Imagine a World Where We Valued Savings Over Debt

‘You may say I’m a dreamer’

John Lennon

Imagine a world where the institution of marriage and family is rewarded. Not only that, savers are encouraged.

The recent pre-budget teasers are a world far removed from the imagined one.

Let’s see…

Harsher Age Pension asset testing awaits those with a greater level of savings. More childcare benefits are on offer to encourage increased workforce participation while stay-at-home parents are rewarded with nothing more than a pat on the back.

It was Kofi Annan who said ‘if tolerance, respect and equity permeate family life, they will translate into values that shape societies, nations and the world.’

Lessons (good and bad) learned at that knees of your parents tend to influence the decisions we make as adults.

My core belief of ‘living within your means’ was taught at home.

Watching my parents allocate Dad’s pay packet to the household expenses is something that has stayed with me to this day.

In the relentless drive for more and more economic growth, the family unit has become collateral damage.

The financial demands of modern life means more and more households need two breadwinners.

The teaching of tolerance, respect and equity is being shared with the local childcare centre or after school care.

Call me old-fashioned but in my opinion nothing can substitute for the nurturing and guidance of loving parents.

Government policy that ignores family values as the bedrock of our society is bad policy.

In my opinion the ‘wealthier’ our society has become, the poorer we are in family values.

All this hasn’t happened overnight. Little by little we’ve allowed this erosion of our value system to occur. It is only when you stand back and observe from afar that you’re afforded a panoramic view of our society.

In part the picture has some elements of beauty, but there’s an encroaching ugliness in the increasing lack of respect and growing levels of demand and entitlement.

In my imagined world this picture can be improved with a change in public policy.

Imagine a world where married stay-at-home mums or dads are rewarded with a bonus payment for nurturing a culture of tolerance, respect and equity within their family.

Imagine a world where income tax is abolished and replaced with a spending tax. The more of your income that you save, the less tax you pay.

Imagine a world where the full age pension was paid as a reward to those with more savings (as a percentage of lifetime income earned). The asset test taper rate would in effect work in reverse. Those with lower savings (as a percentage of lifetime income earned) would receive less pension.

Imagine a world where those who knowingly endangered their health through poor lifestyle choices — smoking, excessive alcohol intake, eating fatty foods etc. — paid a premium for medical treatments.

Imagine a world where illicit drugs were made legal. Governments could monitor the health impacts, provide targeted education programs and receive tax revenues from the now legalised distribution of drugs.

Imagine a world where criminals actually served the full term of their custodial sentences.

In this imaginary world it’s recognised there will be exceptions to each of these hoped for public policies. The truly disadvantaged in our society need to be compassionately cared and catered for.

People may applaud some or all of these imagined ideals, while others will find them confronting and offensive.

The reason for the latter is likely due to these imagined principles being the polar opposite of today’s public policy and society thinking.

In today’s world it is a case of:

    • Don’t try and you’ll be rewarded.
    • Being a full-time nurturing parent has a lower monetary value than a working parent.
    • Work harder and you’ll be taxed more.
    • Save more and you’ll lose benefits.
    • Live beyond your means with all sorts of ready credit facilities available.
    • Buy now, pay later — a common catchphrase.
    • Criminals deserve compassion and lenient sentencing. Whereas, victims suffer in silence…sometimes for a lifetime.
    • The war on drugs continues to rage.


Given that existing public policy has created these negative outcomes, my simple reasoning is why not do the opposite and perhaps (just perhaps) we may achieve some positive outcomes.

It has taken 50-years of public policy for society to evolve into what it is today.

Therefore creating an imagined world — one where prosperity comes from saving; hard work is rewarded with lower tax rates; government only assists the truly disadvantaged and family values are encouraged and incentivised — is not going to happen overnight.

Imagine a world in another 50-years where people are striving to get ahead through increased productivity and not sitting around working out how to scam the system.

A world where people talk about how much they have saved and not how much debt they are in.

A world where family provides the moral, ethical and industrious compass for society’s values and opinions.

In this imagined world, quality of life trumps society’s obsession with materialism.

Transitioning to this imagined world would not be easy. There would be winners and losers.

But this is no different to what’s happened over the past 50-years.

Those who saved hard and lived within their means prior to 1970, where decimated by the removal of the gold standard.

These days when interest rates are reduced, barely a few lines of ink are used for the plight of savers. The media coverage focuses on how wonderful the world will be for those who are in debt.

In truth my imagined world is a dream.

The harsh reality is that a nightmare of ‘Elm Street’ proportions awaits.

When the debt supercycle collapses under its own weight, the violent upheaval within society will sadly trigger changes we are ill-prepared for.

    • Families will suffer due to financial hardship
    • Banks will fail
    • Government will default on their debts
    • More people will join the Centrelink queue on grounds of financial hardship.
    • Savings (in the form of share and property values) will be decimated.
    • Criminal activity and angry street marches will increase.
    • Entitlements will be cut, creating a negative feedback loop into society unrest.

This is the endgame of the public policy disasters that have shaped the society we live in today.

The whole namby-pamby social equity model — where every kid gets a prize irrespective of effort and failure is a success — creates a feel good, fairness effect, but sets society up for a huge disappointment.

If you can even vaguely imagine the nightmare a Greater Depression can create, then act now to protect your financial and family situation.

Personal planning or public policy? Your choice.


Vern Gowdie,
For The Daily Reckoning, Australia

Vern Gowdie has been involved in financial planning since 1986. In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners. His previous firm, Gowdie Financial Planning was recognized in 2004, 2005, 2006 & 2007, by Independent Financial Adviser (IFA) magazine as one of the top five financial planning firms in Australia. He has been writing his 'Big Picture' column for regional newspapers since 2005 and has been a commentator on financial matters for Prime Radio talkback. His contrarian views often place him at odds with the financial planning profession. Vern is is Founder and Chairman of the Gowdie Family Wealth advisory service, a monthly newsletter with a clear aim: to help you build and protect wealth for future generations of your family. He is also editor of The Gowdie Letter, which aims to help you protect and grow your wealth during the great credit contraction. To have Vern’s enlightening market critique and commentary delivered straight to your inbox, take out a free subscription to Markets and Money here. Official websites and financial eletters Vern writes for:

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