What effect does our poor personal finance skills have on the us economy?

Answer 1

We are entering new territory with credit. Time will tell.
Consequences could be an increase in homelessness, working longer, dying at work, more bankruptcies, less freedom, decreased opportunities, reduction in number of people able to pursue happiness, etc.

Answer 2

In the short-run, not as much effect as the long-run.

For example, yesterday, Bush said the deficit this year will be only $200 billion, the fact is, that figure does not include what Bush and the other politicians looted from the Social Security trust fund this year, about $300 billion. If Americans had more finance skills they would know this and demand that Social Security was included in the budget numbers for the White House.

In the short-run it will be okay, the more spending the government does, the more stimulative that is to the economy, more goods and services produced. However, for the long-run it will be very bad. No Social Security trust fund to help the young taxpayers pay for their parent's retirement.

Another example, you go out and are planning to buy a house. The real estate agent tells you, "it has never been a better time to buy." You buy, in the short-run that helps the real estate agent and the economy, even if just maybe, this is not the best time to buy. That is, if more Americans had finance skills they would know that housing has never gone up as much as it has in the past 10 years. Here in California, the number who can afford the average priced house is only 14%, maybe now is not the best time to buy.

And in the long run we will all know that. It would have been better for long-term stability, for the housing market to take a breather from the boom created by Greenspan's easy money policies.

The US is no longer as strong financially as it was 30 years ago, and the reason why is because many Americans don't have the basic finance skills. They allowed Wall Street and the Politicians to leverage us up to the max.

Up until now, it has been okay, but I think the next 30 years, the longer-term, debts will become due, and middle-class America will pay with a large reduction in their standards of living.

Answer 3

Lately as we slowly recess, only the banks or other financial institutions will prosper (via interest charges). Average people taking loans and becoming dependant on financial institutions is hurting the country right now. When average people borrow, it tells you our economy is hurting. When we spend more, our economy is good.
With gas prices higher right now, I'm finding more and more people seeking altenatives to making it by - less eating out and other forms of entertainment. This is a good indication of the declining economy - people trying to save more.
Everything we do affects the economy in some way - that's just the law of economics - supply and demand. As a whole, when our country's economy takes a hit, it shows up on the markets and the value of the dollar.
I know most people have no interest in the stock market but it does effect all of us in some form or another.

Answer 4

The nations debt is higher than ever before. Personal debt is higher than ever before. We are sinking deeper into a recession. The economy used to run on assets, not debt. The only ones prospering now are the bankers.

Answer 5

The fact that everyone is in debt is what keeps the country economy strong.

If everyone saved and noon ebought anything, than what would anyone sell.

Everyone sells somethign weather it be goods, fod, or services.

Answer 6

a lot of national debt