Date: 8/21/2011 Sunday
Just a Thought !!
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Suppose you live next door to an annoying family named the Joneses. One day Mr. Jones goes out and buys a boat, which he then displays prominently in front of his house, washes it all the time, puts cute little ribbons around it and names it "NotYours". This rubs you the wrong way, you feel like your "status" has decreased and it gets you thinking that maybe you too should go out and buy yourself a boat. Maybe you should save less, consume more and keep up with the Joneses. This is the usual story told of how "status effects" can lead to (sub-optimal) level of saving on the part of folks, why Americans don't save and how consumerism is going to be the death of us all.
But wait a minute. Suppose that, instead of buying that boat in order to keep up with the Joneses now YOU ... Buy GOLD, watch it grow in value and sell a small amount back in a few years and buy... an even bigger boat! That'll show the Joneses! Maybe "status effects" lead to increased savings!?
The point missed by the usual story is that saving is just postponed consumption (I like the
Buy-Nothing-Day. I like the Day-After-Buy-Nothing-Day where you spend all the money you didn't spend on BNT even more), so if you ARE trying to keep up with the Joneses you face a trade off: Keep up today, or keep up tomorrow. How you gonna play it?
You also have to consider that the Joneses are playing the same game. They go through exactly the same logic. In fact, they might even anticipate that if they purchase a boat, you will purchase one too (or a bigger one) in order to keep up and any benefits of "status" will not materialize. Hence they will probably not buy the boat - unless of course they happen to enjoy going out on the lake in the summer and fishing, which is after all the primary, the overwhelming, if not the only reason people buy freakin' boats.
"People in their 30s haven’t really experienced a significant or long recessionary period," says consumer behaviorist Larry Compeau of Clarkson University. "I am concerned that they won’t be able to respond quickly enough to mitigate what may be the damage ahead. Not only do people under 40 save less, but they have less to save."
The worry is not that we’re saving less, it’s that we’re no longer saving at all.
The personal saving rate in the United States has been declining for years. In the 1970s and early 1980s, it frequently climbed above ten percent. More recently, it has hovered around zero. But the general trend is downward. Americans are not saving.
The financial picture seems bleak. Even the most optimistic believe we’re in for a couple years of rough times financially. The pessimistic are whispering we could be heading for an economic collapse to
rival the Great Depression. In either case, prudence would indicate that it’s time to buckle down.
Now is not the time for $2,500 plasma televisions. Nor is it yet time to store bread in the closet. But it is time to stop spending and to
begin saving. Just like our grandparents did.
Save your Fiat currency the KB Vision Way-Exchange it for Gold and watch it grow !
From KB Gold Partners-Mike Martin
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