Accumulating wealth and personal assets used to be a major cultural preoccupation. Savings accounts once were popular and dutifully depositing a portion of each week’s paycheck in the bank was a common practice. The power of compounding interest would over time, it was believed, provide an economic hedge against an uncertain future; in some sense this was true as long as that future was not catastrophic. Accordingly, FDIC deposit insurance was one device put in place by the government to protect personal savings in the event of bank collapse; creating Social Security for retirement was another.
Efforts directed towards gain and accumulation are attempts to overcome risk of loss, the real possibility that what has been acquired will lose its value. This is a reasonable psychological response to living within a market-based economy which has effectively replaced supportive social frameworks with urbanized wage-earning but is wholly inadequate to the task of creating individual security. Establishing a market-based economy required the stifling of cooperative, sharing-based economic frameworks which could exist outside of it and other mutually supportive structures; to fill this void “organized charity” was encouraged to provide an additional “safety net.”
It’s said Baby Boomers, the 75 million Americans born just after World War Two and now at retirement age, have the lowest savings rate of many generations. This accords with the cultural signature of that generation, namely its fatalistic “live for today” philosophy born of growing up in the uncertain atomic age with its “duck and cover” psychology. With the threat of global destruction hanging like the Sword of Damocles over its head, Boomers bifurcated into either “hippies” unconcerned with accumulation or “yuppies” fixated on it. Thus we live among 65-year-olds who often have (a) next to nothing in assets or (b) far more than they will ever need.
By embracing the market economy, humans have effectively evolved from Homo sapiens to Homo economicus. Though most people appear to have become psychologically inured to living with the threat of nuclear meltdown, the ever-present possibility of economic meltdown weighs heavily on both the conscious and subconscious mind. As a species we have always lived with a great measure of uncertainty; it used to be the natural world which seemed threatening and capricious, and indeed it still is, but economic civilization itself now provides perhaps greater uncertainty than nature. We feel economically vulnerable for good reason; the market economy is an inherently fragile, globally interdependent structure which responds to negative events in a widely disproportionate or exaggerated manner.
Time was a dollar could be exchanged at a bank for its value in precious metal, but that’s over. The creation of capital is no longer predicated on physically accumulating gold or silver. Capital is now calculated, along with the economy in general, in terms of available credit and purchasing power, in short the perception of what can be bought. Our monetary system overall has taken on the speculative character of the financial markets which dominate it; gambling on the value of tomorrow’s credit line is now the way of gain. Notably, it is also the way of loss, though that eventuality receives far less attention.
It still remains possible to accumulate wealth and possessions in hopes of mitigating a future loss, but in our market economy a collapse of the perception of future value, what we call “loss of creditworthiness,” is actually how modern day depressions are made.