Bloomberg ran an article this past Saturday, December 11, 2021, telling readers to spend their income as soon as possible and borrow as much as they can and spend it too. Their logic was the dollar you have in-hand today will not be worth as much tomorrow due to inflation. So spend that dollar today because tomorrow you won’t be able to purchase as much with that dollar.
This is circular logic. Spending money on consumables not needed today destroys the value of those consumables over time. How much food, clothing, and fuel can be purchased and stored without loss of nutrients, fashion and efficiency?
Besides, excessive spending breeds inflation. The more money that floods the market, the more demand the market experiences. And greater demand historically results in higher prices. Tightening money supply reduces demand and dampens inflation. So, what gives with Bloomberg?
Learn this historical lesson now so you don’t have to be a victim. The more people spend, the less they will have in savings. As of 2019 the Federal Reserve Bank reported 40% of Americans didn’t have $400 in their bank account for an unexpected crisis. Then 2020 happened and 40 million Americans found themselves unemployed. On March 6, 2020, the Dow suffered its worst single-day drop in history. Yet, by June 4, 2020, the world’s richest individuals had increased their wealth by over 50%!
With the money supply increased, due to the Paycheck Protection Program, other government programs, as well as interest rates being lowered to near 0%, the wealthy purchased more stock and bonds at bargain prices. Yet most Americans had no money to take advantage of this buying opportunity. And so more money shifted to the superrich and away from the lower and middle classes over the next few months as the market rebounded. In fact, 8 people now control half of the wealth on earth. And guess who is a member of this elite group of 8 persons? None other than Michael Bloomberg. No wonder Bloomberg encourages the middle and lower classes to spend and borrow more. It provides additional golden opportunities for him and his elitists to further enrich themselves.
Imagine having money which keeps growing while you have access to it to take advantage of opportunities like the superrich did on March 6, 2020, or in 2007-2009 when the superrich saw their income increase by 31.4% while the other 99% of Americans only experienced a 0.4% increase in their income. It is possible, though maybe not at the levels the superrich can afford, but still if you can increase your income by 4% while most everyone else is stuck at merely 0.4% increase, you keep the 17.61% difference.
This is what Nelson Nash wrote about in his book Becoming Your Own Banker. It is what many corporations and insurance companies do with their own capital. Unfortunately, too many people have followed the advice Bloomberg offered up on Saturday, December 11, 2021, and have spent all their income and kept nothing for themselves, allowing the superrich to keep getting richer.
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Dr. Tomas P. McFie
Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of Life Benefits which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, How to Build Sustainable Wealth, can be purchased here.