Will the baby boomers fund their retirement from succeeding generations home purchases? Should they?
Irvine Home Address … 55 CASTILLO Irvine, CA 92620
Resale Home Price …… $599,000
People try to put us d-down
Just because we get around
Things they do look awful c-c-cold
I hope I die before I get old
This is my generation
This is my generation, baby
The Who — My Generation
I don't know if baby boomers still want to die before they get old, but many are not going to experience the retirement they thought they were.
Baby boomers busted by housing market collapse
The following article by real estate reporter Mary Umberger in the Chicago Tribune aptly illustrates the issue:
"I'm a baby boomer who thinks it's probably time to sell the manse and move to someplace smaller. That's what I'm thinking, anyway. Barring some nationwide economic miracle, however, that's not going to happen. Until housing finds its footing again and home prices start to look up, I'm going nowhere, unless I'm keen to lose money.
I have plenty of company. My fellow boomers and I, it appears, are suffering from a serious case of real estate irony. Housing, the very thing that fueled our generation's legendary mobility and free spending, is keeping us right where we are….
The Urban Land Institute's study, called "Housing in America: The Next Decade," divides us into two groups: older and younger…. The older group, aged 55 to 64, will continue to work, either out of necessity or choice. The news here is that just a few years ago, boomer studies were predicting that we'd put off retirement for the latter reason, that we liked the busy-ness of work. Those studies, though, were before the stock market shredded a generation's 401(k) plans. Now, the money is doing the talking.
The real estate takeaway for this older group is, in the institute's verbiage, that many boomers will be "trapped" in their suburban homes until values recover. Not only are they waiting for their homes' values to emerge from underwater status, but their houses, the institute says, tend to be bigger and farther out in suburbia than the next generation wants.
The younger boomers (aged 46 to 54) also won't have an easy time selling their homes. These people are in their prime earning years, but they're facing flat incomes and the ugly truth that many of them have very little home equity. In the olden days (five years ago), they would have been prime candidates for purchasing vacation homes, a prospect that now, for the aforementioned reasons, is "greatly diminished," according to the institute.
I could go on, but I've typed myself into a deep funk, here in my too-big ol' house. So I figure I might as well take a glass-half-full view of things: The Urban Land Institute study didn't say I'd never manage to sell, only that it will take longer than my generation, famous for its I-want-what-I-want-right-now attitude, is used to."
The group most harmed by the real estate bubble is the baby boomers who were relying on their imaginary home equity as their primary retirement nest egg. Boomers fortunate (or unfortunate) enough to live in areas that avoided the housing bubble never believed they had hundreds of thousands of extra equity dollars to create false expectations. Prudent boomers in these areas maintained other savings vehicles, whereas in California even the prudent came to believe outside saving was less important when the appreciation God's endowed them with so much housing wealth.
Eventually, baby boomers are going to need to convert their housing asset into living cash. For their sake, I hope they don't use reverse mortgages — the terminal Option ARM for seniors — but more on that for another post. Baby boomers face either downsizing to sell and extract cash equity, or as the article points out, they must stay put. If they either chose to stay or if they are forced to stay, they will need to (1) earn more money through delaying retirement (2) live on less in retirement and-or (3) grow a cancerous reverse mortgage which will leave them homeless and penniless in their old age. The last option being more difficult when many HELOCed themselves out of equity during the good times.
Whatever solution baby boomers hatch, succeeding generations pay the bills either through government entitlements or overpriced homes. As the Keystone Kops in our government attempt to keep the Ponzi Scheme inflated, particularly here in California, generations following the baby boomers are asked to pay higher debt-to-income ratios and assume larger overall debt loads in order to benefit baby boomers. The generation that cashes-out the baby boomers will not receive a similar entitlement. The California Social Contract is dead.
Irvine Home Address … 55 CASTILLO Irvine, CA 92620
Resale Home Price … $599,000
Income Requirement ……. $124,736
Down Payment Needed … $119,800
20% Down Conventional
Home Purchase Price … $441,000
Home Purchase Date …. 12/28/2009
Net Gain (Loss) ………. $122,060
Percent Change ………. 35.8%
Annual Appreciation … 198.5%
Mortgage Interest Rate ………. 5.05%
Monthly Mortgage Payment … $2,587
Monthly Cash Outlays …..….… $3,210
Monthly Cost of Ownership … $2,510
Property Details for 55 CASTILLO Irvine, CA 92620
Baths 2 baths
Home Size 1,650 sq ft
($363 / sq ft)
Lot Size 4,841 sq ft
Year Built 1977
Days on Market 7
Listing Updated 2/8/2010
MLS Number S604556
Property Type Single Family, Residential
Single story house with high ceiling. Newly installed/upgraded: Hardwood floor, Electric range, Dishwasher, recessed lights, garage door & opener, window blinds, paint. Granite countertop. Spacious attic above the kitchen. Walking distance to award-winning middle school, and shopping center. Low HOA fee. No mello-roos assessment.
The picture is missing the alter and incense….
The intersection of Irvine Boulevard and Culver Drive is just behind that wall.
Has anyone else noticed lenders seem to be foreclosing on the worst properties first?
That’s got to be noisy, with an intersection of two eight lane roads (three lanes each direction plus two left turn lanes on each street) right in your backyard. Not to mention polluted.
Why does the listing say it’s 1,650 square feet and the tax rolls say it’s 1,441 square feet? Doesn’t look like there’s any additions. The listing mentions an attic-maybe they are cheating and counting it in their square footage (they can’t do that, since it can’t be fully usable space).
Staying put means consuming more housing resources than necessary. Take a boomer in a house that is $400k today, that might have sold for $800k at bubblepeak. How much would they save moving to a $200k smaller house? Also factor in less cooling costs. Assume 75% equity, so would need $100k mortgage. Would lose mortgage deduction.
What level of appreciation would be needed to make the stick it out approach make sense? Do empty-nester boomers really need 3000 sqft? Can they make do with the 1500 downsized places that their parents moved into (adjust sqft for SoCal vs. other areas)?
“I hope they don’t use reverse mortgages — the terminal Option ARM for seniors …”
IMHO, the problem is lack of financial discipline and planning. Delusions kill, but not reverse mortgage or Option ARM.
I vote both.
That patio cover looks damaged and the patio is cracked. Why take a picture of that? Speaking of patio covers, we had a new one installed a few years ago. It’s permawood and will last forever and never needs painting. It was 1/2 the price of real wood and installed in 4 hours. It’s beautiful. 🙂
The area that I am keeping watch on is full of “winter homes”. You take a walk through it at night during the summer and you would think it is a ghost town. November rolls around and all of a sudden the cars start appearing in the driveways – Wisconsin, Minnesota, New Jersey, etc etc. Most were bought back in early ’90s for about 1/4 what the average listing price today.
I often think it sure must have been nice for these folks back in the day.
They get to have their little seasonal houses all around the country being continuously refinanced as rates drop. On top of that collect social security that is paid for by AZDavidPhx who rents down the street, earns well above the median income for the area but still cannot afford a modest house without willing to live house poor.
The current sellers can kiss my ass – there is no way I will go into debt slavery to fund some boomer’s golden years. If my only other option is buying in the ghetto then I’ll just keep renting down the street and be happier than the fool that hangs himself with 30 years of being house poor and a paycheck away from disaster.
In the meantime we have a bunch of houses sitting and not being used half of the year. Perfect.
That’s capitalism and the efficient allocation of resources! Wall St. is supposed to put capital where it serves the most good. Are you saying that excess housing in CAFLNVAZ isn’t a good use?
This would not have happened had capitalism and free market forces been present with regards to interest rates.
Our economy is a mixed economy, one where gov/t centrally plans with policy and doles out favors to the highest bidders. We call it capitalism but it is far from it.
Yup. Many think that capitalism has failed, but they know not what capitalism really is.
The baby boomers sure did get a sweet deal. Their parents (Depression and WWII era) knew the meaning of sacrifice, living within their means and many spilled their blood in faraway lands. The baby boomers reaped the benefits from all this. A high school diploma and a career at the local union shop ensured a great lifestyle (nice home, nice cars, meatloaf dinners, great returns on their portfolios, sweet entitlement packages, etc).
This current generation will need all the help they can get. Thanks a bunch baby boomers!
You obviously are not a baby boomer! I have some personal experience with the condition and I can tell you with some authority that “the deal” is not so sweet.
Many baby boomers do indeed have a standard of living better than their parents did, but after attending publicly subsidized colleges and universities, things were by no means easier for them. They competed for jobs and promotions in the seventies and eighties against legions of fellow baby boomers. It took two wages, not one, to not have a LOWER standard of living than their parents. They endured decades of the sacrifice of house slavery.
If you actually know a few baby boomers who only have a mere high school diploma, you would know that they now by and large live with a much LOWER standard of living than their similarly-educated parents did. No unions to advocate for them, either. Now baby boomers are facing working into their seventies and beyond because of the self-serving manipulations of a few on Wall Street.
Having said that, the main point IrvineRenter is making is that no one owes the baby boomers the sacrifice of continuing the Ponzi scheme that was the real estate bubble. No argument there!
I know many baby boomers. I will take my parents as an example. High school educations, 100% middle class, own a nice home outright in CA, my mom stayed home to raise the kids before they were school aged, my dad gets a sweet pension and sweet social security deals (retired before age 60). This doesn’t sound too bad to me.
Now let’s fast forward to today. There is no way in hell you can make the above situation work in today’s world. And it will only get tougher from here…
Actually, you don’t sound like a baby boomer to me, because if you were, you would understand that boomers have a much HIGHER standard of living than their parents.
I’m a boomer. My parents took us on exactly one family vacation during my entire childhood. I can recall going out to eat twice – both times when we had family reunions. We had one car, which we kept until it was worn out. We had no $50, $100, $400 toys as kids. People didn’t spend money on gym memberships, plastic surgery (unless they got nose jobs, that’s it), cell phone plans and internet access(obviously), going out to eat three times a week, enough toys to bury the kids and every electronic gadget you could think of. I was not poor, we were a very typical middle class family in the 1960’s. We had a MUCH lower standard of living, if you measure it by the number of possessions and experiences we had. But, the parents of boomers had money in the bank and they paid off their houses.
You can’t spend money on every little whim, pay off an expensive mortgage for a house 3 times the size of the one you grew up in and have money in the bank unless you are wealthy. Boomers forget that their parents didn’t spend money on 90% of the stuff boomers fill their houses with. They only remember the bank account and the slow appreciation of the modest houses their parents owned after 30 years of mortgage payments.
Sorry for the rant. I just don’t like it when boomers whine about how much better their parents had it, when I think they are just suffering from selective memories.
Boomers just had the luck of living in the golden era of the post WWI America. Abundance of jobs and insatiate demand were the theme of 60’s – 70’s, from 80’s to 2007 they enjoyed the fruits (seemed like falling off the sky) of one of the longest and most robust economic expansion in US history, that was built on
1. cheap energy and other resources (middle east oil, etc)
2. cheap labor from other countries – the wonderful global labor arbitrage
3. cheap money – 25 years of credit expansion devised and facilitated by Greenspan, Bernenke and Wall Street
# 1 & 2 led to cheap goods and products, #3 made it possible for rapid asset appreciation and debt fueled consumption. All three will likely be gone during our generation:
1. rising demand for energy from BRIC and peak oil production will eventually make $2/gallon gasoline a distant memory
2. unless you believe RMB will stay low and Chinese workers will get paid pittance for their labor perpetually
3. just watch out for a bond market rebellion
Boomers are rewarded for being lucky – simply by being at the right time and place in the history. The current generation will see gradual degradation of their standard of living. As for next generation – the generation of my 4-year-old child, I dare not to think.
“As for next generation – the generation of my 4-year-old child, I dare not to think.”
I only worry for future generations in terms of health care, educational opportunities, and not being killed in wars.
As for standard of living? Beyond the categories I have listed above, I’m not sure our standard of living has done much to increase our happiness. Sure, it sucks to think of a future without BMWs, but then I remember that ownership of such things does nothing to increase one’s happiness.
It could be that I’m naive about material possessions, but our standard of living is so extremely high that it can fall quite a distance before true suffering takes place, at least in terms of material possessions.
Another way that California really favors the old over the young is through Prop. 13, which says the assessed value of a home may be increased only by a maximum of 2% per year. This leads to crazy tax advantages for people who have owned for a long time, simply due to having LIVED for a long time. A few years ago my grandfather sold his home, where he’d lived since the 1950’s, for about 1.3 million—but for tax purposes, it had been assessed up to that time at something like a tenth of that (I don’t remember the exact figure, but it was ridiculously low). And he was not the least bit poor; he could have afforded to pay taxes on the real market value of his home.
If I were to buy a one-bedroom apartment, I would probably be paying taxes equal to what Grampa paid on his mansion. I think it’s totally unfair.
I made a similar comment on this to one of IR’s posts from January.
The elderly neighbors of my former home in The Ranch bought their home new in the early 70s, and thanks to Prop 13 they paid less than $1000 property tax in 2009!
It’s often a form of tax on people moving to CA.
And if/when you become a homeowner, Prop 13 will protect you too. Sure, you may pay a lot more than the oldie next door, but you’ll know that going into the purchase. And hey this is IHB, we all know you don’t have to buy a home.
You’ll know exactly what your property tax is, and how fast it may grow. Should inflation become a runaway train, the state of CA can’t come after you for more property tax.
It’s not perfect. No law or tax is. There are perverse outliers we can all identify. Is it fair that my household’s last dollar earned is taxed at 37% (28% Fed + 9 CA), while some oldie’s collecting dividend income of millions in stocks taxed at 15%?
I’m actually a homeowner in California (lots of equity -imagine that) with a child I’ve tried to keep in public school. It’s become evident to me that, despite the undoubted benefits of Prop 13, it actually has helped to destroy the social contract by defunding schools. The old no longer pay for the education of the young, so later generations foot the bill not only for higher property taxes (based on housing prices post-1978) but also for private school tuition.
You’ve bought the CA Democrat song-and-dance. They blame everything on Prop 13. Property tax has been a study and growing stream of income for CA, unlike the state income tax and other sources of “revenue.” We spend more per capita inflation-adjusted on public education today then we did in the years prior to Prop 13.
There are many reasons for CA schools’ poor performance (relative to other states), but lack of funding is not one of them. Public employee unions are the enemy here, not Prop 13.
unions are to protect mediocrity.
No child left behind means no child gets ahead.
Stop blaming on Prop 13 (BTW, I’m an X) and the defunding of public schools. Frankly, if I had 10 kids and knowing that my kids can get FREE education regardless of your family status(try paying for tuition for K-12 for most of the countries around the world…you’ll be thankful that this country has offered FREE K-12 public education), I’d jump the border too.
I wrote about this a few years ago. At that time, The California Budget Project had a concise Excel spreadsheet that shows 44% of the budget is spent on K-12 education and another 14% goes toward the UC and Cal State systems. That’s a grand total of 58% of an incredibly bloated state budget spent on education!
housing isn’t the only arena that the rest of us are having to fund…
“The cost of the trillion-dollar shortfall, which will be paid over the coming decades, is about $8,800 for each American household. The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding” from the article : States must fill $1 trillion pension gap. link to the full article
The OC Register had a good article yesterday (sorry, too lazy to link) about an older couple in Fountain Valley that went through several agents and several price reductions to sell their house they had owned for 32 years.
Of course the couple was bummed they didn’t get the peak bubble price of 900K…but still sold it for 715K. This is baby boomer highway robbery. The next buyers (suckers) will toil to make that monthly nut and see almost no appreciation. Welcome to wealth transfer 2010 style.
The baby boomers saw that their parents sold their paid-off houses and had some retirement $. The boomers just failed to either understand or accept that their parents’ home appreciation occurred over something like 30 years, and the house was paid off the old-fashioned way. The boomers figured they could use their houses the same way, but on a 5-year track, not a 30-year track.
I’ve been watching this home for a long time.
I believe it was on the market some of 2008 and almost all of 2009 as a short sale. If I remember correctly, they started listing it around 650k and it got down to either 450k or 480k last summer with no biters.
I think a 3rd party bought it in December and did a complete remodel of the interior. The kitchen and floors DID NOT look like that a few months ago. I wish i saved the pics but there was also like a random ladder going into the wall/ceiling (hard to tell) but I’m guessing its for an attic or something. But I believe this is a flip attempt picked up by a 3rd party and not a Bank Owned REO. The only thing it looks like they didn’t upgrade was the backyard.
There 2 more homes on Castillo scheduled for auction and one more with a NOD.
I recall this house too. I think it was a short sale in late 2009, and now a flip.
“Has anyone else noticed lenders seem to be foreclosing on the worst properties first?”
Not a bad plan on their part, off load the junk while there is no inventory and the making homes more expensive programs are running, then start working on the better properties that should sell easier.
Yes, if I were a bank asset manager, that is what I would be doing.
Too bad they were not this smart when lending the money…
And for something different, here is an article from the UK Times which is talking about breaking down the UK real estate monopoly by opening up the housing market to Google and Tesco (UK equivalent of Kroger or WalMart). I’d think more competition would be a good thing for our used home salespeople.
IR, just to nit pick your grammar:
“Prudent boomers in these areas maintained other savings vehicles, whereas in California even the prudent came to believe outside saving was less important when the appreciation God’s endowed them with so much housing wealth.”
Don’t you mean “… the appreciation gods endowed them with so much housing wealth …” ? God doesn’t get capitalized (unless you’re talking about THE God) and it’s certainly not possessive in this case.
Sorry, I really don’t mean to be a pain (we all make mistakes – I *frequently* do myself), just surprised you or anyone else haven’t caught it yet.
Thank you for pointing it out. You are correct on both counts: gods is not capitalized when referring to general dieties in plural, and it is not possessive in this instance.
Amazing how I managed to make two errors in five characters. That must be a record.
I.R. Some of us (Boomers) found the IHB and began to re-assess their situation. We cut up the plastic,and assessing the damage of twenty years of excess consumption, settled on a 4.75% 15 year fixed mortgage, courtesy of the Fed’s manipulation. I am paying for my house a second time, but I did it, I spent the money and that’s it. We are accelerating our payment to amortize in about 7 years, which is a keystone in our retirement, fixed low housing costs (insurance, utilities and repairs). I was fortunate that my wife never bought into my entitlement regarding a “big house in the suburbs”. 1660 square feet gets pretty big when the kids move out.
Re: Prop 13: Boomers largely didn’t vote for it, our parents did. It was obviously unfair and a poison pill from corporate America. They had a name for us then too, “angry renters”, because we knew the benefits would not be passed on to us. My neighbor across the street now pays half what I pay, my neighbors to either side pay twice what I pay. So much for equal protection under the law.
There is also a simple fix for Social Security, but it is a political “third rail”. The age to collect benefits needs to go up substantially, period. The income cap on contributions likewise should go. good luck getting that passed. It is simple, it would work, so we won’t even discuss it.
Thanks to IR and the regulars, i just wanted you to know that my life was improved by this forum.
“The age to collect benefits needs to go up substantially, period.”
Weird that these basic proposals for Social Security are not to be spoken of in public.
People are living longer, so raise the age of eligibility for benefits. Simple and completely fair, yet rarely discussed.
HydroC: Too many of my peers are not aware of how the demographics have shifted from the 1930’s when Social Security was actuarialy supported. If you haven’t saved up enough, work some more. Not only are we not “owed” our bubble equity, we aren’t owed a long life on your dime. AARP would come out gunning for anyone who suggested it, but it’s just about the math……
“The income cap on contributions likewise should go. good luck getting that passed”
Just a question: have you ever made over 103K/yr? If you do, you probably wouldn’t be too keen on a statements like that.
I’ve paid my fair share into the SS system – surely come age 67, I won’t see nearly the same ROI that those that make less (and contributed less) than me have. If you want Socialism, move to Europe.
Garrison: Short answer “yes”. Plus my self-employed spouse gets to pay double (employee &
employer contributions. Your comment implies that Social Security is an investment, I think of it more as a social contract ( I am so going to get nailed for this) It was a grand idea, supporeted by contributions & viable going forward. Then two thing happened, entitlements and longer life.
As to your comment on socialism, if you mean police & fire protection,roads, public health, water, parks and a national defense, I’m in! if you mean the part where you and I put more in than we get out, than I’m in for that too.
If you look at prop 13 as a part of the overall tax picture, we are being killed in California. We pay the most taxes, by far, and we are still insolvent.
The next few years will be interesting. We will all be tightening our belts and I am wondering what will happen to the markets for new cars, electronics, etc.
“We will all be tightening our belts and I am wondering what will happen to the markets for new cars, electronics, etc. ”
I’ve been saying this for the past few years – if someone is putting 50%+ of their incomes toward housing costs, that leaves very little left to spend and/or save.
The combination of the HELOC ATM and the option ARM freed up tons of cash that stimulated our economy during the bubble years. The fact that they’re both long gone, and the resetting of loans to pay down principal spells a recipe for disaster, dragging out any economic recovery.
Let home prices fall, let those who cannot afford their homes get out and rent instead, and let the banks and holders of MBSes eat it (they took on that risk in the first place; sometimes your bets don’t always work out). There are plenty of people out there who have money and who could afford a home that is reasonably priced. Those who were foreclosed on could rent cheaper and save the difference so they could buy a house later down the road when their credit scores aren’t so bad, or they could choose to spend that additional money which will boost our economy.
It’s a win-win for the consumer and for the economy, but not for the banks and MBS holders who have to take big losses, and also not for the municipalities who depend tax revenues on inflated home values.
Prop 13 was to limit CA govt spending, but fail to keep spending in check. Prop. 13 limited the property tax on existing owners and creating an unjust tax system in CA where the older owners pay very little and the burden is on the new owners (young and/or new commers). Hundred million dollar mansion owners, who are over 65 years old are paying $10,000 in property taxes, while new owners are paying more for a little hobble with property tax and MR assessment. Don’t get me started on the RE tax free for those above 65 that buy a larger house and still get their small condo. tax RE assessment.
You may not become the personal debt slave, but most of us will become a collective debt slave to pay off the federal debt. Try not paying and see what will happen.
How about blaming Prop 98 for a change?
Oh no…….no…….we need to spend a lot of money on children’s education.
Stop using children as excuses for excessive spending as well as shields for economic failure.
“most of us will become a collective debt slave to pay off the federal debt”
Who says you have to pay off the **Federal** debt? Is this the only country in the world that you can live in?
Even if one decides to live outside the U.S., a U.S. resident still has to pay taxes (at least Federal income tax) on income above a certain level. One may leave America but America will not leave him 🙂
Forgo your citizenship then.
“If you look at prop 13 as a part of the overall tax picture, we are being killed in California. We pay the most taxes, by far, and we are still insolvent.”
California residents don’t pay the most taxes. CA is #17 by tax burden/GDP, #9 for tax burden per capita. We may have the highest total tax burden out of all states but we also have the largest population and GDP.
I don’t like the rankings based on per capita. It makes my tax burden look smaller just because there are a lot of children in CA.
To: Baby Boomers
From: Their Children’s Generation
Please be advised that we will protect your interests as you get older with the same care you looked out for our collective futures. Enjoy the coming around of the going around!
That should be freeze in Don’t get me started on the RE tax freeZE for those above 65 that buy a larger house and still get their small condo. tax RE assessment.
I think the premise behind proposition 13 makes sense but the arbitrary 2% annual increase does not make sense. I think the annual increase should be tied to the rate of inflation and retirees SS income increases.
Yes, that is exactly the kind of common-sense approach that should be implemented.
I am a boomer, 51 years old, bought my first house in ’82 for 46K in Perris. Current assessed value is 75K but the recent sales are about 50K. I have asked the county to adjust it.
Bought my second house in ’85 for 100K and did an addition for 25K in Riverside. Current assessed value is 178K and that is where I expect the value to level out to in a few years.
So from where I stand, I just don’t see problem with prop 13. Why should any of us have to pay taxes on bubble equity?
The examples of these original owners from the early ’70 with their $1,300 a year taxes are my parents generation. The inflation of the late 70’s worked for them and they were still working so they got the large raises in the ’80 but still had the low housing cost.
I have had a better standard of living than my parents did early on but come retirement, I will not have the county pension my mother enjoys now or the health benefits.
Prop 13 would be fine if it was more limited. For example, commercial properties are included. A shopping mall or office tower built in 1970 is probably worth 30, 40, 100 times the initial cost today, but it’s property taxes have been limited by the 2% a year increase that prop 13 sets. Also, there’s no income limit. The point of the proposition was to prevent grandma from losing her house to high taxes, not to prevent some billionaire from paying less taxes on his huge mansion than the owner of some dump of a condo across town.
By keeping taxes for billionaires and huge corporations low, taxes on everybody else have to go up to compensate, or else roads and schools and police and everything else will be underfunded.
Very well said.
Don’t separate this into a rich v poor argument. I am poor and I want to lower taxes on everyone so businessmen can bring viable jobs to the people around me. The gov/t can’t do that.
Everyone is affected/effected by inflation. Some strive to make more money, some are on fixed income. Some put their money in things that pace inflation, and some choose cash or savings accounts and diminished purchasing power.
The culprit is gov/t policy: overspending, borrowing, and perma-inflation.
As gov/t grows, private sector shrinks. As taxes increase, private sector leaves. Sound sustainable? The problem is an overly burdensome gov/t and lack of understanding by voters the importance of a balanced budget. Too many voters on the gov/t payroll is dangerous – Greece riots everytime the gov/t tries to reign in spending.
If we have to drive over pot holes, kids don’t get the fanciest crap in schools, and police and firemen get paycuts, so be it. We cannot appease every gov/t worker and sector in the name of financial and economic suicide – because everybody loses then.
A certain amount of government spending on schools, roads, police and fire protection, defense, etc. is needed for a civilized society to function.
If you want a Libertarian paradise, I hear Somalia is nice this time of year.
Matt138: Well said!
We have now seen that giving them more does not mean we are better off. The experiment of paying more for teacher and getting better results did not happen. Governments will just throw it in the black hole (pensions)and come asking for more. If we say no to more taxes, then we can at least have some money left over to raise our kids properly or fund our own retirement.