Musicmystery
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Joined: 3/14/2005
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Save. It's harder than ever to do, but it's the only way to build wealth. Then reinvest. Americans have a NEGATIVE savings rate (i.e., the average American lives on credit), and in a downturn, that can cause trouble (it's what happened to the failed banks recently). Forget about the get rich quick books--those people make their money selling you books.
And diversify those savings (when they're large even to do that). Don't chase the largest return all the time--it has the highest risk. And think long term. For example, I'm continuing to add stock fund dollars to my retirement account, because stock is cheap, and over 15 years will likely rise again. When it does, I'll probably shift a good amount into bond fonds, rather than counting on it always going up as I near or enter retirement age.
The dollar won't go to zero. The U.S. is asset rich. The shrinking dollar WILL mean that important goods (and most of what you buy is imported) will be more expensive. So try to budget instead of living hand to mouth. Forego unneeded expenses. And when the news talks about the trade deficit, pay attention---these things DO matter to the average Joe.
We do have a credit crunch, and that will slow growth, business investment--and tax revenue. The Fed wants to keep credit liquid to afford a serious recession. The Bush plan, though, tries to go too far too fast. Lenders still exist. Those assets are still real. That capital still needs to be invested somewhere (given the lost opportunity cost of letting it sit), so there's got to be a better way to grease the wheels than this extreme measure, and the House was right to put on the brakes. That credit will come with tighter restrictions and controls---but it should, as much of this credit crisis involves loans that never should have been granted (along with reckless investment in loan derivatives).
From here, we'll see what they propose next.
Tim
< Message edited by Musicmystery -- 9/28/2008 7:15:26 AM >
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the 70s or something different ~ - 
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RE: the 70s or something different ~ - 
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