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The Suddenly Poor Life: Millions Will Lose Their Pensions

Discussion in 'Coffee Shack (Daily News/Economy)' started by Goldhedge, Mar 4, 2016.



  1. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    The Suddenly Poor Life: Millions Will Lose Their Pensions
    March 3, 2016 • From theTrumpet.com

    The collapse of the Central States Pension Fund is part of a dangerous trend.

    Four hundred thousand Americans just found out they are not going to get the pensions they were promised. It is part of a trend sweeping the nation—it’s called the suddenly poor life.

    The Central States Pension Fund told its members on February 16 that they needed to take a massive cut in benefits—or the fund would be completely empty in 10 years.

    Members face a 40 to 61 percent cut in benefits depending on age, what company they worked for, and various other factors. The average loss appears to be approximately $1,400 per month.

    This is the best-case scenario.

    If the pension plan goes bankrupt and falls back on the government-backed Pension Benefit Guarantee Corp., people will get even less.

    The result is that many retired people are back out looking for jobs—not to support their lifestyles but themselves.

    “What’s happening to us is a microcosm of what’s going to happen to the rest of the pensions in the United States,” said Jay Perry, a longtime Teamsters member.

    Perry is probably correct. Public-sector pension funds are grossly underfunded all across America.

    Tens of millions of Americans are not going to get the benefits they are planning on! This is an underappreciated trend that will have a profound effect on America’s economy.

    Consider this: In Chicago, a recent report found that the city’s unfunded pension liabilities totaled 10 times the entire city’s revenues. According to analysts, this means that the city will soon be paying 50 percent of its revenue just to cover pension costs.

    New York City now spends more money paying pensions to retired police officers than it does to active ones.

    Philadelphia, Boston, Houston, New York—virtually every major city in America—face the same pension crisis.

    States are as well. Illinois’s pension burden has brought the state to its knees financially speaking. Ninety-three percent of the state’s retirement systems are underfunded, according to Wilshire Consulting’s 2015 report. The state spends almost a quarter of all its revenues just on pensions.

    In California, unfunded liabilities are so huge that it is projected that taxpayers will have to foot an annual $28.3 billion tax increase for the next 30 years to pay for promised benefits, according to Wayne Winegarden, senior fellow in business and economics at the Pacific Research Institute. According to Steve Greenhut, “California faces death by pensions.” David Crane, former chief pension adviser to Gov. Arnold Schwarzenegger, said the only way California’s pension plans won’t go bust is if the Dow Jones Industrial Average soars to 28 million by 2099. The Dow currently sits at around 16,800.

    According to State Budget Solutions, California has unfunded pension liabilities of $640 billion, Illinois $287 billion, Ohio $287 billion, New York $260 billion, and Texas $244 billion. But virtually every state in the union has underfunded pensions.

    Add it all up and states owe $4.1 trillion to their pension plans. This is money that needs to be in plans today—earning interest and compounding—to pay for promises.

    Puerto Rico announced late last year that its government pension fund will be empty in five years or less—and it has no money to shore it up since the island is bankrupt. Around 119,000 people currently pay into that fund.

    What is left of private-sector pensions is just as bad. General Motors said on February 25 that it will sell 20- and 30-year bonds in order to meet its pension obligations.

    Think about that! America’s biggest car company is borrowing money—not to invest—not to develop new products—not to build more cars—but to pay pensions. And this is at a time when GM is selling record numbers of vehicles! Every financial planner in the world will warn you never to borrow money to “invest” in the stock market. But thus is the desperation of General Motors. The city of Chicago did the same not long ago.

    Of course the biggest broken retirement funds are at the federal level. Social Security, Medicare and Medicaid liabilities range from $55 trillion to $222 trilliondepending on whom you ask. Don’t blame Obamacare though. It only added $17 trillion to the hole.

    But here is the scary thing no one is talking about. Even ignoring the massive, unpayable federal liabilities, tens of millions of unsuspecting Americans are headed for the suddenly poor life.

    And don’t think the Pension Benefit Guarantee Corp. (PBGC) has your back. As of 2015, the fund had $88 billion in assets and $164 billion in obligations. If just the Central States Pension Fund mentioned at the top of the article decided to continue paying out its money till it was gone and then declare bankruptcy—it would completely wipe out the Guarantee Corp.

    In 2014, the PBGC estimated that it would be completely out of money by 2022 and it had a 50 percent chance of collapsing within the next eight years.

    Yet the PBGC is supposed to cover the pensions of 40 million Americans in the event of failure. In other words, the insurance plan for grossly underfunded pensions is grossly underfunded.

    What will become of those who depend upon their benefits to survive? “You know anybody hiring a 73-year-old mechanic?” Central States Pension Fund member Rod Heelan was quoted by the Kansas City Star. “I’m available.”

    When asked how he would cope, Gary Meyer summed up what will soon face many of America’s SUDDENLY POOR: “I guess food stamps,” he said. “I hope not.” ▪

    https://www.thetrumpet.com/article/...y-poor-life-millions-will-lose-their-pensions
     
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  2. Joe King

    Joe King Gold Member Gold Chaser

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    Pensions should not exist. Or even be illegal perhaps? It seems they are more often used as pie-in-the-sky promises in order to get people to agree to work now for a bit less than they would otherwise want.

    Instead of pensions, just pay people more $ now with the understanding that the extra is what would have been invested in their pension funds and that they are responsible for investing it themselves.
    Too often we hear of underfunded and mismanaged pensions. Just get rid of 'em all.
     
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  3. Alric

    Alric Midas Member Midas Member

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    To be fair, it sounds like most places did get rid of them. The issue is what do you do with all the people who are already retired and living off them, and was promised them 30-40 years ago?
     
  4. Joe King

    Joe King Gold Member Gold Chaser

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    Oh? What about public employee pensions? They're bigger than ever.

    Not much you can do about that now. I just never understood how people went for 'em in the first place. I remember many years ago wondering how companies like GM would be able to afford paying people to work while having to pay for all still living past employees to not work.
    Come to find out, they couldn't. Just like so many other companies and their pensions. At some point it just costs more than can be afforded....but they sure did get the work out of 'em.

    Actually, perhaps it's smart on the employers part because they can promise more than they have to pay for the work they get and when it comes time to pay the piper, just declare BK and wash hands of past commitments.
     
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  5. Alric

    Alric Midas Member Midas Member

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    Yeah but pensions used to be the go to thing for all companies. What private companies still offer pensions like that though? Very few. It seems like the only people that still use them is the government, because it is slow to change with the times(Like with the VA still using paper records for everything until like two years ago when they finally started switching to computers).

    I am pretty sure they knew the pensions were never going to work. They were probably just greedy and thought they could make more money and worry about it later(or retire and let someone else worry about it).
     
  6. the_shootist

    the_shootist The war is here on our doorstep! Midas Member Site Supporter ++

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    They won't soon enough....next stop....new EBT cards for all of them
     
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  7. Ensoniq

    Ensoniq Non-Black Member Midas Member Site Supporter ++

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    There's criminality or at least lack of fiduciary performance here

    For years the managers use unrealistic growth growth rates to underfund required contributions.

    Eventually math always wins

    Personally, I wouldn't rely on anything that wasn't under my direct control. For young people currently making the decision where to work, please don't consider the pension to be of any value - it's just maybe extra gravy if you ever get it.
     
  8. the_shootist

    the_shootist The war is here on our doorstep! Midas Member Site Supporter ++

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    If you don't hold it you don't own it!
     
  9. brosil

    brosil Gold Member Gold Chaser Site Supporter

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    Pensions came out of the competition for labor in WW2, if I remember aright. The .gov froze wages to try to stop companies raiding each other for skilled workers so the companies had to come up with another way.
     
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  10. Brio

    Brio Midas Member Midas Member

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    Oy. That really illustrates the fustercluck.
    I work with a fellow who is a salaried employee, I make about 25% more than him, he gets a pension. I'm a contractor. I stack and he relies on a promise.
     
  11. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    Yes, and then I can add it to my negative interest savings account for safe keeping.
     
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  12. edsl48

    edsl48 Silver Member Silver Miner

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    The Central States Pension was a union plan funded by employers based upon the terms of the Central States Master Freight Agreement. The rank and file elected the ones that managed these plans. So now we are faced with a union plan that was mismanaged and now we, the taxpayers, are supposed to bail the plan participants out. Being self employed I have to fund my own retirement.
    Most of us did not make, on an annual basis, what many full time union Teamsters made. Since, one way or another, there are transportation costs in everything I am sure that we all did our fair share of supporting the wages, as well as pension demands, made by these union drivers. Now, being the union plan was mismanaged, once again we are being asked to contribute even more to the mismanaged plan.
    Once again we see the angry finger pointing blame game being played by the rank and file Teamsters trying to shed any blame of involvement by themselves in this matter claiming that the public owes them a retirement. Their choices led to this dilemma and we have paid enough. It is time once and for all that people should have to live with their bad decisions instead of expecting others to pay for them.
    To my neighbor, who has told me he will get 1500.00 per month instead of the 3000.00 per month he gets now in addition to his 1900.00 of Social Security benefits, I say perhaps you might have to wait a bit longer for your next new pick up truck or the latest fishing reel. My business needs a new truck and what are you going to do to help me pay for one?
     
    Last edited: Mar 5, 2016
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  13. southfork

    southfork Mother Lode Found Mother Lode

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    Lets not forget many people have pensions they have paid into. All were not supposed freebies from the companies, everyone paid into ss and the government looted it, I myself paid into railroad retirement for many years at more than twice the rate people paid into ss, the government tried for many years to merge rr and ss to plunder the rr monies and it never past muster, thankfully for me. My goal is to collect 10x minimum what I paid into it before I pass on. I also paid into ss for over 20 years and cant collect that because they changed the rules on collecting both so really im getting fcked also..
     
  14. Aurumag

    Aurumag Dimly lit. Highly reflective Midas Member Site Supporter

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    The public employee pension funds will be ok, but at the expense of everyone else who does not work for .gov

    The National Mortgage Settlement negotiated by state AG's succeeded in maintaining the status quo for all of those .gov employees by covering up their gross exposure of government employee pension funds to Mortgage Backed Securities.

    We are in virgin territory now, still receiving bandaids for that massive, sucking chest-wound, and destined for a global, digital currency which can be micro-controlled in order to further control the masses, and further benefit .gov
     
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  15. Joe King

    Joe King Gold Member Gold Chaser

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    Yea, exactly like people in gov do. Long as the crash happens on the next guys watch, all's good, man!
     
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  16. Joe King

    Joe King Gold Member Gold Chaser

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    The lesson in all this everyone should get, is that NO ONE will look after your $ like YOU would. So why do so many keep giving it to vultures?
     
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  17. Brio

    Brio Midas Member Midas Member

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    Just got off the phone with my Mom, a die hard Socialist. She's worked awful hard all her life, but never did the math. She told me she paid $690 into her pension every month she was working. I said "No Mom, that was income tax, your CPP was capped at $1600/year. Now you extract CPP at $1600/month." She says she worked 40 years, I said no, you worked 28 at a job. So in less than 3 years of retirement she has extracted all her contributions to retiring. She got a little pissy, said she'd do the math to see what a burden she is now. That isn't what I was saying at all, I was only saying the system doesn't work.
     
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  18. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    The sad thing is you can't make people understand the math. It's not if the pensions go bust, it's when.
     
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  19. xhomerx10

    xhomerx10 Silver Member Silver Miner Site Supporter

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    You should get your facts straight before chastising your mother. First of all, CPP (or QPP) is mandatory - so there is no need for mother to "do the math" since she's in by default. Secondly, the maximum CPP payable at 65 years of age in 2016 is $1092.50 per month and the maximum CPP contribution in 2015 was $2,479.95. You don't necessarily qualify for the maximum payable after only 28 years of contributions though there is a drop-out period for child-rearing as well as a general drop out period for which all are eligible. The plan was projected to be viable and self-sustain for a projected 75 years (in 2007) - the system works. Now call your mother and apologize and while you're at it, thank her for raising such a competent and capable woman.
     
  20. Alric

    Alric Midas Member Midas Member

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    Pensions system work perfectly fine, with two extremely important caveats. 1. You can't steal money out of the fund. 2. You can't assume guaranteed growth at a fix rate.

    Which is exactly the problem they all get into.
     
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  21. Joe King

    Joe King Gold Member Gold Chaser

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    So then in other words, if that is exactly the problem they all get in to, pension systems DON'T work perfectly fine and are ultimately just another way to extract more work for less pay.

    If they just gave the people more $ at the time the work was done, it would be impossible for them to be underfunded as the people working would see the extra $ in every check.
    If it's up to the company or gov to fund the pensions, they get to say they are funding it even if they really aren't.
     
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  22. Joe King

    Joe King Gold Member Gold Chaser

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    No, you invest it instead. A bank account is not an investment.
     
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  23. latemetal

    latemetal Platinum Bling Platinum Bling

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    When the Bankers rip off the Vets and Fed workers expect things to come undone...
     
  24. SilverBuyer

    SilverBuyer Silver Member Silver Miner

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    I agree that any semi-competent person will do a better job looking after their money. Of course there is a large percentage of the population who will piss away their money on the most ridiculous things. It doesn't matter if they make $600 a week or $2,000, by the time the next pay check rolls around they are broke.
     
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  25. Joe King

    Joe King Gold Member Gold Chaser

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    In life, some people have to learn everything the hard way. Oh well.
     
  26. GOLD DUCK

    GOLD DUCK Mother Lode Found Mother Lode

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    QWAK,For the last 50+ years the people in the USA have been living beyond there means:finished 2: --- little by little that became the accepted norm but like all illusions and delusions REALITY has a way of forcing us to pay the piper and that time has come!:thumbs down:

    the DUCK :winks2:
     
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  27. FunnyMoney

    FunnyMoney Silver Member Silver Miner

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    Not so. People always live beyond their means, that's been going on for centuries. The problem this time is not people wanting to have 2 cars or 2 TVs. The problem is that their wages, their wealth, their taxes and their liberty has been stolen from them.

    Ron Paul explained very well how these above thefts work and how gigantic these thefts have been and currently still are. I'm surprised you didn't follow along with those explanations of our current economic/financial structures.
     
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  28. Alric

    Alric Midas Member Midas Member

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    I am all for just giving people more money each paycheck. Sadly, there is a lot of schemes and people are always trying to manipulate the money. Very often as ways to trying to avoid taxes. Some times even the employees are in favor of these things.
     
  29. Hystckndle

    Hystckndle Daguerreotype Fanatic Site Mgr Site Supporter ++

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    10 4 ,
    Like 8 % steady growth....jive like that...not possible.
    Math always wins !!!
     
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  30. Joe King

    Joe King Gold Member Gold Chaser

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    Everyone should be in favor of avoiding taxes. It's evasion that gets one in trouble.
    Avoiding means to legally reduce and or eliminate ones taxes.
    Evasion is when you are liable but just don't want to pay.
     
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  31. GOLD DUCK

    GOLD DUCK Mother Lode Found Mother Lode

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    QWAK,FunnyMoney,You got it wrong --- people have always wanted to live beyond there means BUT reality limited the damage they could do.

    The bankers made it possable and easy especialy once credit cards became the accepted norm and then the bankers and corrupted government officials took away GOLD then also SILVER as the safety limiting factors.

    The boiler is now about to blow because all the safety factors have been removed from the equasion GLOBALY. :bombs 8::blew up:

    the DUCK :winks2:
     
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  32. 90%RealMoney

    90%RealMoney Midas Member Midas Member

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    Just imagine what happens when the stock market stops going up, and the smoke and mirrors don't work anymore! The cracks in the system are already appearing, even with a somewhat positive stock market. At least, that's how it appears. Who actually believes the unemployment rate is 4.9%?
     
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  33. FunnyMoney

    FunnyMoney Silver Member Silver Miner

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    Actually, I don't have it wrong. Let me ask you this? Do you admit that the US dollar today is only valued at about 2 or 3 cents compared to the value it had in 1913? If you agree, then let me ask you if you know what happened to other 98 cents on each dollar, what happened to that wealth? Where did it go?

    And that is just one of the thefts, the rabbit hole goes miles and miles beyond just that. If you were to make a list of all the thefts, each one going into the billions and billions of dollars, the list would be pages long.

    Most people don't understand math or economics, it's a good thing they don't, because if they did there would be revolution tomorrow.
     
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  34. GOLD DUCK

    GOLD DUCK Mother Lode Found Mother Lode

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    QWAK,FunnyMoney,I know that since 1913 the bankers have been striping away the buying power of the US DOLLAR and that back in the 60s and 70s forced all of the western world to go along with the fraud.

    We are in the end game now --- all the scams and frauds are being exposed ---- the system can not be saved :thumbs down: but as indiviguals we each can minimize the impact by getting out of the system as much as posable and becoming more independent of the system --- all systems actualy because they have all over time become corrupted.:thumbs down:

    Some times the forest needs to burn down ---- this is one of them times! :(

    the DUCK :winks2:
     
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  35. southfork

    southfork Mother Lode Found Mother Lode

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    So in the past few weeks we have ups and the teamsters central pension fund going belly up and now General Motors joins them after stealing all that stock from taxpayers they are going insolvent again.

    GM to Issue Debt to Shore Up U.S. Hourly Pension Plan
    David Welch
    February 18, 2016 — 10:17 AM EST Updated on February 18, 2016 — 5:12 PM EST
    Share on FacebookShare on TwitterShare on WhatsApp



    General Motors Co. said it will issue $2 billion in new debt to help shore up its pension plan for U.S. hourly workers.

    The senior unsecured debt includes $1.25 billion of 6.6 percent notes due in 2036 and $750 million of 6.75 percent notes due in 2046, GM said in a statement Thursday. Goldman Sachs, Citigroup and Bank of America’s Merrill Lynch are managing the offering, the automaker said.

    Standard & Poor’s and Fitch Ratings earlier in the day said they would rate the notes BBB-, their lowest investment grades. Moody’s put the debt at Ba1, one step below investment grade.


    GM said it its annual regulatory filing earlier this month that it expected to make a $2 billion discretionary contribution, funded by debt, to the U.S. hourly plan by the middle of this year. The automaker, which also has a plan for its U.S. salaried employees, said in the annual report that its U.S. pension obligations at the end of 2015 totaled $71.5 billion and were underfunded by $10.4 billion. GM’s global pension obligations were about $95 billion, with a shortfall of $21 billion.

    The money raised through the debt offering will help GM boost the total value of assets in the hourly fund. The Detroit-based company expected to achieve a return of 6.4 percent on its pension plan assets and achieved about 1 percent last year and 12 percent in 2014, said spokesman Tom Henderson. The Dow Jones Industrial Average was down 2.2 percent last year, according to Bloomberg data.
     
  36. Aurumag

    Aurumag Dimly lit. Highly reflective Midas Member Site Supporter

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    I know where at least part of it went:

    It was used to incrementally fund the ESF in order to greatly ease the monetary manipulation process.
     
  37. Unca Walt

    Unca Walt Midas Member Midas Member

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    The above is correct, but it misses a huge piece of the puzzle:

    I've seen the unbelievably CRITICAL societal change in person. This change is what Duck was talking about.

    When I was a kid in the 1940's, if my father wanted to buy something (anything at all), he saved up the money until he had enough.

    NO STORE ANYWHERE dealt in anything but cash... except in one area: Many stores had something called "Layaway". If you wanted an item (say, a $20 double-barrel 12Ga goose gun) you put down about two dollars, and the storekeeper put the gun in the back. You added a buck a week until you had given the storekeeper his $20... and he handed you the gun.

    I remember the very, very first credit cards. They were paper.

    And they were the fuse to the atomic bomb of debt. Now people all prided themselves of the new stuff they could "buy" with their "revolving charge account".

    Next to the usury prior to the credit card tsumani... piffle, the mere framework, the ground floor layout for the Empire State Building of debt.
     
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  38. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    Invest it? If you mean in the stock market? I already took a shellacking doing that.
    If you mean PMs? I did that years ago and still waiting.
    If you mean for me to invest in myself? I did that, started my own business, and now I am at least breaking even and even have some left over for a small vacation, but no savings to speak of, cause that is what goes into PMs.
     
  39. GOLD DUCK

    GOLD DUCK Mother Lode Found Mother Lode

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    QWAK,Unca Walt,There is an old saying you almost never hear any more and it is also linked to that shot gun ---- owning it "Lock STOCK and Barrel" because people bought with cash as they could or saved up until they could!:thumbs up 2:

    I believe we are going there agen because CREDIT will be gone!:thumbs down:

    the DUCK :winks2:
     
  40. 90%RealMoney

    90%RealMoney Midas Member Midas Member

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    Spot on Unca. I remember my childhood in the 60's and '70's. No one had new cars, and if one of your neighbors got one, EVERY other neighbor came over to "ooh" and "aah" the new purchase. Everything looked old back then. The arrival of credit, and credit cards changed everything. Now, buying or leasing a new car is like getting a coffee at Starbucks, which is another phenomenon in itself! People spend a car payment every month at that place! Credit is a good thing if you are running a business, but it is being used to fund people's daily lifestyle wants now.
     
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