What Are the Causes of Financial Crisis?
Finding the causes of financial crisis could be a lifelong search because I know there are many factors that will impact what happens in an economy.
I am not an economist however I do have my own thoughts, as I am sure you do when it comes to the causes of financial crisis.
So in today's post let's ignore what the governments are saying and get real.
Because the government and major companies like the banks and institutions are going to have their own spin on it and not want to get down to the truth of the problem.
I am not sure this is going to win me any friends but hey, you only live once and today seems like a good day to voice my opinion.
Also I may be able to get some ideas out there that will help you when the next financial crisis happens.
It is my belief that it is going to happen again because nothing has really changed, and until things do, we will keep going in a never ending spiral.
So let's look at what I believe is the fundamental cause of the financial crisis.
To do this let me ask you some questions, they are simple ones and you will be able to answer them without too many problems: -Do you have a credit card? -Have you ever gone over your limit? -Have you ever purchased something you know you shouldn't? -Do you own your own home or do you have a loan? -Have you drawn down on your bank loan to buy something else that was not really needed? -When you look at your home do you have more than one TV and or fridge? -How many computers do you have? -How many old mobile phones are in your draws? -What do you pay for your holidays with? Is it your savings or your "line of credit"? I am sure you get the hint.
We purchase things we don't need and continue putting ourselves into debt to have the things we are told we need.
Debt is a cavern of despair.
We are told it is necessary to get ahead (by the way this is a lie) and that if we don't have a credit card how are we going to get a good credit rating so we can get a loan.
What a laugh.
The banks and credit institutions are some of the best marketers in the world.
They know that people have an insatiable appetite to have the latest and the best.
The institutions understand that people hate the idea of being left behind and someone else having something that they don't have, and God forbid when someone does have something that the other person does not have.
We put pressure on ourselves to go out there and get it just to keep up with the Joneses.
What a joke!!! It is our greed that keeps us wanting more and keeps us in debt and it is the debt that puts undue pressure on us and stresses out our relationships and hinders us from being all that we were created to be.
You see when we have debt we make decisions of what we can or cannot do, where we can or cannot go because we are bound by a contract to pay back a loan, and if we don't pay up we could easily lose everything that we THINK we own.
So what is it that causes a financial crisis? Well it is simple in my eyes.
1.
It starts with believing the lie that we NEED to have more.
2.
We start looking for ways to have the things we THINK we need.
3.
Instead of saving money or building a business that increases our income we do the EASY thing and use our credit card or get a loan.
4.
Pressure gets placed on the economy because people are spending too much money (money which is not theirs because they borrowed it from the bank or financial institution).
5.
The government in their wisdom says "our people are spending too much and because they are all in DEBT lets slow them down by putting interest rates up".
6.
Interest rates go up, we stop spending.
7.
Companies who thought that the bubble would never burst keep going into debt themselves to feed the insatiable appetite of the country/globe.
8.
When people stop buying, companies can't afford to pay their staff.
9.
Staff get laid off.
10.
When too many people get laid off at once banks can not carry the debt and so they go under.
11.
People start to get scared that they will lose all their money so they pull their money out of the bank.
12.
Because the bank can't allow that to happen that stop people from pulling out all their money.
13.
This causes more fear.
14.
People revolt.
15.
Governments do a bail out.
16.
Governments do a bail out with other countries money and go into debt themselves.
17.
Governments go broke when they realise they cannot pay back their debt.
18.
Countries become owned by institutions rather than the people.
I know this is a pretty morbid view on things but it is reality, well reality in my eyes anyway.
It would be nice to be able to blame someone else for a financial crisis but ultimately we need to take responsibility for the things we purchase and the debt we put ourselves in.
You see it is our greed that starts it all and then it is the debt that continues the cause of financial crisis.
So for those of you who have read this far and I know it won't be many because not everyone wants to know this information because it is too hard to digest and take responsibility for.
If you want to take control back for you and your family can I suggest you do what some of the biggest names in business are doing right now.
These are just my opinions as I am not a professional adviser.
1.
Get out of debt.
Don't have any personal debt.
2.
Start paying off your smallest debt first and then start compounding your repayments.
3.
DO NOT consolidate your debt.
(this is my personal opinion and you should seek professional advice) Pay off your smallest debt first by only paying the minimum on the other debts.
Once this is paid off, then take the money you were using to pay off your small debt and put it off your next smallest debt.
Continue will all your debts.
This starts to compound and you will find your debts start to minimise quickly.
4.
Once you are out of debt, cut up your credit cards and get a visa/mastercard debit card.
5.
Have a financial buffer.
ie.
don't spend everything your earn.
6.
Start saving money and have an Emergency fund.
7.
NEVER get back into debt.
8.
Pay cash.
9.
Learn how to budget.
This is my opinion on what causes a financial crisis and what I believe you can do to minimise the effect of the next one on you and your family.
In my mind I do not believe that there is any such thing as good debt.
Debt is Debt and it is a lie to keep you bound up financially.
I am not an economist however I do have my own thoughts, as I am sure you do when it comes to the causes of financial crisis.
So in today's post let's ignore what the governments are saying and get real.
Because the government and major companies like the banks and institutions are going to have their own spin on it and not want to get down to the truth of the problem.
I am not sure this is going to win me any friends but hey, you only live once and today seems like a good day to voice my opinion.
Also I may be able to get some ideas out there that will help you when the next financial crisis happens.
It is my belief that it is going to happen again because nothing has really changed, and until things do, we will keep going in a never ending spiral.
So let's look at what I believe is the fundamental cause of the financial crisis.
To do this let me ask you some questions, they are simple ones and you will be able to answer them without too many problems: -Do you have a credit card? -Have you ever gone over your limit? -Have you ever purchased something you know you shouldn't? -Do you own your own home or do you have a loan? -Have you drawn down on your bank loan to buy something else that was not really needed? -When you look at your home do you have more than one TV and or fridge? -How many computers do you have? -How many old mobile phones are in your draws? -What do you pay for your holidays with? Is it your savings or your "line of credit"? I am sure you get the hint.
We purchase things we don't need and continue putting ourselves into debt to have the things we are told we need.
Debt is a cavern of despair.
We are told it is necessary to get ahead (by the way this is a lie) and that if we don't have a credit card how are we going to get a good credit rating so we can get a loan.
What a laugh.
The banks and credit institutions are some of the best marketers in the world.
They know that people have an insatiable appetite to have the latest and the best.
The institutions understand that people hate the idea of being left behind and someone else having something that they don't have, and God forbid when someone does have something that the other person does not have.
We put pressure on ourselves to go out there and get it just to keep up with the Joneses.
What a joke!!! It is our greed that keeps us wanting more and keeps us in debt and it is the debt that puts undue pressure on us and stresses out our relationships and hinders us from being all that we were created to be.
You see when we have debt we make decisions of what we can or cannot do, where we can or cannot go because we are bound by a contract to pay back a loan, and if we don't pay up we could easily lose everything that we THINK we own.
So what is it that causes a financial crisis? Well it is simple in my eyes.
1.
It starts with believing the lie that we NEED to have more.
2.
We start looking for ways to have the things we THINK we need.
3.
Instead of saving money or building a business that increases our income we do the EASY thing and use our credit card or get a loan.
4.
Pressure gets placed on the economy because people are spending too much money (money which is not theirs because they borrowed it from the bank or financial institution).
5.
The government in their wisdom says "our people are spending too much and because they are all in DEBT lets slow them down by putting interest rates up".
6.
Interest rates go up, we stop spending.
7.
Companies who thought that the bubble would never burst keep going into debt themselves to feed the insatiable appetite of the country/globe.
8.
When people stop buying, companies can't afford to pay their staff.
9.
Staff get laid off.
10.
When too many people get laid off at once banks can not carry the debt and so they go under.
11.
People start to get scared that they will lose all their money so they pull their money out of the bank.
12.
Because the bank can't allow that to happen that stop people from pulling out all their money.
13.
This causes more fear.
14.
People revolt.
15.
Governments do a bail out.
16.
Governments do a bail out with other countries money and go into debt themselves.
17.
Governments go broke when they realise they cannot pay back their debt.
18.
Countries become owned by institutions rather than the people.
I know this is a pretty morbid view on things but it is reality, well reality in my eyes anyway.
It would be nice to be able to blame someone else for a financial crisis but ultimately we need to take responsibility for the things we purchase and the debt we put ourselves in.
You see it is our greed that starts it all and then it is the debt that continues the cause of financial crisis.
So for those of you who have read this far and I know it won't be many because not everyone wants to know this information because it is too hard to digest and take responsibility for.
If you want to take control back for you and your family can I suggest you do what some of the biggest names in business are doing right now.
These are just my opinions as I am not a professional adviser.
1.
Get out of debt.
Don't have any personal debt.
2.
Start paying off your smallest debt first and then start compounding your repayments.
3.
DO NOT consolidate your debt.
(this is my personal opinion and you should seek professional advice) Pay off your smallest debt first by only paying the minimum on the other debts.
Once this is paid off, then take the money you were using to pay off your small debt and put it off your next smallest debt.
Continue will all your debts.
This starts to compound and you will find your debts start to minimise quickly.
4.
Once you are out of debt, cut up your credit cards and get a visa/mastercard debit card.
5.
Have a financial buffer.
ie.
don't spend everything your earn.
6.
Start saving money and have an Emergency fund.
7.
NEVER get back into debt.
8.
Pay cash.
9.
Learn how to budget.
This is my opinion on what causes a financial crisis and what I believe you can do to minimise the effect of the next one on you and your family.
In my mind I do not believe that there is any such thing as good debt.
Debt is Debt and it is a lie to keep you bound up financially.
Source...