Archive for the ‘finance’ Tag

Is the easy life truly easy?

I was at the gym the other day, and I saw the cardio room filled with people, everyone moving on stationary machines, but going nowhere, and I laughed to myself. Later, on the way out, my laughter turned to amazement when someone told me about a projection keyboard her teacher used in her class. I didn’t understand how a keyboard could be projected and still work. Then I got to thinking about how our entire economy was dependent on bankers buying and selling bets, and how that could work.

Sounds abstract? I think so, too. So…

Is it possible to make life too abstract?

In a previous blog. I talked about how exercise gives us a feeling of accomplishment which is needed in a society that seeks to make things easier. When I looked out on the rows of cardio machines last week, I saw something a little different. There were people running in place. I turned to the other end of the gym, where people were lifting weights, up and down, over and over again.

It’s funny how we’ve replaced the work that gives us this exercise naturally, like washing clothes by hand, walking or biking to work, or raising and making our own food. We have specialized roles now, a machine washes our clothes or a laundromat offers to do it for us. Groceries provide us food, and a cook and a waiter who provide us meals. There are garbage men to pick up our trash and lawn service for our yards. We’ve got cars that we can drive, taxi drivers that can drive us, and car mechanics that will change our oil.

The same thing is happening with our retirement accounts. Instead of investing in stocks and bonds in companies we think are making a good product, we give our money to bankers and they make us money. They still buy stocks and bonds, but today we have added bets in the mix. These are bets that someone else’s purchase is going to go up in value. You can even bet whether something will go down in value.

Sound abstract? I think so, too.

The easy decision is easy…at first

We use machines to make it easier to do things and get places. It’s easy, but then we realize we bought a car that has 6 cylinders, instead of 4, and has cargo space for 6 people, and those things cost more. We realize that our sedentary lifestyle requires us to exercise. Not easy, because we must now pay money and make extra time to drive to a gym.

We’ve lost the knowledge of how to landscape a yard, or even change the oil in our car, and this makes us more helpless than before. And instead of making meals which we know the ingredients, we buy convenient meals which can contain sugars and fats that are out of our hands, hidden in the food.

Maybe most important, our investments are made by bankers. They send us statements that show that our little pile of money is ever increasing. It’s easy. Until we realize we don’t know what a derivative is, or a collateralized debt obligation, but we staked our future on them. We then realize that everything we’re doing is postponing the cost. The cost of us not supervising the banker is measured by the number of lost jobs and failed businesses after the banks defraud us and mismanage our investments.  

Sound abstract? I think so, too.

My cousin is vice-president of Securities at TD Bank.  He might be able to help us sort it out. I asked him how the derivative collapse affected them. He said, “Not too much.”

“Really?” I answered, surprised.

 “We looked at mortgage derivatives as a possible investment. We didn’t understand it, so we passed,” he answered simply.

If something is too complicated, ask why that is.

Maybe then we can make our lives truly easier.

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