Saving Physical Assets - Why?
Squirrels have the right idea when it comes to saving. They bury acorns in the spring and summer so they will have something to eat in the fall and winter. We aren’t as smart as squirrels. We don’t build up stockpiles of useful things to meet our needs. Instead we buy and sell physical things such as land and buildings, and more ephemeral things such as stocks and bonds. As we have seen recently, our system doesn’t work that well. Lots of people have lost most of the acorns they thought they had. If you want acorns, save acorns. It may not help to own the tree or have rights to its production next year if you need acorns today.
There is going to be a big problem when the baby boomer generation retires. There will be a lot of frail elderly people who aren’t working and need expensive medical care. How, physically, are we going to meet this need? The baby boomers have invested in real estate and stocks. They need food and healthcare. Can real estate and stocks be converted into food and healthcare? The answer, regrettably, is no. We are going to have too much real estate and stocks and not enough food and healthcare when the baby boomers retire. The baby boomers will try to sell their real estate and stocks so they can buy food and healthcare. Unfortunately, there won’t be enough people interested in buying them. Real estate and stock prices will tumble. The baby boomers won’t have enough money to buy the food and healthcare they need. Baby boomers are investing in the wrong things.
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