The Wealth Effect FailureBy Susan Boskey The wealth effect is a psychological phenomenon that causes people to spend more as thevalue of their assets rises. The premise is that when consumers homes or investment portfolios increase in value, they feel more financially secure, so they increase their spending. Conversely, when consumers see the value of their homes or portfolios fall, they tend to spend less. The wealth effect attempts to explain why consumers might change their spending habits even if their income and fixed costs have stayed the same. ~ Investopedia Monetary policymakers consider the increased consumer spending that follows a rise in the price of assets to be an indicator of economic recovery. But is it really and does the everyday family benefit? What is the reality? In April of 2016 GOBankingRates.com created a survey they called: Financial Burdens Survey. The respondents ranked their personal finance issues according to the six categories the survey provided. Interesting to me is that a category called, personal debt, was totally absent! Here are their six categories: Not surprising, one in four Americans responding to the survey said the high cost of living was their most challenging personal finance issue. Not only do salaries and wages fail to keep up with the cost-of-living (since the 1970s) but also the killer personal debt takes a growing bite out of incomes. The wealth effect is a smokescreen. It distracts from any focus being put on the flaws of the monetary system. Rising asset prices favor the haves who own assets (minority), while extracting precious resources from the have-nots (majority). More decent-paying jobs can certainly help; but alone, jobs cannot make it right. Why? The independent-of-governments central banking system pulls the strings. Simply put: The money they issue is systemically devalued via a mathematical formula decreasing moneys purchasing power. Anyone who has studied this, as I have, knows that nothing short of a system overhaul could possibly bring back long-term economic recovery. Even if everyone had a job, their hard-earned money over time will purchase less and less. The good news is that by this knowledge you can rethink the best ways to earn, spend, save and invest to ensure the most quality in your life with the least amount of stress. That is, until really real change takes place at the monetary system level. Susan Boskey is author of the book, The Quality Life Plan: 7 Steps to Uncommon Financial Security. After exposing the bottom-line of why more and more families need credit each month just to make ends meet, Susan provides game-changing practical strategies, tactics and templates to help you create a life of greater ease. You can reverse the downward trend of credit and debt while learning how to establish a long-term, debt-free lifestyle; a life that allows you to build both financial wealth and the wealth of well-being midst the challenges of todays economic landscape. To learn more or to purchase the book, please visit her website at http://TheQualityLifePlan.com Susan can customize her strategies and templates for your particular situation and is available to coach you through this process. She can be reached through her website. Iceland the goat worshipers. 