03/10/11 Baltimore, Maryland – Stocks were flat yesterday. Gold was flattish. Oil was flat.
Everything was flat. Nothing much happened, as near as we can tell.
So, let’s turn our attention elsewhere. To greedy old people, for example.
Here’s a letter that appeared in The Financial Times on Saturday:
“I have recently returned from the first leg of a world cruise. Many of the elderly passengers were on their way around the world at a cost, for a couple, of between [$75,000] and [$140,000] and I met several who were on their third of fourth such voyage. This at a time when their grandchildren or great grandchildren may be struggling to pay university tuition fees…and later to find a deposit for a house…
“It is time for the elderly to step up to the plate to support the younger generation.”
In America, each generation is expected to make it on its own. At least that is the idea. So, old people think they are quite within their rights to spend all their money themselves, leaving little for their heirs to inherit. They do not see themselves as selfish. Many even think they are doing the next generation a favor – protecting them from sloth and dependence.
They go around with T-shirts that say, “I’m spending my kids’ inheritance.” Instead of taking care of grandchildren or helping their sons and daughters with the family enterprise, they retire to Florida, organizing their financial lives so their money lasts not a minute longer than they do. They grow old and lame – and then expect special parking places. They spend their time playing golf, watching daytime TV or pressuring their elected representatives to give them even more benefits.
The old have not merely abandoned the young to their own fate – they have stabbed them in the back. It’s bad enough that they use up all their own money. But they don’t stop there. They spend other peoples’ money too. And then they spend money that hasn’t even been earned yet.
The biggest items in the budget – Social Security and Medicaid – benefit the graybeards, not the young. And the budget is so far out of whack that for every dollar of tax revenue, the feds spend $1.70. That is to say, they add 70 cents that will have to be paid sometime in the future…most likely, by their own sons, daughters and grandchildren.
How lucky the next generation is! If a lack of money breeds tough self-reliance, the young in America must be the toughest generation ever. They not only have to pay their own way in the world, they’re also expected to shoulder a debt burden that would break Atlas’s back. Their parents and grandparents bequeath them public debt and unfunded obligations of more than $200 trillion, according to Professor Laurence Kotlikoff’s estimate.
Forbes publishes a list of the world’s richest people. Who would it put on its list of the world’s poorest? Surely, America’s young people would lead the rankings. Each one is shackled to a ball and chain of debt – hammered into place by an older generation – before he even begins to compete.
It hardly seems fair.
Economist Robert Samuelson, writing in Newsweek, shares our opinion:
“Whether our elected politicians will take back government from AARP, the 40-million-member organization representing retirees and near retirees,” – that’s the big question for the 2012 budget debate. Obama’s budget proposals left Social Security and Medicaid untouched. Why? The greedy old geezers vote.
Those programs have become a form of “middle class welfare,” says Samuelson; they must be cut.
Here at The Daily Reckoning, we do not believe in trying to change the course of history. We are not world improvers. Still, we do our damnedest to improve our own lives.
About two years ago, we began to think seriously about what to do with our own money. What was the plan? Spend it? Save it? Forget about it…and hope for the best?
But what was the plan for the children? What would become of them if something happened to your Daily Reckoning editor? Would they be able to “make it” on their own? What if something went wrong? Should they depend on the charity of the state…or the planning of their own father?
It was about that time that we discovered the concept of the “Family Office.” Poor people have food stamps and bail bonds. The middle class has Social Security and Medicaid. The rich people have family offices.
We’re not talking about people who win the lottery or a million-dollar contract to play football. We’re talking about people who make their money the old-fashioned way and try to keep it in the family, often for several generations. They treat their money differently. They see it as an heirloom, to be passed along, not used up.
Just because people are rich doesn’t mean they are stupid. Old money must have its secrets…its tricks…its wisdom too.
Not that we know what they are. We had no old money in our family. We inherited a few banged up pieces of furniture from our mother…who inherited them from her father. That was it. What money we have now is so new the ink isn’t even dry yet. But should we spend it all ourselves? Should we retire to Florida too…and wish the family “good luck”?
No. We decided to share…to prepare…to work together…to involve the whole family in our financial life – with trusts, an investment committee, a family constitution, budget goals, and everything else the family office guidebooks recommend. We decided to burden the children with the fruits of our own lives. The children are supposed to join in our key financial decisions, help manage family property, and partake in the family business. They’re meant to help preserve and enhance the family wealth – such as it is.
Don’t get the wrong idea. We’re not taking the high road. We never like the high road; it makes us a little queasy. Besides, we don’t like the high life much either. Spend our time playing golf? Fishing? Cruising around the world? Doesn’t sound like much fun. And we have no interest in fancy cars or expensive clothes. We drive a Ford pick-up and wear what we get for Christmas.
So, we’ve taken a different route. To us, it is more interesting, exciting and challenging. And there’s much less traffic.
“I know what you’re up to,” said son Jules, 23, shrewdly, “you’re just drawing us into your problems…putting them on our backs. I don’t have time for this… I’ve got my own life to lead.”
Hmmm. We haven’t actually succeeded at this yet. We’re just getting started. Check back in 20 years. We’ll let you know how it turns out.
Regards,
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Gee Bill, you complain the old are spending their own money and taking whatever government checks and medicare that come their way legally.
What would you do Bill? I know how about a big fat new government department to educate these old people. And maybe tax their loot away.
No individual old person made the rules. Leave them alone . It’s their money.
Long live free enterprise and greed!
Down with the lazy and envious.
Bill,
Greatest point of view I have read in a long time, wrapped up so nicely concise.
Having such a father, your kids should inherit at least some of your wisdom, much needed in handling their wealth.
Keep delighting us with your posts !
Ah an interesting article but you do not seem to pin the rose on anyone. You may correct me if I am wrong but whenever there is proposed an increase in politicians compensation the media jump in and say we have to pay a lot because we want to get the best and the brightest. Of course we accede so now going to congress is to become a millionaire and if not become then the very real opportunity to be come. Now have these stalwarts, the best and brightest have they voted what is best for the country or even what is fair or have they voted for what will get them relected? A friend of mine has suggested that instead of paying them we should auction the jobs off so at least we would get something for their place at the trough. Also is this sainted media which is given special privileges in the law one which stands up for what is right and informs its readership? I will leave that for you to answer. So I would say don’t pick on the recipients as they only have gotten what these best and brightest have elected to give them. If we did not elect them to do right and not expedient just what do we pay them to do? Take for instanced the sainted Greenspan is my memory faulty when I say i seem to recollect when he was on some sort of committee made changes to SS and how inflation is computed and stated it is now fixed for as far as the eye can see.
Bill:
I’d disinherit that snot nose kid of yours and hit the links with Mogumbo.
See, here is the problem: When the bankers (foreign and domestic) and Wall Street needed the bucks, well, they flowed like honey. No bankruptcies for Wall St, no jumping out of buildings… not when the government was there to wipe their noses, dry their eyes, and tuck a few trillion dollars in their collective pockets. But here comes the geezers… people who have paid in 15% of their paychecks in to the system, so at least have some legitimate claim to reimbursement… and well, now, we’re broke. So sad. You believed us, or at least you didn’t riot, when we told you we’d tuck that 15% away for your golden years. And now, suck it up, as Charlie Monger says. We made loved to the bankers, but what we are doing to you is better described as rape. Lay back and enjoy it.
I have an idea… get the money back from the banks. Prosecute the criminals and clawback all the unearned bonuses that have been paid for with taxpayer dollars or Federal Reserve guarantees. Once those bastards are in jail… once the trillions are back in the government coffers… then we’ll talk about trimming back Social Security and Medicare. How’s that sound?
Seems to me “the young” vote for the free spenders, particularly the Democrats, in greater numbers than any other age demographic. So they are bequeathing the debt on themselves. It’s not somebody else’s fault, it’s their own fault. I know that is a hard concept for anyone under 50 to grasp, that something might be your own fault.
As always another brilliant piece of writing. I have been reading your column for years now. Full of wit, wisdom and logic. Keep it coming Bill, it’s my every day reading addiction.
What about the 2 trillion taken from those oldsters paying SS between 1984 and 2005 over and above what was needed and splurged on a few wars?
The 1 trillion for Iraq. Another Trillion for Afghanistan.
14 Trillion printed up for Banksters and Corporations…
and it’s still grandma’s fault for accepting SS.
I agree with Bill totally. My acquaintances in their 30s and even 40s cannot afford a basic middle class family home, despite having tons of education at the best schools and six figure salaries, and living frugally. The older generation, their parents, are so smug about all the property and money they own, mostly by luck of being born during better times. They selfishly wash their hands of any sort of support for the next generation, who is struggling often despite doing “all the right things”. This coldness is unique to our culture, I think. Bill is a great father.
Good Job Bill… Your actions will reveal to the next generation(s) your character and caliber. The best form of teaching is by example. Teach your kids to be good stewards of the family heirloom and you have set a noble precedent for their children and your selflessness will never be forgotten.
My parents with their very limited resources keep trying to do that now despite what life throws at them. They are in fact, preserving their future legacy. I vowed to continue to carry the “tradition” and hope I have learned something from this… even if its as much as they forgot…
Please… Shawn…
I’m begging you…how many times do I have to ask?
It’s not that the people aren’t interested in the tiny nuggets of non-wisdom that you have to share, it’s just that I don’t have the same feelings for you that I once did.
It’s not you, it’s me.
I’ve tried to make our parting as easy as possible. For your own sake, it’s time to move on and find someone new to pore over Berkshire financials with and trade autographed Warren Buffett photos.
CS
Hey –
)
You stole my stuff!
@kenn
You have it upside down. SS is taken from the youngsters and given to the oldsters.
What’s the number of workers per retiree right now?
Wow Bill.
I detect a sense of anger towards “old people”. And actually I’m quite surprised. Senior citizens didn’t create the problem we have.
And regarding what Robert Samuelson wrote: “Whether our elected politicians will take back government from AARP…. The greedy old geezers vote.”
And you agree with this sentiment? First, the problems we have were created by our “elected politicians”. How insane of him to think they would fix it. They raided SS surpluses until there were no more. Responsible politicians would have made the necessary adjustments to SS over they years to keep it solvent. It’s not the fault of the ”old geezers” that they didn’t.
Although I’m not yet a retired old geezer, I provided more assistance to my children (and still am) for a lot longer than my parents did for me, and I think the same is true for most in my generation. I’m approaching a time in my life where I won’t have the energy to keep up my current pace, so I look forward to spending leisurely time in an accommodating climate. Nobody I know would turn their backs on their kids – you must be hanging around the wrong people. However, I see nothing wrong with enjoying my golden years.
I thought you were pretty level-headed. I think the jury just took a recess.
“Ok, Jules. You are out of the family office!”
Now, I will look for another young guy to replace you… Hmmm, probably an Argentinean guy, from Rosario “The Argentine Chicago”, named Facundo. He is a hardcore Ancap, Yeah! Doug said he is the right one too! I will contact him now. Stay Tuned
FAMILY. Bill our marriage of 60 years was based on family structure and stregnth. Love equal treatment, discipline and values.
Excellence was the standard.We raised and educated 5 wonderful children, all minimum master degrees, who have given us 10 grandchildren. No interest loans to help over the bumps, always repaid in full to the family treasury. After the dispora, we hosted annual Thanksgiving retreats at various home towns. This helped maintain contact and relationships.
The grandchildren were granted checks at Christmas and birthdays. The raising
responsibility was left to the parents. 3 years ago, my partner was called home. I no longer had to be prepared for long term care and ruinous medical bills. I am 88 yrs old, so my care will be limited. Rather than leave a modest estate to be divided 5 ways, I began establishing precious metal holdings for them. Something I deem imortant, but they would neglect to do. Thanks Mogambo. Now I am gifting them with a 2 week vacation trip of their individual choosing. My needs are met, so I enjoy watching them receive portions of their inheritance now, in a
tangible way. Bill, as we age, entropy arrives. Jobs, hobbies, community , even church activities diminish. The core of our lives is the family. This cannot be a last minute revelation. As you have done, it is a life long endeavor. Our happiest moments came when my wife and I sat at either end of a long table holding 20-25 family members and raising our thumbs to proclaim, “We did Good”.
Thanks for the wonderful article it has really helped me. Congratulations again on a good job Bill.
The nuclear family is a long gone part of society. It is what made people in the winter of their life have money now. The children and grandchildren are spread all over the country and world and all incomes are not put into the pot for the “whole”.Not like happened for our older generation.
Frugality, savings and modesty are the real sources of capitalism, growth and prosperity. A simple truth that has fallen in oblivion yet.