Wealth Shift: The Decline of Ethics in America
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Chapter 6
Where Do We Go From Here?

People talk all the time about Armageddon. But it’s not the end of the world that has people so concerned – it’s the end of the world as we know it. I, personally, am not willing to make any sort of dire prediction about what kind of mess we’re currently in -a recession, another depression, or the complete and total meltdown of America, but I am certainly willing to acknowledge that, if we don’t mend our Wealth Shifting ways, that worst-case scenario is, at the very least, a possibility.

Under the worst-case scenario, the sub-prime hit our economy has already taken will be minor compared to the hit it will take if we move on to massive commercial real estate, credit card/consumer debt, and even National debt default. We are so very, very close right now that only a financial ostrich would be willing to bury his head in the sand and say it can’t (or won’t) happen. Here’s why it could:

When consumers can’t make ends meet, they change their spending habits. Where they once bought all sorts of things they don’t really need, “belt tightening” puts a stop this kind of consumer spending, which in turn causes revenue problems for companies. The companies then have no choice but to lay some people off, which further squeezes the pocketbook. This downward cycle feeds on itself like a self-fulfilling prophecy, which is why the Federal Reserve watches things like job growth and the GDP figures so closely.

But the Federal Reserve is getting a little worried these days. They are worried that even if they lower the fed funds rate the measly 0.25% they have left in their arsenal of financial weapons, they are not going to be able to stimulate the economy enough to make up for all the Wealth Shift that’s been hitting the fan over the past several years. They know releasing money into the economy will stimulate it, right? But the unforeseen problem with this strategy is that banks are now getting “late-in-the-game” gun-shy. Having already let the cow out of the barn by permitting funky mortgages and even funkier consumer debts, banks are now instituting much stricter lending procedures. It is clear what they are thinking: We may not be able to get back the bad loans we’ve already made, but we’re sure not going to make any more.

Without the release valve of full-spigot credit that the Fed counts on when it lowers interest rates, the vast majority of companies and people are going to have to live largely on the cash they can bring in every month (plus whatever little cash they’ve been able to save). Companies that want to stay alive are going to have to actually start cash-flowing revenue -not just finding the greater fool to borrow money from. Executives who have already squirreled away a nice pile of nuts are going to begin making personal decisions about whether to jump ship or stick around. This is bound to result in more frequent changes in the leadership of this country’s companies and, by extension, even greater uncertainty about the future of those same companies.

Anyone who thinks that jumping ship is an option needs to realize that there’s a huge flaw in this master plan. You can run, but you can’t run far. And you certainly can’t hide. Just where do you plan to go, anyway? New Zealand? I challenge you to close your eyes right now and picture living anywhere but America. Europe? Too crowded. Asia? Please. The Middle East? Africa? You did say you want to live for a while, right? South America, with its poverty? Australia, with its drought? Canada’s too cold, Mexico’s too hot. Some island somewhere? Dubai? Nice for a while, but not forever. A cage, no matter how beautiful, is still a cage.

Nope. If you want to live in America, be an American citizen, or even just have investments in America, then you are going to have to realize just how completely all our fates are tied up with one another’s. Even if you hop on your mega-yacht and float around the ocean, putting into port only long enough to load supplies in some sort of futuristic Waterworld existence, you will still be an American expatriate and taxed however America will then need to tax you. Even if you renounce your U. S. citizenship and invest abroad, your investments will still be tied, in some form or fashion, to the welfare of America.

Recent events have proven once again that what happens in America still has an effect on the rest of the world. We owe foreign countries (like China and Japan) trillions and trillions of dollars. America imports over $200 billion dollars a month in goods and services from other countries. Foreigners are heavily invested in the U.S. stock market. It may not seem like it, given the devaluation of the dollar over the past few years, but we do still matter. We matter immensely.

Going back to the yacht idea – even if you decide not to trust banks or investments domestic or foreign -and carry all your gold around with you like some sort of floating Scrooge McDuck, then you may very well also have to worry about pirates (no, not your kind -the real kind – the Johnny Depp kind, who will take your yacht and money and make you walk the plank).

So if you can’t run and you can’t hide, what should you do?

You work to fix it. That’s what.

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