Monday March 13, 2006

Dear Visitor:

I have many things I have been wanting to write about since my last letter in January. However, I have not known how to write them. I try to write informative, thought provoking things. However, I try to avoid being overly negative. There is more than enough gloom-and-doom in this world. We need more solutions, more alternatives, more help.

Today, I have been thinking about a few things. However, they may sound like doom-and-gloom. I am not sure they are. If they are, there are still answers and they are simple. I hope people will see the answers and avoid the woe is me or woe is us.

According to a text I read a few years ago, the savings rate in this country has been negative for years. Meaning, more people owe more money then people have in savings, etc. This is dangerous. As this economic text pointed out this leads to slower R&D and investment in business, which leads to our economy being more dependent on foreigners, both to provide such money but also to provide products we cannot. This is bad, however the situation is worse.

This year, the rate of negative savings grew. Here is why this is bad. Our economy has grown rapidly due to people buying on credit. Tomorrow when some of them lose their jobs (due to the lack of development of competitive products, natural disasters, terrorism or natural business cycles) much of what they have will be on borrowed money. They have no savings to fall back on. They lose everything.

Now, other than "Black Monday," the U.S.A. has been able to avoid anything like the depression (and its effects) since the 1940's. This is great. However, over the many centuries we have in written history, they are full of such things. Based on the fact our economy is based almost ENTIRELY on borrowed money and the fact that we cannot avoid a deep recession or total depression indefinitely, what is going to happen? How will we recover based on the fact "nobody" really owns anything? Will we ever get back to being a leading country (economically or otherwise)? I do not have answers, other than I believe it will be bad.

The leaders of the LDS Church have long taught the members of that church to avoid debt and to pay it down. Regrettably, I am not sure the large majority have listened. This is the advice I wish to give. Get out of debt. Get your own place, pay it off. Stop wasting money, if you can, on rent. However, buy a modest home you can afford to pay off quickly. Stop wasting so much money on non-essentials and start saving it, paying off all debt, and getting a place of your own. Do not buy into the reverse mortgages, re-fi to pay for this-that-or-the-other less important things. Also, please do not believe that a car is an investment. Sure, you spend money. Sure it helps you out. However, unlike some other things (such as houses), it loses value every second. Just driving a car off the lot and turning around and coming back causes it to lose a tremendous amount of value.

Please, get out of debt. Stop borrowing. Our economy depends on this being done carefully, but it must be done!

Sincerely, Trever Adams