Headline September 01, 2016/ ''' MARKETS -CHEAP- *MONEY* '''


*YOU*,  -YOU STUDENTS OF THE WORLD  -had better wake up to your responsibilities in a world drowning really fast in debt, and cheap money:

Big numbers are all around you,  -the world over, and they are bound to shape political debates, including  *the way you think about things*. You will soon be hearing, ever more and more on this-

About the  prodigious size of your *national debts*. Take England's Pound 1,603 billion this July, in the latest official statistics. 

More on it, as we go along : Merium, Rabo, Haleema, Dee, Hussain, Ali, Zain Tariq Hameed, Malala [Nobel Prize],  Noman, Ehsan, Abu Bakar Khan, Sarah, Saima, Aqsa. Paras, Sorat, Vishnu/India, Mustafa, Emaan.....best, listen up!   

KARL MARX WAS WRONG : FREE MARKETS are wonderful. They have delivered prosperity on an astonishing scale and helped bind the world together.

But their greatest triumph has been  their ability to turn workers into capitalists, writes Allister Heath. Forget about those obsolete class-war theories so beloved of Jeremy Corbyn's fans:

Middle Britain's army of home owners, investors and wealth accumulators own trillion of pounds worth of capital.

Yet all of this progress towards a genuinely classless society, in the Marxist sense at least, is now at risk. The ongoing devaluation of thrift, the rise of zero or negative interest rates and our economic establishment's obsession with free credit means-

That it is becoming unreasonably hard for  non-financial experts to accumulate wealth, especially for the young and those who are starting from nothing.

Savers, the linchpin of middle-class stability, the epitome of responsible individualism that underpins all successful democracies, are facing their greatest challenge since the 1970s.

This means hugely, not least because contemporary Britain rests on a number of grand bargains.

One is that hard work, thrift and long-term planning should be rewarded in return for for the public being asked to take control of their personal finances.  

Because we now live longer, the company organized private sector final salary pension model is no longer financially viable; the state is also far too stretched and can only provide, at best, a very basic safety net.

The responsibility and risk of providing for one's retirement have therefore shifted to individuals, and rightly so, the old paternalistic model was always an aberration, an unsustainable phase of early-stage capitalism.

The problem is that  ultra-low interest rates are destroying the economics of wealth accumulation,

Since the end of  19th century  at least,  savers were propelled not just by how much they could put aside but by the wonders of compounding: by reinvesting interest and dividend payments, portfolio values grow and eventually snowball.

Today, with gift yields of 0.5 per cent and inflation at  0.6 per cent, compounding is dead.

Real returns are either zero or negative, time is no longer the saver's friend. As early as in the early 1980s, the US or British governments had to pay 15 per cent interest on their  IOUs  to attract savers, even when accounting for much higher inflation, this was a hugely better deal.

The flip side is that it has become impossible, to live off interest in dividends. A decade ago, anybody seeking to enjoy a Pound 35,000 annuity in retirement needed to accumulate Pound 761,000 to do so. 

Today, the savings pot required would worth be around Pound 1.4 million, beyond the reach of almost everybody-

And larger than the maximum allowed under current pension pot regulations. 

It's madness. Needless, to say, the current generation of savers has benefited enormously from the boom in asset prices caused by quantitative easing and the lowering of the cost of money.

*The issue is the future*.

The Honour and Serving of the latest operational research on   ''Economies & Economics''  continues. Thank Ya all for reading and sharing forward. And see you on the following one.

With respectful dedication to the Students, Professors and Teachers of the world. See Ya all on !WOW!  -the World Students Society and !E-WOW! -the Ecosystem 2011:

''' Code Breaker '''

Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless


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