Retirement Impossible For Many

Monty Pelerin / Economic Noise

We are now well into the ME and NOW generation. They grew up believing saving was unimportant and debt was a proper way to gain access to the pleasures that they couldn’t afford, didn’t really need but believed they were due.

The insanity of this entitlement mentality wasn’t born in a vacuum. Government encouraged it every step of the way. You see, if you can convince people to spend, the GDP accounting reflects this spending as a boost for the economy. How can the economy be improving if the gains are from consumption financed by debt? All debt does is allow future consumption to occur earlier. Conversely, it means that future consumption will be lower by the amount of the debt service necessary to honor the obligation.

None of this was accidental. Every politician responsible for the economy has an incentive to “juice” the numbers. Modifying the statistical measures used in the calculation is one way to achieve this. By far, however, an easier way is to encourage citizens to use more debt. Lower interest rates below where markets would set them. Then lower the lending standards to qualify for a loan. Set up government agencies to guarantee loans that should not be made. All of these efforts pleased the financial industry and converted much of the population to debt slavery.

Want a new car? No problem, finance it over six or so years.

Want the latest and electronics — a large screen TV, the newest cell phone, etc?  Again, buy the stuff on on credit. No problem.

Credit card line being exceeded. Get another credit card and use it to make payments on the first. Repeat by adding new credit cards whenever necessary.

Want to go to college? That’s free, for a time. Just borrow the money to pay for the overrated experience. It keeps you out of the workforce and provides great opportunity for partying, meeting sex partners, etc. Don’t worry, you know how much more college graduates make.

Haven’t been to Europe yet? What better time to go than when you have no job or other responsibilities. Just borrow the money and go.

This is the environment that government has created for the country. The young don’t understand the implications. The government is no better than the pimp used by a loan shark. Get em’ hooked while they are young and you will have them for life.

We are at least a generation into this foolishness. There are consequences beyond the occasional defaults and bankruptcies declared along the way. Much of society has been corrupted by the belief that debt is normal and necessary to live the good life. Few understand that a good life cannot be borrowed; it must be earned.

continue article at Economic Noise:

http://www.economicnoise.com/2014/02/04/retirement-impossible-many/