How the WaMu crisis means millions are now rich!

by Crystal N on September 28, 2008

Donald Trump once famously pointed out a homeless man to a colleague and made the comment that the man was millions of dollars better off than himself. When his companion asked how could that be, seeing as the man very obviously had nothing, the reply was along the lines that the Trump, millions of dollars into debt, would love to be in his position.

This morning, reading through the paper about all the banks in the US facing the same situation, it occurred to me that I’m now wealthier than many US banks. So, for that matter, are you! Mortgage, credit card and paltry savings balance notwithstanding, I may not be quite as well off as that infamous homeless man, but I do stand better off than several global investment firms and banks. It’s a nice kinda thought.

Ironic, really, that the organisations and people we think of as having the most wealth are usually the same ones as have the most debt. Is wealth, then, simply having the ability to convince people to lend you more than others would get away with? Could just walking around with a high enough level of confidence that you can get others to bankroll your ideas until they spin back enough returns to make both of you happy be the ‘secret’ to wealth? Obviously, if they don’t spin back any returns you end up in trouble, but it’s amazing how many of the super-rich have previously declared bankruptcy.

I’ve long believed that wealth is more a mindset than a physical circumstance. Now, it seems, the proof is coming out. Not only that wealth and debt seem to be very closely related, but that it’s as much about the picture you put into other people’s minds about your wealth as it is the picture you hold for yourself. On a bigger picture, I’ve wondered before about how economies based on debt (since they got rid of the gold standard) would last in the long term. The answer, it seems, is “just as long as people believe in them, and no longer.”

Scary thought, isn’t it?

So, instead of aspiring to become flamboyant rich people with lifestyles based on huge amounts of debt, what if we aspired instead to become like Donald Trump’s homeless man? I know it’s a romanticised picture (believe me, I’ve been there) but imagine aiming to live a life free of debt, free of possessions, answerable to nobody, living simply and from day to day.

Life would be VERY different, and very interesting, I think!

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