The Museum of People Who Save

Monday, November 12, 2012

Come sit at my knee, children, and hear a tale of a time long, long ago, when there was an ancient act they called "saving money."

This "saving" in its time was considered a worthy, even noble thing, and was rewarded with 7-8 percent interest on a checking or savings account and simple investments returning 10 percent on one's money. Park that in the museum next to the 1987 Firebird.

As archaic as this idea sounds, kids, saving paid off, and so most tried to do it. They built a cushion, so when times got tight they didn't have to ask for welfare. They passed a nest egg gently down to their children, and their children, to their children, and the economy skipped along happily.

What in the blue heck happened?

Your bank account today, children, might pay a miserly one-third of a percent, and as of this week, if you are lucky, tying up your savings in a lengthy three year CD may bring you a whopping 1 percent. Your IRA, not much more. Woo-hoo, a penny on the dollar.

That's far less than the rate of inflation, so if anyone did save money, which they don't, every dollar would be less that what it was worth when you put it away.

In other words, saving actually costs you.

Just invest it, you say, children? Your 401K or market portfolio is as shaky as your editor after two pots of coffee. It may do splendidly one quarter, then lose all it gained and more the next with a slightest pretext of any unsettling news or the whims of speculators.

The term "savings account" is a cruel joke. You would do as well to sew your money into a mattress.

Sure, you can opt for riskier investments, or shop accounts around constantly and maybe do a fraction of a percentage point better, my children, but the bottom line does not change.

Possibly for the first time in our nation's history, saving money doesn't make sense any more.

President Obama says he knows how to fix the economy, but he doesn't. Neither did Bush, who urged people to go spend recklessly to boost a failing economy.

People who are age 65 today have an average of $170,000 in savings, because saving paid for most of their lives. People who are 30 today average almost no savings. What will happen when they hit retirement age with nothing to sustain them but perhaps Social Security?

Saving today can actually hurt you. Any parent with a child headed for college can tell you this. If they scrimped all those years and did without any nice things to save what they could toward their kids' education, they won't qualify for much in the way of grants and scholarships unless Junior is the next Einstein or RGIII. But if they lived it up over the years, spent lavishly and enjoyed fine cars, showy houses and expensive vacations, and have nothing in the bank when it's time for college, the system falls over itself to hand out the cash and low-interest need-based loans.

It's true in many other programs as well. If you've ever seen a guy with an Escalade with custom rims strolling into a store and using a "Food Stamps" card, while the workaday fella sputters up in a 20-year-old pickup with rust on the side and empties his wallet for a cart of $3 bread and $3 milk and $18 razor blades and a $52 bundle of diapers, you know what I mean, children.

If a senior citizen has saved and needs help in their old age, they may have to drain everything before any help kicks in. So if they eventually are able to leave a nursing home, they may not have a home left to return to.

If you have spent all your money on electronics and cigarettes and can't afford to clothe your kids, someone will do it for you.

Now, I'm not saying people here are abusing charity.

Most of those who are in need work hard, but just can't cover the constantly rising cost of their bills any more. Don't blame them, children.

The point is, saving money isn't what it used to be.

It pains me to say this. I was raised by frugal old-school Norwegians, and saving something of every dollar you ever make was ingrained into my psyche. I can hear my grandfather's voice in my head to this day, saying, "If you can't afford it, don't bother wanting it."

I've tried to pass that sentiment on to my kids, but increasingly, my voice doesn't sound so sure. Those who spend everything they have on nice houses and cars over the years, might be better off. Most programs can't count your home or transportation against you.

If the commercials can be believed, if you've run up big credit card debt or income taxes you haven't bothered to pay, someone's ready to settle it for you for pennies on the dollar while the rest of us suckers pay our bills in full every year.

Where I come from, charity is a hard pill to swallow. You had better about kill someone to make them accept it. Today, it is an entitlement.

Something is terrible wrong with our economy. Three-fourths of people in our city alone qualify for free or reduced school lunches. That's insane. How long, at this rate, will there be enough people who pay all their bills, to subsidize all who cannot?

There are a million reasons why things are so messed up - pay that doesn't match rising consumer costs, skyrocketing health insurance, food, gas costs.

But there is one main reason and one alone for why your savings are in the toilet, and don't go blaming your local bank. You can thanks the Feds.

Why have they intentionally driven down interest rates on your savings: "There is a greater good here, which is the health and recovery of the U.S. economy," says the head of the treasury. Translation = your government doesn't want you to save money. They want you to spend every penny and then some, in hopes that consumer spending will bail them out of the recession they have helped to create, and perhaps extended with their incessant tinkering. Historically, the only other answer is a World War. Not a great option.

So how has that "greater good" worked out so far, children? Or should I ask you when you're trying to pay back a hundred grand in college loans in a few years?

I know it's old fashioned and naive, but I can't help but believe that our economy will never really be right again until saving money helps a person instead of hurts them. When it's a good thing to put money aside for a rainy day or a college education, and not smart to blow everything on expensive luxuries a person doesn't need.

I would like to be able to pass down the saving mantra to my kids.

But it's on life support, now, my children.

God help you. Because it's not likely your government is going to know how to.