Personal Finance Meltdown Makeover - Take the Long View Americans on Main
Street have been urgently requested to take the plunge with Treasury Secretary Paulson and Ben Bernanke to bailout Wall Street's bad debt to the tune of $700 billion and counting. We have been told that this must happen in order to not only stabilize Wall Street but the economic system itself. Or else! As of this writing 9/29/08, the House has just voted to reject the bailout. If a bailout bill does eventually get passed, it won't be a magic bullet and we as a nation will continue to flounder in uncharted economic waters. But perhaps more importantly, millions struggle to maintain their equilibrium when it comes to household finance. Personal finance gurus have taken front and center, weighing-in on the news and talk shows. They beat the drum of "whatever you do, don't liquidate" and please, stay calm. Stay calm? My concern is what the personal finance gurus are not telling Americans. Their advice to John and Joan Q. Public as regards the best approach to decision-making in light of the current financial meltdown is flawed. Why? Their solutions do not reflect the-elephant-in-the-living -room-root cause. Instead, we are told the financial crisis is due to the sub-prime mortgage collapse, mortgage defaults and the subsequent downturn in housing prices nationwide. Yawn. The Emperor's New Clothes It's the mainstream media that has served up this convenient cover story. As in the Hans Christian Anderson tale of The Emperor's New Clothes, though the king is most certainly naked as he parades down the street, virtually all the spectators of the royal parade see the king as he himself wants to be seen; wearing magnificent robes. Only when a child in the crowd proclaims the king's nakedness is the mass delusion of the townspeople shattered. Thanks to the Internet, the "children" with eyes to see and ears to hear the truth about money are growing in number. As a result, many cracks exist in the official story line about why we are in the financial mess we're in and what we must do to get out of it. There's much more to know. The real root cause goes back to the time of widespread understanding of how interest-based money lending, also known as usury, corrupted the fabric of relationships and of society. In modern times, usury has come to be considered business as usual via a global network of central banks. Almost no one today gives it a second thought. The central-banking system is global and was carefully designed to be a debt-based in nature: Money is issued into existence at the time it is loaned at interest. Interest that compounds over time becomes both revenue for the system's shareholders and inflation in the cost of living for you and me when debt service gets added to the cost of goods and services. To most people's amazement, The Federal Reserve, the U.S. central bank, is not actually even part of the government but a private for-profit corporation with shareholders. However, as in The Emperor's New Clothes, don't expect TIME magazine to run a cover story on this any time soon. The System of Money My association in the 1980's with R. Buckminster (Bucky) Fuller led me to understand the wisdom of the saying "the whole is greater than the sum of its parts". Money is but a part of a monetary (central banking) system in the same way the earth is but one aspect of the solar system. It's impossible to fully understand earth as a planet without understanding the system that contains it. A more complete picture of money comes into view with the big picture of the monetary system. As we were changed forever when we saw the whole earth from space for the first time, getting the big picture of the monetary system changes the way we think about money. A comprehensive view would put an entirely different spin on the Paulson Plan for a mega-bailout. A comprehensive overview would tell us that going $700+ billion more into national debt in a debt-based system will only delay the inevitable bottoming out of an already heavily indebted system. Such an injection of capital would be much like giving a heroin addict a larger injection to continue to be able to experience their high. It's really no different. The monetary system by design needs larger and larger sums of credit (digital money) to pay down debt and access working capital. It's an insatiable beast needing more and more new credit to keep the wheels turning. As a result, I humbly submit that what we have is a completely unsustainable monetary system. For international, national and personal financial solutions to be more than Band-Aid measures as a mega-bailout is certain to be, the entire system must be reformed via a total-systemic makeover. As Bucky taught, systems ultimately shape and determine the possibilities of their moving parts. You're on Your Own Until national leaders make monetary reform a top policy priority, everyday Americans are on their own to find the best ways to navigate their personal finance concerns. Each of us is affected by the mechanics of a debt-based monetary system by way of lost purchasing power. What's more, government purchases of Wall Street's "toxic assets" will only accelerate this ongoing process. Yet almost no financial advisors will tell you. Actually, it comes as no real surprise since the professional training of most licensed financial advisors never covers central banking 101 and its personal implications. Advice devoid of understanding the personal impact of the monetary system is short-sighted at best. The Long View Like nuclear waste to waste dumps, hundreds of billions of dollars of additional debt due to the purchase of "toxic assets" will have to go somewhere. That somewhere, after the liquidity injection-high wears off yet again, will be directly out of our pockets as lost purchasing power and tax increases. Job-outsourcing, bankruptcies, foreclosures and debt have meant millions of Americans have traded peace of mind for chronic stress. Enough is enough! Individuals, families and communities stand to gain from (hopefully) an eventual monetary reform but need real answers right away. Over 25 years of independent research, study and working one-on-one with individuals and families have led me to the following conclusions as regards a long-term approach to personal financial well-being especially while living with the risks inherent to a debt-based system. The traditional approach to personal finance tends to destabilize lives by use of its main strategy; the repeated leverage of credit and debt. The following recommendations empower people to stabilize their financial lives long term. Time is of the essence, however. The erosion of purchasing power accelerates over time and dramatically so when billions and trillions are injected into the system all at once. So the sooner corrective action can be taken by individuals and families, the more options they may have for creating a sustainable financial situation. Here is the formula I recommend: First and of utmost importance: Get the whole story about money. There are many resources, for example, watch (Google) the short and amusing animated documentary Money as Debt by Canadian Paul Grignon. By becoming fully informed, you are more likely to empower yourself by taking necessary action steps. Get out of debt. Mortgage debt is still debt. Track your monthly money-in and money-out. Do whatever it takes to have more money coming in to your household than going out. You must be willing to change your lifestyle if need be. This is a goal that generates a process. Once you have more money coming in than going out, strive to live below your means. Create a cash-flow engine that will drive your finances to keep you ahead of the increasing cost of living going forward so you will not have to revert back to credit use. It's important to keep in mind what goods and services people will be willing to pay for in both good times and bad. This also applies to people on fixed incomes who are likely to need more money-in (than they thought they would) to keep up. Become a member of an alternative currency exchange system such as Fourth Corner Exchange to access a second-tier economy. If there is not a system in your community, create one. Once you have changed your mindset about money, are debt free and practicing the above, you will be out of the matrix once and for all. It's an opportunity to re-build a quality life on your terms, long-term!
