Ben Stein How Not to Ruin Your Life

My training in economics was in theories and in history.

Like all students of economics, I was trained in Keynesian economics. This basically holds that it is possible, contra Adam Smith, David Ricardo and Jean-Baptiste Say, the great geniuses of economics, for there to be prolonged periods of high unemployment if there are chronic failures of demand.

I also had a teacher who taught us about the Austrian School. Nice guy, but his accent was so thick I could barely make out a word he said. I think his lectures were about how rigidities in the system could interfere with economic equilibrium at full employment and also about how bad deficits are.

Additionally, I learned about Irving Fisher's law, which states that the quantity of money in circulation times the velocity of money equals prices times transactions. Fisher's law was meant to illustrate how all of these variables affect economic activity, prices and employment.

Then I was trained on Friedman and Schwartz's monumental work, "A Monetary History of the United States." This attempts to explain, with great statistical support, how real business activity, not just prices, is affected by money supply.

In other words, I had a lot of training in the theoretical. But now, in this bad recession, I find myself overwhelmed by the actual, as opposed to the theoretical. Friends are losing their jobs. Close friends, even very, very close friends, are losing their homes. Happy couples are turning their anger and fear against each other and losing their marriages and their children.

I see so much suffering that I never thought I would see. I am sometimes flattened by the tidings I get by phone, text and email. These are not stories in magazines or newspapers. These are terrible events happening to people who are close and dear to me.

Only You Can Take Care of You

Yes, of course I help them out. In fact, I worry that I help them so much I am setting myself up to be one of them. And if that happens, who do I call upon for help?

Now, let me be clear. Some people are simply not looking the reality of the situation in the face. There are some who, as my pal Frank Mottek from CBS describes them, are part of the "funemployed."

This would be the young woman I know, funemployed, with an immense monthly expense tab, just out of grad school, who used many of her borrowings for a vacation in Europe. Another simply had to spend time touring the fashion capitals of the continent -- on borrowed money. And there are many more.

Their turn to pay the piper is coming, and when it does there will be wailing and gnashing of teeth. Ernest Hemingway once quoted a friend on how he went broke: "Gradually, and then suddenly."

But let me go back a moment. I am approaching my mid-60s. My parents long ago passed away and are desperately missed. They left me an inheritance, but it was not enormous. I have a staggering number of dependents, all of whom are used to a standard of life that they assume will go on indefinitely. (It won't.)

Sometimes, when I contemplate the damage done by the recession, the stock market collapse and the utter rout in real estate, I get really scared. Who is there to take care of me if things get even worse? Who on earth is there to take care of me the way I take care of so many others?

Then, my old dad comes to mind. "You are there to take care of you," he once said. "The younger you is there to take care of the older you by virtue of the assets you accumulated when you were young."

My genius pals, financial manager Phil DeMuth and Ray Lucia, the father of the extremely sensible "Buckets of Money" strategy, say the same thing -- make your younger self the savior of the older.

Learn Your Lessons Now -- Not Later

Cicero said something similar in his famous essay on old age, "De Senectute," from which my father often quoted. Almost everything you have in your older years is by reason of having it passed down to you by your younger self. Your habits of life and health, your home, your family, your savings.  So said Cicero. (That's alliteration, friends.)

This is a powerful lesson for us all. If we want to have a decent life in our latter years, especially with Social Security and Medicare nearing collapse, we need to accumulate while we are young. We most of all need to accumulate habits of sensible living -- and especially not spending beyond our means.

 The young you can save money, teach the old you how to live sensibly and train the old you in decent habits of care. The young you might want to take a few minutes every day to imagine the old you, unable to work, possibly because of health, possibly because of the economy, and plan accordingly.

The young you might want to acquire skills that will be of use even if there is a downturn in one or more sectors of the economy. The young you might want to find a life partner who behaves sanely.

And this is the key part: The younger you is you right now. However old you are, you are younger than you will be tomorrow.

I see far too much pain among men and women in middle age or later in life who simply assumed something would happen to take care of them. It might, but then again, it might not. It makes good sense then to realize that for most of us, there is no one to take care of us but us, and that the best and strongest part of us is our younger self. Let that younger you give you an inheritance of safety and security