| In the recent past we looked to professionals of | | | | research, reforms and action in the field of |
| the financial planning industry to help us devise a | | | | private pensions and individual retirement savings. |
| more informed plan that would take us | | | | Alternative Economics fulfills all three of these |
| comfortably into our retirement years. | | | | objectives. But why is our savings so important |
| Unfortunately, the procedures and methods that | | | | to the federal government? The answer is two |
| most typical financial planners follow and suggest | | | | fold: |
| have become archaic and antiquated (even | | | | 1. The productivity of this nation and therefore |
| self-serving). Too often, this misguidance has led | | | | the health of its economy are directly related to |
| to diminishing returns instead of the large gains | | | | the savings habit of its people. |
| usually promised. As a result, and for good | | | | 2. Based on current savings habits in America the |
| reason, we as a public have lost our faith in these | | | | majority of future generations will not have the |
| so-called professionals and have lost the desire to | | | | ability to retire or even support themselves on |
| save or invest for the future. Read the book, | | | | their own resources. |
| "Where are the Customers' yatchs?" by Fred | | | | Coupled together, these two effects of the |
| Schwed Jr. | | | | current savings habit of the American people |
| To further the challenge, Social Security has | | | | could result in an unrecoverable condition and even |
| published their prediction to be bankrupt (See your | | | | a collapse in our national economy. |
| yearly Social Security statement page 1 top right | | | | "Left uninformed, ambition is paralyzed by fear of |
| paragraph) and the government is screaming at | | | | the unknown. Opportunities go unrecognized and |
| the public through almost every form of media to | | | | our dreams of a prosperous future fade away |
| establish a personal financial plan that would not | | | | into excuses." |
| include government assistance. In other words, | | | | - Steven Hettema- |
| "you are on your own!" | | | | You may be asking yourself, "What is Alternative |
| Without understanding your economic alternatives | | | | Economics"? To answer this lets start by telling |
| or having a personal system of financial growth, | | | | you what its not. |
| the effects of social heredity during demographic | | | | Alternative Economics is not about stocks, bonds |
| and economic transition has proven to be | | | | or mutual funds. Our corporate retirement plans, |
| devastating financially for most. | | | | pensions plans, 401ks and IRAs are all invested in |
| In other words it's becoming more and more | | | | stocks, bonds and mutual funds. Let's face it, |
| difficult to achieve any level of financial security if | | | | we've all seen or experienced the poor |
| we make our financial decisions based on our | | | | performance of these traditional investment |
| inherited perceptions. As time goes on things | | | | classes. We'll talk in more detail in future articles |
| change and the economic climate we live in | | | | about why we believe these investments are |
| changes too. Things are changing more rapidly | | | | yielding such disappointing results. We'll also discuss |
| now than ever before. Unrecognized changes | | | | how Alternative Economics will solve this problem |
| expand the information gap between our | | | | on a personal level for anyone who actively |
| perceptions and reality. The decisions we make | | | | applies the methods and principles it suggested. |
| have their result determined by how close, or far, | | | | But for now let's keep the conversation a little |
| our perceptions are to the reality of the world we | | | | broader in scope. |
| live in. | | | | As a country, we've lost faith in these investment |
| For instance, did you know: | | | | tools and are no longer motivated to save or plan |
| 1. You can Self Direct IRA's, 401K's and other tax | | | | for the future in the manner that we used too. |
| deferred retirement plans and use those funds to | | | | This is evidenced by the fact that Americans |
| leverage acquisition of high performing real estate | | | | save or invest less than 1% of our income. Some |
| and watch your assets grow unhindered by | | | | believe this is just because we are less disciplined |
| taxation. | | | | today or we just don't care any more. |
| 2. If you have stocks bonds or mutual funds you | | | | Suggestions have been made that we are |
| can often Pledge (Not Borrow) that asset as a | | | | entering a new economic era lead by an |
| down payment on real estate but never take it | | | | irresponsible generation with an immediate |
| out of the funds they are in. In effect you can | | | | gratification mindset. These explanations blame |
| double dip! | | | | this depleted savings habit of our nation on the |
| 3. Banks make money through something called | | | | actions of the people and not the cause for these |
| Arbitrage and so can you. | | | | actions or lack thereof. |
| 4. You have hidden assets you didn't know you | | | | The American people of this generation are not |
| had. In fact you have all the financial assets you | | | | stupid; we are simply reacting to our common |
| need to achieve any goal you desire. | | | | sense...Why engage in a plan that we know is |
| 5. The Return On Investment for Home Equity is | | | | failing for so many? After all, discipline comes |
| Zero. | | | | from motivation and motivation comes from faith |
| 6. The Effective Rate you are paying on a fixed | | | | in an action that will yield a desired result. We just |
| rate mortgage changes from one year to the | | | | don't believe anymore in the traditional financial |
| next. | | | | plan which relies (for the most part) on the |
| 7. Of the ways that the financial planning industry | | | | performance of stocks, bonds and mutual funds. |
| are allowed to report the performance of your | | | | What we need are better alternatives. |
| investments under their management at least 9 | | | | Alternative Economics is also not reliant on your |
| of the 13 can make it look like you are getting a | | | | frugality. Most Americans are under the |
| better return than you are. Sometimes you are | | | | perception that growing assets and/or investing |
| actually losing money when they report a gain. | | | | are only possible at the price of significant lifestyle |
| Through knowledge of truths like this, and much | | | | sacrifice. It's no wonder people think this way, |
| more, you can turn the financial table in your | | | | listen to what Federal Reserve Chairman Ben |
| favor. | | | | Bernanke was quoted saying: |
| To achieve your own goals and dreams (which | | | | "Unless the current generation is willing to sacrifice, |
| may be just a comfortable retirement) you must | | | | by cutting consumption or increasing savings, |
| become knowledgeable and sophisticated about | | | | future generations could face a heavier reduction |
| how the money game works, now, and stay that | | | | in living standards." |
| way through fast paced changes. This requires an | | | | "We can mitigate the adverse effect of the aging |
| education process that may rattle your | | | | population on future generations, but only by |
| conventional thinking and an on going affiliation | | | | forgoing consumption or leisure today. As the |
| with a trusted source of new and current | | | | population ages, the nation must choose among |
| information as well as opportunities to keep you | | | | higher taxes, fewer government programs, cuts |
| on the cutting edge. Finally you need to learn to | | | | in Social Security and Medicare, a higher deficit or |
| apply a new systematic process that works and | | | | some combination of those options." |
| keeps working; Because all the knowledge in the | | | | USA TODAY 10/05/2006, by Sue Kirchhoff |
| world won't get you anywhere without its | | | | Does Ben understand what he is saying? Doesn't |
| application. | | | | consumer consumption affect the health of the |
| The principles of what is becoming known as | | | | economy? Of course it does! Spending less to put |
| Alternative Economics are critical in developing a | | | | more in savings or afford a higher social security |
| successful personal system of financial growth. | | | | tax is not a solution. Sorry Ben! People need |
| Alternative Economics is being called by some | | | | alternatives that will allow them to keep spending |
| experts the solution to a failing financial plan in | | | | (maintain or improve lifestyle now) while growing |
| America and the economic doctrine of our era. | | | | assets for their future at the same time. |
| Alternative Economics was first introduced to the | | | | The reality of this perception, left to us by the |
| public through local investor clubs of the national | | | | media, our political leaders and our heredity, |
| investor group as a personal system of financial | | | | makes more understandable the lack of |
| growth and an emerging industry by the National | | | | motivation Americans have to save or invest in a |
| Strategic Investment Corporation (NSIC) in | | | | conventional manner. Think about it, who in their |
| February 2005. | | | | right mind would be motivated by this financial |
| Founders of NSIC recognized growing financial | | | | plan? |
| disparity in homes on a national level due to | | | | Take money from your current budget, sacrificing |
| inefficient financial planning traditions, a failing social | | | | lifestyle now, to save or invest for your future in |
| security system and mismanaged or impotent | | | | a system that, based on past performance and |
| government and corporate retirement programs | | | | future projections, will leave you with a |
| that overlook many beneficial alternatives. | | | | retirement savings that won't even support the |
| This disparity has reached a climax as the public is | | | | reduced lifestyle you endured to make a better |
| encouraged to take charge of its own financial | | | | one. |
| future. The challenge to this solution lies in the | | | | With that kind of outlook, no wonder we are |
| progressively fast changing economic climate of | | | | more apt to say, "Spend it while you can enjoy it |
| this country caused by the effects of rapid | | | | and hope for the best at retirement". Even |
| technology growth among other major changes | | | | though that's not a plan it makes more sense |
| and events. The national education system can | | | | than the traditional option described above. |
| not keep up with these changes therefore leaving | | | | The concepts of Alternative Economics deal with |
| the public to make financial decisions based on | | | | the necessity of asset accumulation without |
| perception and not reality. Financial decisions made | | | | requiring or even consideration of frugality. |
| with the old or just inaccurate information of | | | | Finally, Alternative Economics is not reliant on |
| perception yield less than desirable results and | | | | corporate pension plans or government managed |
| extinguish motivation of savings or investment | | | | retirement programs such as Social Security. |
| activity. As a result less than 1% of this nation's | | | | In a recent Frontline Report titled "Can You |
| household income is currently being invested in | | | | Afford to Retire", which first aired on May 16th |
| any kind of retirement or financial plan. | | | | 2006, observers were made aware of corporate |
| Alternative Economics is an answer to the call to | | | | financial strategies that lead to the demise of |
| the American public being shouted by top officials | | | | employee pensions. Specifically, federal law allows |
| from every political party of the federal | | | | companies that offer pension programs to use |
| government to plan our own financial future. The | | | | those employee pension funds for company |
| message is clear, "the government will not be able | | | | expenses with the hopes to repay the deficit at a |
| to support us as we get older". | | | | later date. If the company experiences financial |
| The "Savings Are Vital to Everyone's Retirement | | | | difficulty and can not repay the pension funds |
| Act of 1997" (SAVER) was enacted on | | | | then they can file chapter 11 bankruptcies to wipe |
| November 20, 1997. The purpose of the SAVER | | | | out the debt leaving employees with nothing. |
| Act is to advance the publics knowledge and | | | | Check out the full report at the link below. |
| understanding of the importance of retirement | | | | The Social Security system has predicted its own |
| savings. The Act directs the Secretary of Labor | | | | bankruptcy date and publishes it in its own report |
| to take action in four general areas: | | | | to the American people every year. Most of us |
| 1. To maintain an ongoing program of outreach to | | | | have, at some time in our working life, received |
| the public to effectively promote retirement | | | | the yearly Social Security statement. If you are |
| income savings; | | | | like the majority of people, when you finally take |
| 2. To disseminate specific educational materials | | | | the time to look at the document you |
| related to retirement savings and the principles of | | | | immediately turn to the 2nd and 3rd pages which |
| saving and investment; | | | | outlines your personal benefits if you retire, are |
| 3. To establish a web site as a means to | | | | injured or die. This year take the time to read the |
| disseminate these materials, and | | | | first page. On it you will find the details of when |
| 4. To convene these National Summits on | | | | (not if) the Social Security system will be |
| Retirement Savings. | | | | bankrupt. Specifically, it's in the paragraph on the |
| In 2006 this was the objective of the National | | | | upper right hand side of the cover page. When |
| Summit of Retirement Savings taken right from | | | | you read it you will understand why the |
| the DOL web site located at the Department of | | | | government is so emphatically encouraging us all |
| Labor web site listed in the resources section | | | | to make financial plans for retirement that do not |
| below. | | | | include government or corporate managed |
| National Summit Objectives | | | | programs. |
| 1. Advance the publics knowledge and | | | | Its time for economic alternatives; it's time for |
| understanding of retirement savings and its critical | | | | Alternative Economics. |
| importance to the future well-being of workers | | | | Alternative Economics(TM) is a personal system |
| and their families. | | | | of financial growth designed to reveal hidden |
| 2. Facilitate the development of a broad-based, | | | | assets and apply them to alternative investment |
| public education program to encourage and | | | | strategies using four asset acceleration principles |
| enhance individual commitment to a personal | | | | through three financial growth stages. It is the |
| retirement savings strategy. | | | | solution to the failing traditional financial plan in |
| 3. Develop recommendations for additional | | | | America and the economic doctrine of our era. |