What would Benjamin Franklin say about the current economy? Can we consider Benjamin Franklin as the first American personal development blogger?
Benjamin Franklin was one of the Founding Fathers of the United States and a noted polymath. Fascinated by many things in life. I just completed reading his biography and was even more enthralled by this great American hero. His biography reads like a how-to manual on how to live a highly engaged life. This is a man who invented the lightning rod, bifocals, a carriage odometer, and was also the first United States postmaster. I deeply value his opinions and after reading his biography, I was left wondering what would Benjamin Franklin think of the current state of the economy? Would he be pleased? What would he want to be different? I wanted to pull some items out of his biography and tie them into our current state of affairs. We would do ourselves a great favor if we really followed in his philosophy of seeking out the truth, no matter if it shakes our own strong convictions. In a way, he was one of the first personal development “bloggers” by publishing Poor Richard’s Almanack trying to reach out and help many Americans with common sense and rigorous observations.
“and gaining money by my industry and frugality, I lived very agreeably, forgetting Boston…”
Benjamin Franklin was always a character of frugality and master of using whatever he was given. He did not come from a wealthy family. He was merely getting by for the early part of his career but he always pushed forward. He valued hard work, discipline, and even lived on a mostly vegetarian diet. He was a man of pragmatism. I’m not sure he would be fond of how people are massively in debt today and many do not value hard work. He was proud of being an early riser.
“So I din’d upon cod very heartily, and continued to eat with other people, returning only now and then occasionally to a vegetable diet.”
He wasn’t extreme in his diet. He adjusted to this diet since he viewed people living on very little yet going into old age. He reasoned that a low intake diet might be a reason. There is even proof today of a low-caloric diet for longevity. Given this, I’m not sure how fond he would be with the prevalence of fast high calorie foods that dominate the market.
“I went on, however, very cheerfully, put his printing-housing in order, which had been in great confusion, and brought his hands by degrees to mind their business and to do it better.”
Early on his career when he arrived back from a stint in London, he worked hard in a printing-house. His philosophy was of hard-work but of intelligently making things better and getting others to carry their weight. He mentions an Oxford scholar who found himself bought as a servant. The fellow seemed very intelligent yet “idle, thoughtless, and imprudent to the last degree.” In other words, having a college education is not the only thing in life that matters in regards to success. I have this feeling that many are going to college just going through the motions but not putting in the extra time to go above and beyond the basics. After the degree is in hand, it is what you do with it that matters.
“But he knew little out of his way, and was not a pleasing companion; as, like most great mathematicians I have met with, he expected universal precision in everything said, or was forever denying or distinguishing upon trifles, to the disturbances of all conversation. He soon left us.”
Benjamin Franklin put together a sort of brain trust group that met on a frequent basis to discuss ideas. Any idea. The group was to be objective and observe things for what they were and to keep emotions out of it. I see how broken down our political system has gotten and I think Benjamin Franklin would be appalled. People today would rather win an argument than get to the bottom of what is objectively the best solution. His comment on a mathematician in the group reminds me that sometimes in life, a complex one as the one we are given, is never going to be precise. To solve our economic challenges we must accept some imperfections to reach a better solution. We would be wise to listen to one of the most accomplished Americans ever.
The week had some interesting news before we enter into daylight savings mode. We found out that 227,000 jobs were added and the unemployment rate remained steady as more Americans entered into the labor force to find work. Job hiring is still tepid at best so this was seen as cautious information and the neutral stock market reflected this. We also received bailout news #213 on Greece regarding the never ending bailout story. It is well known that Greece will not be able to pay off their debt in this given lifetime. This is fact. Yet what has been occurring is merely a delaying of the inevitable. Greece has two roads ahead; either a correction through a slow decade (or more) of austerity or a deep and potentially disorderly collapse if Greece were pushed out of the Euro. Too much money is at play here for giant banks so the push is for a fierce amount of austerity ahead. Not a good time to be working class in Greece
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- Everybody Can Have an Emergency Fund! @ Master of Saving
The 4 best savings rates for the financially bearish – What options do conservative savers have besides stuffing cash into the mattress?
Savings rates have been incredibly low for the past decade. Many growing into this current economy must think that banks are simply expensive mattresses where you keep your money. There are options out there for stashing your emergency fund or simply for keeping some of your savings money powder dry. There are many options out there but it must seem incredibly confusing to people simply looking for the best yield in a very challenging market. The stock market may be up but banks are still paying out close to zero percent on savings accounts. Where can bearish savers place their money and actually sleep at night without worrying too deeply? As we all know that with risk comes reward so do not expect big yields here but then again, you shouldn’t be chasing massive yields with your emergency funds in the first place.
1. U.S. Treasury I-Bonds – One of the better options is through U.S. Treasury I-Bonds. These are savings bonds that are indexed to inflation and will never pay less than zero. The rate adjusted bi-annually and fluctuates with the CPI. They also pay a fixed rate component but that has been zero since 2010. The current rate is 1.53 percent. The benefit of these is that you can purchase them through Treasury Direct and link them up to your traditional checking account. You can purchase up to $10,000 a year per Social Security number. In this low yield environment, these are not a bad deal. If these are redeemed within the first five years of purchase, you will forfeit 3-months of interest. Not a bad trade off for the rate.
2. Treasury Inflation Protect Securities (TIPS) – These investments seek to invest in US government debt through inflation-indexed bonds. Most have dollar-weighted average maturities between 7 to 20 years. This is another good option for the bearish investor. For example, compare the overall stock market versus a TIPS fund over the last 10 years:
For a very low volatility, this is another good place to stash some cash.
3. Non-traditional banks like ING, Ally, Everbank – If you look at brick and mortar type big banks you will be lucky to get anything higher than zero percent on your savings account. By the time you get a certain fee on something, your little interest will be wiped away into thin air. Some of the more non-traditional banks like ING, Ally, and Everbank offer better rates because of smaller storefront operations. Current rates are as follows:
4. CDs – Certificate of Deposits act like a forced savings account. You purchase a CD for a set timeframe and will get a guaranteed return over this period. Many of the one year CD rates are yielding 1 percent so this isn’t a get rich quick spot either. This is simply a place to store your money and earn a bit more than your regular savings account. Some will benefit from CD laddering and have 1, 3, and 5 year maturities hitting at various times.
It isn’t hard to beat the market when the savings rates at most big banks is zero percent. Throw in the added fees some will hit you with and you will experience negative growth rates. I prefer things like I-Bonds and TIPS for emergency funds because in reality, with inflation, even the 1 percent rate is making you fall further behind. The above are simply a sample of safe savings vehicles for those that are financially bearish.