Walking the tightrope during ‘middle year’ requires great balance

Life may not be meals, as one best-selling book claims, but both should be balanced.

A balanced meal, of course, is one in which the last morsel from the cord of string beans is followed by the last heaping forkful of potatoes and then the last chunk of bleu cheese-slathered steak so rare you suspect a good vet could heal it, all washed down by the last of a bottle of impudent dry, red wine.

As for a balanced life, this might best be illustrated by an anecdote from my former boss, who tells of visiting the home of a major metropolitan newspaper executive and his impressively stocked 1,000-bottle wine cellar. The executive quipped that his ideal life would be one in which, on his last day of life, he spent his last dollar and drank his last bottle of wine — balance.

This quip also illustrates the difference between top floor newspaper management and those in the ink-stained trenches, since my “cellar” holds a mere 100 bottles — one side stocked with the “two-buck Chuck” varietals for the guests who wouldn’t know a corkscrew from a backscratcher and the other mostly with middling California reds lying indolent in wait of those suitable occasions and discerning palates while they mature enough to have their corks popped, if I may be so vulgar.

During this time of lingering near-double-digit unemployment and depressing levels of underemployment across the state of Nevada, with some counties still hovering above 12 percent joblessness, more and more people reaching their middle years and beyond are contemplating just how to balance their lives so that their remaining days don’t reach too far beyond their cache of dollars and bottles — or whatever their comparable indulgence. They know full well that the ending balance could be upset at any time by an unexpected expense for plumbing repairs or replacement parts, whether for home, car or their own aging bodies.

What most people fail to realize is that their life savings is being slowly but inexorably siphoned off by the willful and calculated scheme of a body of unelected bureaucrats. The Federal Reserve has for several years embraced a policy of rock bottom interest rates — close to zero, in fact — in an unabashed effort to encourage businesses to borrow and invest and perhaps grow the economy. The policy favors risky investments over safe and sound saving. If it is working, it is a painfully slow process.

According to a recent analysis by McKinsey Global Institute, by the end of 2012, households in the U.S., U.K. and the Eurozone had collectively lost $630 billion in net interest income due to this monetary policy.

This is occurring while most households in Nevada have seen their biggest risky investment halved — their home equity.

Meanwhile, this Fed policy has resulted in interest rates for low-risk savings accounts earning less than 1 percent, but at the same time inflation has been bobbing between 1 and 4 percent, meaning the buying power is in a slow but steady decline.

The fear is that — with all the quantitative easing and buying of bonds — inflation may not remain so modest.

In a press conference, Fed Chair Ben Bernanke once admitted the potential danger and tried to assuage the American savers.

“My colleagues and I are very much aware that holders of interest bearing assets, such as certificates of deposit, are receiving very low returns,” he said. “But low interest rates also support the value of many other assets that Americans own, such as homes and businesses large and small. … it is difficult to save for retirement or other goals without the income from a job. Thus, while low interest rates do impose some costs, Americans will ultimately benefit most from the healthy and growing economy that low interest rates help promote.”

He followed this by saying the Fed has managed to keep inflation close to its goal of 2 percent a year — though it was nearly 4 percent in 2008.

This is from the man who said in 2005, “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

Doesn’t that instill confidence? Thought you’d like to know how they are looking out for your life’s savings.

Thomas Mitchell is a longtime Nevada newspaper columnist. You may email him at thomasmnv@yahoo.com. Read additional musings on his blog at http://4thst8.wordpress.com/.

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