The Reality Of Carrying Buckets

In the modern context we are all bucket carriers. Most people are paid a certain amount of money for their time, or for performing certain functions. Some are employees; others are independent contractors or self-employed businessmen. But the principle is the same we are being paid based upon the number and size of the buckets we are carrying and if for any reason we were no longer able to carry buckets are income would be interrupted.

Recently my wife and I were enjoying a lovely dinner with four other couples, two of the men were well paid anaesthesiologists (medical specialists), one of the men was a very successful lawyer downtown and another was an investor who appeared to work exclusively on managing his own investments.

In conversation we talked about investments and I told the parable of the bucket carriers and the lawyer looked at me and acknowledged that he was now carrying a very big bucket. He noted that he was so busy carrying buckets and developing new business (finding new buckets to carry), that he had little time to think about building a pipeline for the future.

To protect themselves from calamity most big bucket carriers are heavily insured against disability because they know that their earnings are dependent upon carrying buckets. For the masses that carry smaller buckets it is difficult to imagine a life where they are not carrying buckets and even more worrisome is the fact that their retirement savings have been threatened in the last twenty-four months by severe drops in stock values.

It seems that the busier we get carrying buckets the easier it is to delegate the responsibility for our personal investments to others and it has cost people greatly. As Warren Buffet says, “Beware of geeks bearing formulas.”

We are trained to believe that our RRSP account balances are real and that we can trust the numbers printed on paper statements, but some of the most sophisticated investors in the world learned with Bernard Madoff that their statements were bogus and that their life savings had been eradicated.

The reality is that there is a huge financial services industry in North America that has been preying for years like piranha on the cash flow of the bucket carriers. It is no wonder that Canadians now have more that 1 trillion dollars sitting on the sidelines in money markets, including government bonds, term deposits and cash savings that are guaranteed by the Canadian Deposit Insurance Corporation (CDIC).

Unfortunately our money has become a fiat currency and it is no longer attached to anything of value such as gold and all banks deposits are now governed by the fractional reserve system, which means that if all Canadians showed up to withdraw their savings there would be little chance that more than 10% would see any paper bills – enter the CDIC. Without the CDIC savings in any bank would be crazy.

Of equal concern is the fact that governments are trying to spend their way out of the recession by printing billions and trillions of dollars on paper that is not worth more than the government’s promise to pay. As new dollars flood into our market the purchasing power of our cash savings are being eroded and severely devalued in the safety of our cash accounts. The governments are the big winners and once again we are paying dearly for our lack of financial education.