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richardhutnik on 10 October 2011
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HappySqurriel said:
richardhutnik said:
Paul said:
If you spend less than you earn you'll probably become wealthy in the long run. People waste a lot of money on stuff that doesn't change the quality of their life. People are too concerned about what their neighbours have and overlook what's important in their lives.

People don't get rich saving.  They get rich owning assets that produce more money for them, and they leverage their time heavily.  And then, from this, there is a compounding effect that happens.  The saving is needed in order to be able to have extra resources that can be mobilized for more, and theoretically lead to an improved quality of life later.  Save to day, get more tomorrow.  But today, saving likely is running less than the rate of inflation.

What was discussed earlier in another post was about how America no longer had saved, and fell behind.  This CNN article goes into further details on this, on America getting soft:

http://globalpublicsquare.blogs.cnn.com/2011/10/09/america-is-getting-soft/?&hpt=hp_c2

People don't get wealthy from saving (much) anymore because inflationary monetary policies and consumption focused economic policies undermine saving money as a strategy ... Even contractions in the market, which represent huge buying opportunities for those who saved and have liquid assets, are "prevented" to protect those that are over-leveraged (and those backing this insane debt).

Look at the housing market collapse to see the truth in what I say, you can look at this as being a negative to the people who used horrible terms to buy more house than they can afford or as a positive for those who saved up and can now afford their dream house; but all policies and government action sided with those who overbought ...

Create a bubble in the middle of an area that impacts most Americans, and then you create a nice human shield that will result in mail outs for "pols with mechanations" (phrase from Fear the Boom and the Bust).

A big thing that causes liquidity to get stuck is to create very uncertain economic conditions also, which means no one knows where to stick money.  In case of immense uncertainty, you will even have people bailing from gold.