible that work is now more fulfilling for so many more people? Were so many employers discriminating against willing 65-year-olds a couple decades ago? Puh-leez! People are working longer to keep food on the table and a roof over their head.
Besides not having saved enough, today’s would-be retiring baby boomers have more debt. The Census Bureau reports that from 2000-2011, the largest percentage increases in median household debt were in the 55-64 age bracket (up 64%, to $70,000) and the 65-and-over bracket (more than doubling, to $26,000).
And while many were taking on more debt, median net worth (assets minus liabilities) for all age groups fell. In 2000, median net worth was $81,821. In 2005, median net worth had jumped to $106,585, before dropping to $68,828 in 2011 (in 2011 constant dollars).
Even retirees who made all the right moves are hurting. Ben Bernanke doesn’t much care about a guy like Forrest Yeager, who told The Wall Street Journal a couple years ago that his $45,000 nest egg wasn’t throwing off much to supplement the $1,500 a month he receives from Social Security. Yeager, a spry 91 when featured by the WSJ, figured his money would last only another six years if rates stayed low.
In 1985, when Mr. Yeager was 65 years old, taxable money market funds were yielding 7.71%. A one-year CD was yielding 8.53%. Yeager could count on his $45,000 to throw off nearly $320 a month extra. The highest one-year rate in the country is around 1%, meaning his nest egg, untouched, would throw off less than $40 a month. Money market rates are even lower.
“Americans who have done everything right, have worked hard, saved their money, and stayed out of debt are the ones being punished by low interest rates,” says Federal Reserve Bank of Dallas president Richard Fisher.
But while Fed official Fisher describes savers as doing the right thing, Charlie Evans of the Chicago Fed says, “It seems to me if we could somehow get lower real interest rates so that the amount of excess savings that is taking place relative to investment is lowered, that would be one channel for stimulating the economy.”
Les Miserables actress Frances Ruffelle is a girl after Evans’ own heart. “I’m not a saver,” she says. “If I had a savings account, I would spend it. When we were kids, we were always told to save our money for a rainy day, but I think, Life is too short for that. Enjoy it. Enjoy it with your friends and be generous. What’s the point of keeping it there for a rainy day in case you die tomorrow?”
A person will think that way when rates are so low.
Lifestyle coach John Strelecky says you shouldn’t worry about saving for retirement. “Spend more time doing the things you want to do now, because you don’t know about the future,” says Strelecky.
“No matter when that two-minute warning ticks off, you could say you did what you wanted to do with your life,” he said. “Don’t wait until you’re 65 to start spending your money to live a rewarding life.”
After all, one in five men doesn’t make it to age 65, and of those that do, nearly 30% will suffer from life-threatening cancer, stroke, or heart attack. As Lord Keynes famously said, “In the long run, we are all dead.”
It would be nice to know what day exactly we’re to pass on. Unfortunately, we have to plan for a long life even if we don’t get one. After serving under Gen. Patton in World War II and working for Eastern Airlines, Mr. Yeager retired in 1982 with plenty of savings, but he and his wife “lost our butt” in the 1987 crash. Despite his money running short, he told the WSJ that he was going to Las Vegas to have fun.
Bernanke’s legion of Ph.D.s at the Fed dearly wishes those saving for retirement and those in retirement would do their part to decrease the gap in aggregate demand. If you don’t need a big-screen TV, buy a few shares of Apple. Let loose a little. You can’t take it with you. We’re all in this together, says President Obama. Don’t be ambitious and save in order to take care of yourself. The economy needs you now.
Of course, this is all nonsense. Nothing is more human than being self-reliant. To be free, one must take care of oneself, and that means saving for lean times — call it a rainy day, retirement, or what have you.