An interesting thread & being in Canada the conversation has been a learning experience for me.
I will be 78 come July & have been mortgage free for 36 years with the last house that we presently live in purchased new in 1991. Hence, when I recieved my paycheque I was able to pay myself first instead of a bank. We have no debt whatsoever paying cash for autos, furniture, renovations, etc. We use a credit card as a convience & pay the bill in full monthly.
We did not invest in stocks & bonds. I refused to rely on the stockmarket as to what the quality of my retirement would be. So we did not have fantastic gains of the stock market nor the latest loss of 45% in value since last June. Many seniors in this country are in trouble because of the loss of value in their portfolios. Instead we purchased Bank Guaranteed Investment Certificates which are in turn insured by the Canadian Depositors Insurance Corp.(Crown Corporation).
Granted the growth was low due to low interest rates but steady & in REAL
money....not some pie in the sky value generated by the stock market.
The current economic situation was caused by low interest rates that had no relation to risk or real inflation and it took about 25 years for the piper to arrive at the door & demand to be paid.
If you think your Gov't is quoting real inflation with their very low bank rates think about those things that could be termed cost of living such as housing(rents or ownership) food, transportation, utilities, etc. & if like here in Canada these things have doubled in price over the last ten years, then real inflation has been running at 6% plus per year.
These phoney low interest rates encouraged individuals & corporations to carry ever increasing loads of debt. & with very little Gov't oversight on the Finacial Industry, it ran unchecked....especially in the U.S. & also with many instances of fraud.
While Gov'ts try to shore up banks & industry by pumping HUGE quantities
of funds into the system, I do not see them addressing the cause of the problem with regard to phoney inflation rates to back up low interest rates.
If they continue to refuse to face reality, then we are going to be looking at global depression. And if that happens then Governments will largely become irrelevant.
You think not ??? Are you aware that California, formally known as the richest State in the Union is now bankrupt ? On tax refunds they are sending out I.O.U.'s to people instead of cheques.
Those who think gold is a good investment from a safety point of view....just remember you can't eat gold & it is only worth what someone will pay you. And if you do buy gold make sure you take delivery & not accept a slip of paper that says you own x amount of gold.
Lee
