Readers here know that this blog is devoted to covering how monetary system change might impact the daily life of the average person. One of the two big questions we are following here is whether or not we will get another major financial crisis. Now that we are a few years past the last big crisis, you may wonder if this is still a relevant question.
A survey done by the AICPA and published in the NY Times proves that we are on the right track here in covering this question. The survey showed that a huge number of Americans are putting off major life events due to worries about money and the US economy. Below are some quotes from this NY Times article and then a few added comments.
--------------------------------------------------------------------------------------------------ABOUT half of American adults have postponed a major life decision in the past year for financial reasons, mainly because they lack sufficient savings or are worried about the economy, or both, a new survey finds.
The survey, conducted for the American Institute of Certified Public Accountants, found that the proportion of people delaying big decisions like buying a home or getting married had risen to 51 percent, from 31 percent in a similar survey in 2007, before the start of the financial downturn.
The change was striking, and the percentages more than doubled in some areas. Nearly a quarter said they had delayed higher education, up from 11 percent in 2007, and 18 percent said they had put off retiring, compared with 9 percent in the earlier survey. Twenty-two percent said they delayed buying a home in 2015, compared with 14 percent in 2007.
. . . .
Susan Bruno, a financial planner and a member of the institute’s National CPA Financial Literacy Commission, said that the young people she counsels, in particular, often say that it’s more difficult to sustain a relationship if a couple is under financial duress, so they are waiting until they have jobs that help them feel more secure about money. “They know the biggest stress on a marriage is financial,” she said.
. . . .
The primary reason given for the delays was a lack of savings, which was cited by 60 percent of Americans. That was followed by worries about the economy (50 percent) and difficulty paying monthly bills, other than the mortgage. Other reasons included a need to take care of older relatives or pay down credit card debt, and difficulty making mortgage payments, as well as concerns about job security.
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My added comments:
Here we have clear evidence that a huge number of people are so worried about another crisis in the economy that they are delaying major life events. In doing this blog I had already sensed this from feedback I get and just following the economic news that relates to what this blog tries to cover. For example, kids coming out of college now with huge debt and still having trouble finding good paying jobs is one big area of concern.
This is very important information because it shows you that despite the relative calm that seems to exist in the financial system now, there is a deep well of concern under the surface. Since confidence in the system is the most important factor of all, this news should be a wake up call to those running the present system. There is such a lack of confidence in the system for a huge number of people that they are putting off major events in their lives. The vote yesterday in Greece is just another signal that trust in the system is quite fragile.
This also shows you why one of our two big questions we follow here is whether Jim Rickards forecast of another big crisis will be correct. With public confidence in the system this low already, another big crisis is obviously going to shatter public trust. When I attended Jim Rickards recent speech in Dallas and he talked about this issue, you could feel the concern in the audience.
If we have a complex system as Jim believes, the public reaction to another big crisis is very unpredictable. The public might accept whatever solution to the crisis is put forward to them or they might just give up on those who were in charge when it happened completely. It could get ugly if the whole world turns into what Greece is going through right now some day. Greece proves how unpredictable public response can be in a complex system as the Euro group was taken completely by surprise by the huge No vote. Now they are somewhat in shock and not sure how to proceed. Meanwhile, people stand in lines at ATM machines hoping to get their own money back.
We are swimming in uncharted waters for sure. We need to hope another major crisis is avoided or contained because this survey makes it pretty clear that regaining public trust if we get hit again may be impossible next time. Trying to reset the system under crisis conditions might be nearly impossible as well.
We have to follow this question because it is so important to the average person. It's not an enjoyable thing to do, but this survey and the vote in Greece proves it is a key question for many people and it is very uncertain how they will react to another big crisis.
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