Many people in the baby boomer generation are confronted with some tough decisions. Some are considering an internet home based business opportunity as a solution to their problems.
Many baby boomers have seen their retirement savings reduced as the stock market crashed in 2008 and the first 3 months of 2009.
Although the market has had a significant rally in the last several months, many baby boomers were reluctant to get back into the market after the crash and may not have benefited from many of those gains.
The reduction in their home equity has also had a negative impact on their retirement savings.
Baby boomers fall into many different categories.
1. Some have retired early. Many are in good shape financially but others are greatly concerned about their reduction in retirement savings and the future of the economy.
2. Some have lost their jobs. They are hoping for an economic recovery to improve their chances of finding employment.
3. Some are feeling job insecurity. They are also hoping for economic recovery so that their companies can stabilize financially.
4. Some just don’t like their jobs. They are looking for alternatives in order to gain more control of their lives.
Most of these people in the baby boomer generation are looking for a good understanding of where our economy is headed.
The latest economic data indicates that the economy is improving. Layoffs have slowed. Automobile and retail sales are improving. The Gross Domestic Product, which indicates positive or negative growth in the economy, is getting better.
The improving economy is partially the result of the massive spending by the federal government and the money being printed “out of thin air” by the Federal Reserve. But the bottom line is that the economy is improving.
But we are also seeing some signs of inflation. The economy is starting to heat up.
As a result, we should start seeing a shift in monetary policy. The Fed should start gradually raising short term interest rates and start cutting back on its extremely accommodative policy of buying mortgage backed securities and the excessive printing of money..
But Federal Reserve Chairman Ben Bernanke is nowhere close to doing this. He is absolutely convinced that the Fed prolonged the Great Depression in 1938 by prematurely raising interest rates.
Bernanke may talk about how he is taking steps to keep inflation under control. But his actions speak louder than his words.
It doesn’t matter how many bubbles his easy money policies create. He will do whatever it takes to keep from raising interest rates. He will continue to print money and increase liquidity in the market.
Because of the Fed policies, the Federal Government should begin taking steps to counterbalance Fed’s easy money policy and begin to tighten its own fiscal policy. They should start cutting back on spending.
But let’s face it. The President Obama administration and the U.S. Congress are showing absolutely no desire in taking these steps. President Obama, Treasury Secretary Tim Geithner, and Congress are all operating on the same page.
There is absolutely no way that they will take steps to reduce our deficits. In fact, they are doing just the opposite. Health care reform, cap & trade, and another stimulus plan will add huge amounts to our deficits.
We will soon be seeing the economy adding jobs. The Gross Domestic Product probably grew at a reasonable rate in the fourth quarter of 2009.
As a result, there will be calls for a return to fiscal responsibility. There will be demands that the Fed stop buying mortgage backed securities. Many people outside the Democratic administration will say that the Fed should stop the printing presses.
But it’s just not going to happen.
1. The Fed will not stop buying mortgage backed securities because that would allow market forces to prevail and cause home loan rates to rise.
2. The Federal Housing Authority will not tighten its loan standards since this is the only way that people with poor credit and little money for a down payment can get a mortgage.
3. The Fed will resist any demand to increase short term interest rates.
So here is what baby boomers should expect as they struggle with decisions that will affect their future.
The economy will begin experiencing much higher inflation and rising long term interest rates in the next few years. This will be a huge drag on economic growth and employment numbers.
An internet home based business opportunity is a wise choice for baby boomers in this economic environment. It will help them gain more control of their lives and protect them against inflation.