PeakOil is You
No bread on the shelves
Re: No bread on the shelves
by LoneSnark » Mon 07 Jan 2008, 00:42:56
$this->bbcode_second_pass_quote('', ' ')And the one thing that most of them have as an "investment" is their home, and that's been a questionable investment for many of them lately.
Home ownership is setting new highs.
But, I am sorry I am not going to prove something you should be able to reason yourself to. The savings rate has fallen precipitously every since Congress created instruments of tax-avoidance called 401Ks and others which are excluded from savings-rate statistics.
Similarly, retired individuals are dis-saving their bank instruments which did count towards savings-rate statistics. As more and more retire and withdraw their savings the statistic should be negative, that the next generation is building its savings in instruments that do not count towards the statistics should make it even more negative.
Therefore, as the statistic is only slightly negative, we must conclude many workers are failing to take full advantage of tax-avoiding instruments, a failure of education, I suspect.
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LoneSnark - Tar Sands
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Re: No bread on the shelves
by Revi » Mon 07 Jan 2008, 10:02:55
$this->bbcode_second_pass_quote('LoneSnark', '')$this->bbcode_second_pass_quote('', ' ')And the one thing that most of them have as an "investment" is their home, and that's been a questionable investment for many of them lately.
Home ownership is setting new highs.
But, I am sorry I am not going to prove something you should be able to reason yourself to. The savings rate has fallen precipitously every since Congress created instruments of tax-avoidance called 401Ks and others which are excluded from savings-rate statistics.
Similarly, retired individuals are dis-saving their bank instruments which did count towards savings-rate statistics. As more and more retire and withdraw their savings the statistic should be negative, that the next generation is building its savings in instruments that do not count towards the statistics should make it even more negative.
Therefore, as the statistic is only slightly negative, we must conclude many workers are failing to take full advantage of tax-avoiding instruments, a failure of education, I suspect.
I think you are right. You would have to be brain dead to hold much money in a savings account. They are paying like 2% and the inflation rate is around 10% per year, at least. Still, what can you do? I have some in a 403 tsb, and it is not making 10% per year either, so inflation adjusted it is less than when I put it in there. I just hope that there is something there for my retirement. I plan on dieing broke, anyway. I may just have to die earlier!
I do think that there are things that can outpace inflation out there, such as solar stocks, silver and timberland, but most people don't know about them.
Deep in the mud and slime of things, even there, something sings.
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Revi - Light Sweet Crude
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Re: No bread on the shelves
by FoolYap » Tue 08 Jan 2008, 00:47:15
$this->bbcode_second_pass_quote('LoneSnark', '')$this->bbcode_second_pass_quote('', ' ')And the one thing that most of them have as an "investment" is their home, and that's been a questionable investment for many of them lately.
Home ownership is setting new highs.
The two facts are not mutually exclusive, right? Home ownership has been setting new highs because lending standards were relaxed to dangerous new lows, as we're seeing. As this unwinds, many who bought in the "new highs" years are finding their "investment" is not a good one.
In the long-term? Who knows. But since most homeowners in the U.S. live in a house for a fairly short time (under a decade on average IIRC), many who need to sell soon, who bought in the past 4-5 years, will agree with me, not with you.
$this->bbcode_second_pass_quote('LoneSnark', 'B')ut, I am sorry I am not going to prove something you should be able to reason yourself to. The savings rate has fallen precipitously every since Congress created instruments of tax-avoidance called 401Ks and others which are excluded from savings-rate statistics.
A minute of Googling suggests your assertion is dubious. 401(k)s first became a viable program in 1981:
401(k) Plans, History
$this->bbcode_second_pass_quote('', 'T')hen a benefits consultant with the Johnson Cos., Benna came up with his innovative interpretation of the 401(k) provision in 1980 in response to a client's proposal to transfer a cash-bonus plan to a deferred profit-sharing plan. The now-familiar features he sought were an audit-inducing combination then—pretax salary reduction, company matches, and employee contributions. In January 1980, the answer came, according to Benna, literally in response to a prayer. He called his interpretation of the 401(k) rule "Cash-Op," and even tried to patent it, but most clients were wary of the plan, fearing that once the government realized its tax-revenue-reducing implications, legislators would pull the plug on it.
Luckily for Benna and the millions of participants who have made use of his idea, the concept of employee savings was gaining political ascendancy. Ronald Reagan had made personal saving through tax-deferred individual retirement accounts, or IRAs, a component of his first campaign and his presidency. Payroll deductions for IRAs were allowed in 1981 and Benna hoped to extend that feature to his new plan. He convinced his superiors at Johnson Cos. to establish a salary-reducing 401(k) plan even before the Internal Revenue Service (IRS) had finished writing the regulations that would govern it. The IRS surprised many observers when it provisionally approved the plan in spring 1981 and specifically sanctioned Benna's interpretation of the law that fall. The government soon realized the volume of salary reductions it was unable to tax and tried to quash the revolution: the Reagan administration made two attempts to invalidate 401(k)s in 1986, but public outrage prevented their repeal.
401(k)s quickly became a leading factor in the evolving retirement benefits business. Between 1985 and 1994, the value of the 401(k) plans sponsored by the 1,500 large corporations surveyed annually by Greenwich Associates grew from $137 billion to $454.7 billion. The number of employees able to participate in 401 (k) plans rose to more than 48 million by 1991 from only 7 million in 1983, and Benna's prayerful breakthrough earned him the appellation "the grandfather of 401(k)s."
Whereas, we seem to see no real evidence that U.S. savings rates changed until 1994:
What's Behind Low U.S. Savings Rates?
$this->bbcode_second_pass_quote('', 'I')n recent years, the personal saving rate in the United States has fallen sharply, and it is now at a very low level compared either to U.S. historical experience or to the savings behavior of many other industrialized countries. From 1980 through 1994, the U.S. saving rate averaged 8%; thereafter, it fell steeply, and since mid-2000, with allowance made for the tax rebates that boosted household saving in the months of July, August, and September 2001, it has averaged approximately 1%.
But I know many who explicitly say "I'm saving X% of my income in a 401(k)", and X tends to be smallish. Usually, it's whatever the limit is that their employer matches, if there's a match. I also know plenty of people who've taken large loans on their 401(k)s for houses, cars, boats, etc. I even know indirectly a few who took their 401(k)s as cash-outs when they changed jobs, and spent it, tax penalty and all.)
As G W Bush said "bring it on"