Trying to raise my kids the best I can

Saturday, November 01, 2008

Have you seen this movie?

Have you seen the Jim Carey version of the movie: Fun with Dick and Jane? It's a great movie. Really funny. And in my opinion it's a great demonstration of the economic mess we're in. It shows how we American's look like we're doing OK, but really our economy is a breath away from a great depression, because our economy is based on credit!! Our gross national product used to be based on things we made with our hands or services we provided. But over the past decade our gross national product has shifted to a CONSUMER basis.

"consumption ran about 63% or 64% of gross domestic product in the 1960s, but last year hit 72% of GDP. At the same time, savings have dropped from 8% to 10% of GDP to 0% today. That, in turn, has led to total debt in the economy jumping from less than 50% of GDP in the 1960s to 110% today.

This cannot go on forever. Watch this movie. Have a laugh and learn something at the same time. The movie is based on an Enron type collapse, but it's also a good representation of how our entire economy is based on credit. Credit is not real money. Some consumption is necessary for a healthy Gross Domestic Product. But that balance has been thrown waaaay off.

So. Yeah. That's my doom and gloom economic beliefs again, in a nutshell. My advice for dealing with this coming recession/depression, once again is to: not buy real estate. (Or sell what you have). It is still FAR, FAR, overvalued. Invest in tangible items like gold, useful things like cars and intangibles like talents, education, children, health. Don't invest in your credit score: which won't be worth your effort as the banks realize that the economy cannot run on credit the way it has in the past.

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