In today’s world there is massive change happening all around us. The changes are happening at a rapid pace. Change is inevitable. The internet, government and the ultra rich are driving the changes. Only people who want to change and embrace change will make it. Change is happening in many forms.
Donald Trump, who was being interviewed by Fox News Greta Van Sustren, said that manufacturing in America is being shipped out of country to China, Mexico and other countries. The American government facilitates this exportation of jobs by giving those businesses tax incentive to leave. This means jobs are lost, communities destroyed, families are pushed into the poor class.
The jobs that are lost to other countries may never come back. When the United States begins manufacturing again or some of the jobs return to the United States, the people that will be employed to perform these jobs will be paid at a much lower wage, keeping them in the poor class. As the American government continues to print dollars inflation will result so the cost of all products and especially raw goods will cost more to purchase. As everyone knows that last thing to inflate in price is wages. Business knows that the best way to control costs is through employee wages. In a manufacturing company the easiest way to control wages is to lay off employees or move to another country to manufacture products. Cheap labor, no employee benefits, lower taxes and incentives from the American government to move your business out of country is business dreams come true.
A major change that has duped American employees has been going on for decades are our retirement plans. Before 1974 employees could count on retirement being paid by the company they worked for. The pension plan was a defined benefit (DB) pension plan. A DB pension plan was a plan that the employee never had to contribute their earnings to. In 1974 (ERISA) Employee Retirement Income Security act was put into law. ERISA took companies off the hook for paying the entire cost of an employee’s retirement and put it on the employee to fund their retirement. The ERISA law changed the pension plans from a DB (defined benefit) to a defined contribution (DC) meaning the employee is now responsible for their retirement and has to apply their earning to their retirement.
The duping of American employees directly enriches the bank accounts of the rich and steals from the employee. The theft of the employee begins with the company bringing in people from a mutual fund company. They will offer many different mutual funds within the mutual fund company. These sales people are taught to tell us to diversify. In effect a mutual fund is diversification. A mutual fund invests in many companies. The salesperson will tell the employees that they should also diversify in different risk classes. The sales person will also tell you that you may move your earnings around to the different mutual funds online within the mutual fund company.
Warren Buffet said “Wide diversification is only required when investors do not understand what they are doing.” Mutual funds are in the paper asset class. There are four asset classes; business, real estate, paper assets, and commodities. So diversifying in mutual funds is just investing in paper assets. Paper assets are in the stock market. The stock market moves up and down. Your mutual fund is a paper asset; your investment will follow the stock market. The stock market has not been a very good place lately for long term investors.
The salespeople will not tell you that the investor takes 100% of the risk and 100% of any loss. The mutual fund companies receive their money before the employee receives their paycheck and takes no risk because they take their fees before it is invested. When the employee’s money is invested the mutual fund continually takes more fees as any transaction is made. The mutual fund company takes their money whether or not employee makes or loses money in their investment. The risk is all on the employee. The rich become richer and the poor become poorer.
The internet is the invisible change and is moving at light speed. Business can now be conducted twenty four hours a day seven days a week around the world. Everyone has noticed many video stores have gone out of business like Block Busters Video Stores. Video stores went from VHS tapes to CD’s. Then their demise hit hard when you could order movies through the internet. That is only the tip of the iceberg. Looking at the airline industry, the internet makes it possible to communicate with loves on a moments notice lessening the need to fly to see your love ones who live thousand of miles away. More importantly, business can conduct meetings with their clients and employees on a moment notice and have real time conversations and video feeds. No need to hop on a jumbo jet to visit your clients or employees half way around the world. The airline industry is moving into a secondary system of transportation just as the railroads have. Moving freight will be the focus of the airline industry just as the railroad system is today.
Business will change. Business will see that it is more economical to pay for a computer and internet in an employee’s home than locate in an office building. With more shopping done on the internet more strip shopping malls will have empty storefronts than ever before. Home business will proliferate at break neck speed as families try to keep up with inflation by bringing in another line of cashflow. Winners in this economy will attain financial education and internet marketing education. The losers will try to maintain the outdated idea that you work for a company for security and retire with a pension plan
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