Tuesday, August 18, 2015

Do Not Take On Debt

Here is an article which highlights various economic debates, and one point:
Alan Greenspan said Monday that weak productivity is the most serious problem that confronts the U.S.
I disagree. The most serious problem clearly is a debt overload everywhere one looks (students, households, subprime auto loans, corporations doing into debt to buy back their own shares, etc.)
For that blame the Fed. One can also blame the Fed for its loosey-goosey monetary policy and nonsensical 2% inflation target.
That education loan is unbankruptable, and any work you are likely to get is not going to leave much for you to enjoy after taxes, etc.  Rents are terribly high, then ther eis the car to get to work, I think the argument is right both ways:  How does a retail clerk "work harder"?  How does someone witha  good job save anything?

It seems a point being missed is with debt, working harder or more gets you nothing, since it goes to the debt.  If you are an Uber qualified driver, you can walk onto an auto lot and get any car 4 years old or newer (remote controllable) on your signature.  The personal  "adjustment" is in the interest rate.   But once you have the car, and then where are you?  Working to death to make the payments and interest, mulcted weekly.  Miss a payment and that tow truck following you is radioing in your location so it can be repo'd and back on the lot before the negine cools if you get behind.

One way to navigate this is to simply refuse to take any and all credit.  Outside of the hegemon's world, the set of options is still very wide, but certainly counter cultural.

If you spent a bundle on a AA or BA degree and cannot find work, Tacoma Public Schools is desperate for substitute teachers. Say you have a BA, the pay is $140 a day, and you need no credential.  (I takes a bit for the background check, etc.)  You can work everyday. $140 a day is not much, but Tacoma is cheap, and a bus ride to Seattle.  And you have a way to make money while you develop your business.

Because self-employment is the only place to be the next 40 years, while the "stakeholders" fight over the trace resources that support our nominal economy.

Feel free to forward this by email to three of your friends.


Anonymous said...

Yes, ultimately self-employment is the key. The ability to increase earnings (self-employment) as opposed to earning wages (being employed) is the best way to build wealth.

John Wiley Spiers said...

How do you define wealth?


Anonymous said...

Wealth could mean building a net worth sufficient to maintain one's needs (medical, dietary, leisure, etc.) on a daily basis from age 65 to death without having to rely on government handouts or loans.

Anonymous said...

"How do you define wealth?"

Wealth = Total amount of $USD in assets and investments (savings, investment accounts, IRA's, 401(k), real estate, etc.) + Affordable and easy access to an ample number and variety of goods and services that improve your standard of living (services like medical care, security, insurance, vacations, and goods like healthy food, appliances, TV's, cell phones, Sony Playstations and xBoxes, etc.).

At least that's what I think of when I think of Total wealth.

John Wiley Spiers said...

Very good... yet other definition, although not unusual. But you see that your definitions are essentially "wealth is accumulation" and in service of staying out of government clutches, a prudent goal. But does not your definition imply you quit working, that is retire, at 65? I wonder why anyone would retire from doing what they love?

I think the right definition of wealth is what range of the population can access the range of goods and services available with their own money. Not just what you get or have, but that to which every one has access... This is optimal in only a free market.


Anonymous said...

I never plan to retire. I plan on being financially independent doing something that I like.

Retirement meaning the intention of not working at all I don't think was ever the usual occurrence through history, unless it was for health reasons. The modern notion of complete retirement and doing nothing for the rest of ones' life like being on one long vacation is a recent notion I believe. In olden times, people would just downsize their work in accordance with what they were physically capable of doing as they aged. So instead doing hard labor like digging ditches or working a plow, they just did something less strenuous like peeling potatoes or maybe knitting. They could always be doing something useful to the farm or household. People also did not live as long and just dropped dead on the job. I also think that this recent notion of complete retirement is a strategy by investment companies to get people to think that they need to amass enormous amounts of retirement money so that they can profit from investing and managing it.