“Elementary, my dear Watson.” The Adventures of Sherlock Holmes, 1939
Peter Bernstein is one of the elder statesmen in the world of economic thought. At age 87, his expectations and thoughts about the future have been accurate for decades. It is rewarding to find someone of his stature and experience indirectly endorsing the strategies and practices that are presented in Money for Life…in good times and bad – How to Thrive in the 21st Century. Here’s a brief excerpt form his recent letter to John Mauldin, another analytic economist that hits the nail on the head more often than not. I encourage you to read all of this letter and consider how you are going to manage your money in the future based on the thinking of these informed and insightful comments.
The Shape Of The Future
By Peter L. Bernstein
“The root of today’s problems in the financial markets and in the economy as a whole is the household sector. The point needs no elaboration, but its significance cannot be minimized. As we have argued on more than one occasion, the shrinkage in the personal savings rate is not the result of consumer profligacy, as other commentators persist in describing it. Rather, the savings rate has been suppressed by a slowdown in the growth of household incomes. The shortfall between income and outlay has been met by borrowing, and in particular by borrowing against the family real estate. Now the opportunity to borrow has shrunk dramatically, an outcome that will profoundly change the household’s spending power and spending patterns. But the impact is not just on the household. A slowdown in the growth of consumer spending has ominous implications for the entire global economy – and, along the way, the U. S. federal deficit, soon to be overburdened by spiraling benefit obligations. This predicament is not a short-run matter, unless home prices abruptly reverse themselves and head back into the stratosphere – which is hardly likely.”
Read – and re-read – the entire letter here –> http://www.investorsinsight.com/otb_va_print.aspx?EditionID=670
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www.TheMoneyForLifeBook.com addresses this issue at its core. It shows you how to thrive while others just survive or worse, descend into the dungeon of debt that never releases its prisoners without first inflicting great pain and leaving deep scars.
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