Park Avenue, an analysis
This is the video my Cousin sent to me, it is an NPR production of wealth inequality within the US. It made me think about wealth inequality in the world. Here is my analysis of the video, why there is wealth inequality and what can be done to mitigate it.
It is unfortunate that some people are born poor and others rich. Wealth does give some people a massive advantage. However I think it is a lot more complicated then saying greed and big business caused this. As for government regulation helping to prevent or mitigate this depression is largely the opposite of what happened. It highly encouraged this event and instead of backing away they are making things worse. I can break it down like this.
There many aspects to the financial collapse of 08. I cannot address all of them but these are the important parts that lead to it. First, the massive spending by the Federal Reserve that loaned out money to the banks and the government at very low interest rates. This allowed the government to pay for the Iraq and Afghan war. It also pushed for very low interest rates on houses. This meant that banks and people were heavily speculating on housing. Next the government pushed banks to make loans to low income people by backing the loans with the full faith and credit of federal government. This means that people who would never be approved via a normal bank were getting loans. This should never have happened.
But these two parts are just a small parts of the pie. With all of this speculative money entering the markets people make bad decisions. Those bad decisions equated to buying too much house, too much car and too much of everything else. Once the apr jumped it was time to pay the piper. So A massive default happened and many people lost jobs due to these malinvestments.
The government projections grow due to this malinvestment and false prosperity. We now have to pay for more government then we need. It gets worse. The government also promised medicare, Medicaid, social security and obama care to the citizens of the us on top of a massive government. This should be taken out of taxes that the government collects. However the government cannot afford all of its liabilites so it has to borrow a trillion dollars extra a year to pay for these programs. (hence the debt growing a trillion each year)
Also the system at large will not change because the government underwrites mortgages, student loans and medical treatment. This means that the price will never go down. There is no competition in the system and the doctors, pharmacists, unions, teachers, professors have no reason to push for this essential monopoly to be taken apart. They make the money of the status quo.
I could go on but the bottom line is this. The collusion of big business and government drives the economy into the ground. People say that the government should take from these greedy business men and give it to the poor but you cannot just take something from some one without compensation. This compensation is the empowerment of the superwealthy. This is what we have seen in the last 30 years.
Credit cards are generally deemed as the reason why people get into financial issues and looking around there are a lot of them. In 2011 the average US person had 6500 dollars in credit card debt (http://money.cnn.com/2012/01/17/pf/credit_card_debt/index.htm) . This is a huge number, especially considering that there are 300 million persons in the US and 6500 * 300,000,000 = 1,950,000,000,000. That’s almost 2 trillion in debt and that is just credit card debt. Like so many things, don’t be a statistic, pay of debt and put your money into investments that appreciate or retain their value.
There are many ways that people get into trouble with credit cards and many of them are not due to the person being irresponsible its that most people don’t think about the long term of their finances. Most people view credit cards as an extension of their wealth. This is what most people have been told and what many believe. While credit cards and credit in general is an indicator of prosperity they are not the same as being wealthy. For instance a person with no job can have multiple credit cards but they have no money to finance that credit. Unfortunately this cycle continues and the average consumer gets deeper and deeper into debt.
To break the debt and instead focus on savings there are a number of steps that one can take.
– Break the “I want it now” approach. Delayed gratification is the key.
– Don’t pay the minimum. Pay as much as you can.
– Don’t carry the credit card on you. Instead carry cash. (You will know how much you are spending by the decrease of the money in your pocket)
– Credit cards are not additional cash, they are a loan and one that has to be replaced.
These are some of the ways that one should begin to view credit in order to stay out of debt or get out of debt. It is tough going especially when we have been taught our entire lives that credit cards equal money and that if you want it you should buy it. But when you are debt free and saving money you will feel much better about yourself and your future.
We all know that drones can monitor activities on the ground and launch missles. Did you know that they can also monitor traffic?
As we look around we see hundreds of thousands of students in debt. The student debt is almost a trillion dollar. Thats a lot of money. What many people are realizing is that an education may not be worth it.
To me an education is a commodity or a tool. Much like an axe, a car, oil, gold or any other thing that helps you gain money and a living. If it doesn’t help you in your life then you wouldn’t get it.
What it leads me to is this. Where do we go from here? How does one educate oneself and ones children?
libertariandad. Thoughts and musings on fatherhood and libertarianism.
Selling on Craigslist:
(Intergenerational wealth transfer)
There are a number of ways to raise money if you have time and are willing to respond to many emails and willing to chase down a lot of leads that peters out to nothing. This method is using Craigslist,. The basic premise is that you have something of value or utility that people might be interested in obtaining from you. What I tend to do is take photographs of the item and post a detailed description of the item you are selling. Sometimes you want to clarify why you are posting something, such as katana swords. “The swords are not decorative and are not sharp” I guarantee people will come back and ask if the sword is sharp or who made it….China?
There have been many responses written to my posts and so many of them are very tort. Such as will you take 5 dollars for it or a single line of bad grammar, Still got it? Not that I wouldn’t sell these people but seriously it doesn’t take much to write a friendly and courteous line that expresses your interest in a product. I have responded to hundreds of inquiries and then I never hear anything back. I am assuming that they either lost interest or just found something else to satiate them. However in some instances you hear something back pretty soon and people will come by to look at something. This sometimes can be that very day or the weekend. The words “do you want to buy it” should probably not be written in an email. Most people recoil when this is asked.
So they come to your house or you meet them somewhere in public. What ever you do, do not drive out of your way to meet people unless they are willing to compensate you. So, 9 out of 10 times this is a very rapid exchange. People check the merchandise (eye ball it) and then hand you the money. Once this is done then you say thanks and you go about your business.
Craigslist is a handy way of selling some items you may not want or you are not using any more and not want to get rid. But it generally takes a long time to sell them. I have had items on CL for over a year sometime. But it is nice to see when you get that cash. There are other ways to raise money like this, those are have a yard sale and the ever elusive EBAY/AMAZON.
On a side note, one of the best pieces of advice I can give you is to post items Thursday evening because on Friday people will check Craigslist and plan for the weekend accordingly.
After i had my first child i had to think long and hard about my world view and the way i wanted to raise my children. I wanted to start a blog discussing this and discussing libertarianism.
libertariandad. Thoughts and musings on fatherhood and libertarianism.