Create Your Own Economy
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- Published on Tuesday, 23 October 2012 12:38
- Written by Andrew Snyder, Editorial Director, Insiders Strategy Group
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America's economy is in sad shape. That's why we refuse to be part of it. We're creating our own economy.
America is sick. By all measures, it is a fatal illness. We've talked about the idea of a "New" America many times. We've looked at what it means to invest and build wealth in an economy that works and acts far differently than it did just a generation ago.
But we are the minority. Most Americans don't care about investing and creating wealth. They're so broke all they care about is having enough cash for tomorrow... not 20 years from now.
I've got some disturbing facts to report.
A survey this week shows that 41% of respondents had less than $500 in savings. That means four in 10 Americans would go hungry in less than a month in the event of fiscal calamity. What's worse, though, is the fact that just 52% of all Americans earn more than they spend each month. That's the lowest we've seen that figure in 20 years.
It's clear something is wrong, but what does it mean? What factors are at play here?
First, the most troubling factor is falling wages. When compared to the rate of inflation (or Washington's version of it), American wages have dipped in six of the last 12 months. If we had the guts to use real-world inflation figures, the math would be much more damaging.
In fact, incomes have risen for only the top 20% of American wage earners.
In the New America... there is no middle class.
Why bother saving, anyway? Maybe those poor souls at Wal-Mart with their hot new smartphones have it right... spend now, pay for it later. What's the point?
The few lucky wage earners who have any cash to spare by Monday morning can put their cash in the bank, but it's a worthless endeavor. Thanks to Bernanke, it costs more in gas money to get your cash to the bank than you'll ever earn in interest.
Joe Sixpack could turn to the stock market. At least, there, he stands a chance. But he'd better be damned careful. Follow the conventional path to Wall Street and the men in fancy suits will pick your pockets before you ever place your first bet. (The ETF industry alone lifts over $3 billion from investor pockets every year.)
And bonds... well, it's pointless to talk about bonds to Joe Sixpack. The average American doesn't understand them, and even if they did, they'd get sucked into one of the biggest (and most manipulated) bubbles the market has ever seen.
So what's the answer?
You're not going to like it.
It's real simple. Joe Sixpack spends, spends, spends and spends some more. Blow through that paycheck. Put that money in the economy. And when you run out, fill out these three forms and Uncle Sam will reload your account twice per month.
I said you wouldn't like it. But dependence on the government is the truth. That's life in the New America.
From the top down, the government runs the show. From the dollars in our pockets to the interest rates at our banks, Washington's in charge. From the bottom lines on our paychecks to the prices of our groceries... Washington's in charge.
Economic freedom has died. In the New America... a handful of men tell Father Economy what's best. And most of the time, they are flat wrong.
My solution to it all is equally devious. We'll take our ball and go home. We'll play in our own economy.
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