The Economics of Multi-Generational Living

Frugality Must Rule in the New Normal

The economics of strategic frugality becomes the economics of multi-generational living as globalization puts pressure on wages and the American way of life. I have written articles about the subject of globalization and frugality at Business Insider and these are included in the discussion here. But looking at the big picture of why all this frugality is necessary becomes a very important piece of information to the families facing permanent wage decline and permanent pressure on their way of life.
The economic picture reveals a steady decline in wages as America seeks to become competitive in the world market. The necessity to keep and accumulate wealth becomes a fierce battle as the decline of wages progresses. The cost of living certainly is not declining, as often prices for food, gasoline, and housing do not decline in proportion to the wage decline. That is because world demand and also massive speculation by investors is driving the price of the commodities up in a way that is out of our control. That is why the merits of multi-generational living are very evident.
There are many reasons why this way of life, defined as having two generations of adults or a grandparent raising children, becomes an important economic force. As the economic power of wages is taken from our society, the power to fight back can come from cost cutting. As business cut costs by mergers, so can families cut costs by merging and avoiding duplication regarding power, cable, transportation, costs of property, etc. It has come to the point where these cost cutting measures are main street's only insulation against credit and predatory behavior of bankers.
Here are just some ways families can cut costs in a multi-generational setting:
1. Power costs are reduced and though one household bill could be a little higher, it would not be as high as two households' power bills in a non multi-generational setup. This includes cable as that service has become quite expensive. Online substitutes for cable are available but are somewhat inferior as of this writing.
2. Credit frugality can be maintained in a multi-generational family because people have more money in their pockets and the temptation to charge becomes less. The responsibility to the household takes over from the desire to charge. The wisdom of multi generations is wisdom that can be lost on young people out on their own.
3. Multiple income sources strengthen the family in a multi-generational setting. There are more ways to come up for the money for bills. And the rest can go to ones own bank account and for a better quality of life, without the need to charge for things. The accumulation of wealth should be the priority of main street USA, as this will cause a resurgence of economic stability for the entire nation. It won't be the wealth builder for the banks, but these greedy predators already have enough bonuses for a lifetime.
4. Transportation becomes more effective as you can have a two car family with each family only having to own one car. This can be an important savings as a lot of money can go down the rat hole of car repair.
5. All repairs can be absorbed by multiple streams of income. It is no longer necessary that just a single adult or a married couple have to be responsible for all the costs of repairs for the car, house and appliances. Those costs continually go up at an alarming rate. The weakness of the dollar means that the purchasing power families in the 1980's is no longer available to families today. Wages have increased, but the rate of increase for housing and for gasoline have far exceeded the increases in wages. Wages have stagnated since 2000 as well.And the stock market has tread water since 2000, and it is now 2012!.
6. And the most important consideration to understand when deciding to live with relatives is that predatory lending on the part of unscrupulous too big to fail banks and their subsidiaries is not finished. The lure of easy money will cause prices for housing to rise again if these organizations are permitted to offer hurtful loans as was done in the last decade. The ability of the financial overlords to manipulate housing prices and destabilize your single family budget is troubling to be sure. As a multi-generational person, you can escape some of that stability as you don't bite for the equity loans and other gimmicks that will certainly visit us on main street in a few years. Protect yourselves from these attacks that are sure to come.

The central banks are in the process of bailing out banks, and weakening the US dollar in order to improve our trade position. However, this has the effect of increasing the cost of everything, while wages decline. This is a serious long term attack on the value of the dollar. However, our efforts at multi-generational living will offset this behavior some by slowing down the turnover of dollars and by limiting the inflationary impact of Fed policy. It will allow less credit into main street, leading to a downward pressure on prices, to offset the Fed's policy.

Non Financial Benefits of Living in a Multi-Generational Environment

The personal benefits of living together can work better in an environment of necessary space for the family members. Communication between family members is important and space for each family member needs is important. Common interests can help generate a more enjoyable experience in the family practicing strategic frugality. Avoiding or fixing conflict is important in the extended family environment. There are more and more places where all family members can go and that is a recognition of the new normal of family unity.
People must realize that they should not feel guilty about living in extended families. The guilt is placed by banks and friends and some families. Remember how guilty some families were when enticing their sisters and brothers and nieces to buy overpriced housing? All this propaganda comes from the central banks ultimately and the banker controlled media. We need to understand that this guilt must go. The guilt is what bankers use to get people to go out on their own under capitalized, and in need of their credit products. That makes money for bankers, and money making is not as available for these predators in a multi-generational family. Too bad bankers!


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