December 5, 2008

Taking a Step Back

Over the past few months I have talked with many clients and educators about various financial matters. From questions regarding investing to pensions to annuities to savings accounts, and it is from these discussions that I have learned a great deal that I wish to share.

Being an avid history buff, it is interesting to me that the group of people that seem to be least worried about the market fluctuations are those in their late 70's and older. In talking to them, they stress that this is nothing like the "Depression" that is "talked about on the news."

When I ask them what they think, they let me know that things have come full circle. From humble beginnings where family and friends helped each other with the necessities of life to the growth of materialism... and now back to the little things. I think that is sometimes lost on many of us.

The have pointed to the change in government programs from prior to the Great Depression.

  • There was not a FDIC guarantee at your bank for the your account. When a bank went under, your account was gone. Now we have $250,000 guarantees at FDIC banks.
  • Social Security was non-existent. Now it is an important part of your retirement benefits.
  • Medicare/Medicaid was not even a thought until the 1960's.
  • Unemployment benefits started in 1935.
While some would argue whether these programs are run efficiently, they are still better than nothing. Imagine waking up tomorrow morning, and finding out your checking and savings accounts are gone. A "run on the bank" was a real and ever present danger until the government backed the banks.

No one event or program will move us from our current economic situation back towards a "normal" growth pattern, but if you look at the various moves by the Federal Reserve, U.S. Treasury, Bush administration, Congress, and proposals by the soon to be Obama administration, things are in the works. Just the various rumors about the stimulus proposals by Congress for a package that promotes revamping the infrastructure of the U.S. is promising. If it is implemented with speed, it will mean immediate jobs throughout the country on items that must be done and will take months and years to complete. This is just one of the many ways that we will start the growth cycle again.

I wrote today's blog simply to explain that while the current times may look bleak, our country and economy has weathered and grown through many trials. From these previous trials, we have learned, adapted, and anticipated some of these issues. Changes will be implemented after this latest trial, and if history is any judge, we will be the better for it.

Next time, back to more educator issues.

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