which do you prefer: 1. an uneventful economy with consistent 6.5% unemployment and consistent, modest GDP growth of 3%, or: 2. the boom-bust cycles we've been seeing where unemployment bounces between 3% and 10%, and where GDP bounces between -2% and 6%. myself, i like these boom-bust cycles. you can make a lot during the boom years then sock it away, and during the bust years you can really live it up and buy anything your heart desires at fire-sale prices.
We can't afford boom-bust cycles, you may love it now, but just wait until the banks stop lending money or another great depression happens. You won't be preferring it as much then.
what makes you think i won't like it if we have a great depression? we just had a near-great depression and i'm loving it. everything is cheap these days: cars, homes, watches, travel, women... and i'd like it if banks stopped lending money because that'd make stuff even CHEAPER. how much would homes fall if all banks required 50% or 100% down? i could get a $3m beachfront property in Calif for $750k.
Very good point. I like steady ... but I think steady is gone. So I have to cope with and improve boom bust skills. My concern is that boom and bust are about to move to Germany and that steady is already there. Solid warnings regarding the doctrine of Charlemagne from top world leaders after WW2 are not being heeded at all. If steady, boom and bust move ... things will be very cheap ... but violence will be very expensive for the USA.
In a true bust, your bank account would be wiped out obviously, and all that is cheap will be out of your reach probably.
your conclusion is incorrect since it is not obvious that in a bust your bank account would be wiped out. "Of the more than 25,000 banks in business in 1929, fewer than 15,000 survived to 1933." ________________________________ denying the natural corrective economic forces will result in a bigger bust down the road. the economy is treated by the gov't just like a heroin junkie. the junkie needs ever more heroin to seem to function. eventually the junkie dies from an overdose. the same is true of the economy. eventually there is a collapse.
Fair enough, let's call the odds of your bank faltering 50%. Flip a coin. I would also like to add busts can manifest themselves troughout many other ways than banks failing alone all of them having a possible impact on the possibility of the savy individual taking advantage of the downturn.
#2 is not a boom or bust cycle. range is too narrow. #1 is unlikely because GDP growth of 3% per year is not the natural rate of growth for the US or Europe. it is probably much less.
the odds of my bank failing would be near zero after doing research. I also would not keep all my money in 1 bank and would keep money underneath the mattress.