How to create wealth?
A question that many people continue to search for is how to create wealth. Well wouldn’t it be nice if there were some easy method for creating wealth and passive income streams. But realistically there isn’t any that I know of, if wrong, write your suggestions below in the comment box. (italics: slightly reworded from original)
To be more precise, by the idea of wealth people think about money, however wealth of misery is also wealth, to show the extremes. Flooding the market with stimuli money that generates more debt destroys wealth that is like the use of fuel to extinguish a fire.
Responsible personal finance is the most important aspect in wealth creation in life than anything else, which often is overlooked. Creating wealth brings happiness and ease of life, by removing the many stresses on financial challenges and burdens.
However wealth is created by hard work, saving, innovation, investment, and perseverance.
While wealth is created by work and saving, it is destroyed by consumption and debt. When money is borrowed, it has to be paid back again. During that event wealth is draw down, living standard is reduced, and a decrease into the savings that were made before or not going to be made at all. There is no way out from paying off debt, every dodge will make the situation worse.
A new generation of economists took over from the ones that lived through the Great Depression 1.0. Most of them born after the war, they only know hard times from history and movies. They have never lived through hard times and learned the old reality of thrift.
They think the key to prosperity is spending. Consumers spend until they can't go on anymore. Then it's up to the government to help them out, with stimuli packages and tax rebates.
That's why governments run such high deficits. They all think they need to keep up spending - at all costs - in order to boost the economy. Of course this makes no sense, not theoretically and not practically either. Moreover there's no evidence that it worked in the past either.
Every time governments have intervened with large stimuli of countercyclical spending they have made a mess of the economy, either by stimulating the private sector to further acts of reckless insolvency, or by blocking the process of honest market correction.
Dave Rosenberg says the unemployment rate is headed to 12-13%. And then, it's going to stick at more than 10% for a long time.
Think about it. We haven't yet hit bottom on employment but that will happen at some point. Employment is not going to zero, of that we can assure you. But when we do start to see the economic clouds part in a more decisive fashion, what are employers likely to do first? Well, naturally they will begin to boost the workweek and just getting back to pre-recession levels would be the same as hiring more than two million people. Then there are the record number of people who got furloughed into part-time work and again, they total over nine million, and these folks are not counted as unemployed even if they are working considerably fewer days than they were before the credit crunch began.
So the business sector has a vast pool of resources to draw from before they start tapping into the ranks of the unemployed or the typical 100,000-125,000 new entrants into the labour force when the economy turns the corner. Hence the unemployment rate is going to very likely be making new highs long after the recession is over - perhaps even years.
As explained before this crisis will become a long lasting Japanese-like slump.
Capitalism doesn't make anyone rich. It only allows people to compete for wealth on more or less equal terms. Obviously, some are better at it than others. Most people prefer alcohol, television or jobs on Wall Street to the rough and tumble of real enterprise and entrepreneurship. And almost everyone is prey to bubble illusions, hoping to get something for nothing. And then, when capitalism corrects their mistakes, they turn nostalgic, longing for the state to intervene and rig the game in their favour.
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Burnaby, British Columbia, Canada