Savings are for everybody

Who are people who need to save money and keep their budget in order?

People who don’t earn enough to meet ends? People who were just fired? People who need to save for big items like college, retirement, and purchase of house or a car?

Sure, but there is much more to it. If you believe you don’t need to save than you need to think twice. Here is why.

On October 8, 2008 I have watched Experts Panel on current financial crisis on C-Span. The most eye-opening was a speech presented by Robert H.Dugger.

Rob began his career at the Federal Reserve Board of Governors in the early 1970s — and served as a senior staff member of both the House Financial Services Committee and the Senate Banking Committee in the 1980s. Later he served as Policy Director at the American Bankers Association. For the past fifteen years Rob Dugger has been a managing partner and director of the Washington office of Tudor Investment Corporation, a global asset management company responsible for approximately $18 billion of investor funds.

Per 2007 estimate US have just 15 years to total collapse when Government will have ZERO $$ to spend. A cause for this is increasing costs of the following 4 components (National Debt Interest, Tax expenditures, Medicare and Social Security). Short name of this problem is “Line Crossing Problem”.

I’m sure many of you have heard about unbearable burden of so called entitlements - current Medicare and Social Security structure. Some of you thought about our growing National Debt. But how many of you thought or read about those four components combined?

What would Government do if all Government revenue would be equal to National Debt Interest, Tax expenditures, Medicare and Social Security combined cost? No money would be left for any Government program whether it is defense, justice system, education or whatever else. Of course Government could print-borrow more money but that only would get problem worth for every next month and year.

In a midst of current economic and financial crisis on October 8, 2008 Rob Dugger said that now (on October 8, 2008) an estimate is that we have just 12 years.

I’m writing this blog on January 18, 2009. As you know during last several month Bush Administration have increased our National Debt by trillions $$. In an attempt to dig out of current economic hole a new Obama Administration will continue that course. I don’t have any estimates but we could be sure that now a time to go would be less than 12 years.

A root cause of all those troubles is US “consumption led growth strategy” which began in 1950s. Consumer spending currently accounts for 70 percent of economic output.

Solution is a transformation of our society from consumption (borrowing) society into saving society. That would happen do we want it or not.

Saving would be soon major personal priority and major Administration priority.