Tuesday, May 28, 2013
Translate complex financial concepts into easy-to-understand terms! You'll find reprints of Financial Insights articles that once appeared in GCFlash in our Financial Glossary.
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Stuck In The Middle
America - the Land of Opportunity. Or so it was once known.
Immigrants came to our country in droves to obtain what was impossible in their homeland. Namely, the chance to better their standard of living.
Some fled religious persecution, as did the Pilgrims and later the Jews. The 1840s saw a flood of Irish immigrants escaping their famine-ravaged country. Asians were migrating here around that same time, lured by the prospect of quick riches during the California gold rush. The industrial revolution offered promise to Italians seeking a better life.
Despite their varied reasons, they chose to come to America. They could have settled anywhere, but none offered the possibilities of our United States.
Through dedication and hard work, home ownership was possible. Those with an entrepreneurial spirit could establish their own business. Skilled tradesmen could earn a good wage with guaranteed benefits by joining labor unions. Factory jobs were plentiful for those who previously struggled to put food on their family's table.
The middle class was thriving. Those who were motivated could save enough money to send their children to college, take family vacations and afford quality healthcare. All it took was determination, dedication and the desire to live comfortably.
But this is 2013 and so much has changed. Being middle class today means not losing your job and being able to pay most of your monthly bills without going too far into debt.
Who is today's middle class? In February 2013, the median household income was $50,054. That's pre-tax, and a 9% decline from 2007 when it was $55,438.
There is no firm formula to define middle class, though several entities have their own description. The U.S. Census Bureau defines it as earning between $20,600 and $102,000, representing the middle 60% of incomes.
That lowest end overlaps the Federal poverty level of $23,283 as defined by that same Census Bureau. According to their criteria, those living below poverty standards are classified as middle class.
And that holds major implications. The Federal poverty level determines eligibility for several economic programs; including Head Start, Food Stamps, the National School Lunch Program, Low-Income Home Energy Assistance and Children's Health Insurance Program.
We've gone from a nation whose middle class could achieve financial security to one eligible for public assistance.
Yet the American dream remains strong. More than defined by economic terms, middle class is a state of mind. It's an attitude.
Those in the middle class still hold true to their values. Work for what you have. Spend what you have wisely. Provide for your family and hold hope your children will prosper.
The problem mirrors that described in Where Is It? from the May 7, 2013 edition of GCFlash. The piece ends with an analogy shared by a financial advisor, comparing our economy to a car with a manual transmission. If you missed it, go ahead and take a look now. You can come right back and pick where you left off.
The jolting and backfiring are natural components of a routine economic cycle. Rather than the stimulus push used in the economic indicators mentioned in the article above, government hands out more entitlements to help the poverty-stricken middle class in their time of need.
They hand out the necessities of life; like cell phones, grants, tax credits and legal advice. Add in those items that truly are necessities; food stamps, day care or medical assistance, and finding a job becomes less and less attractive. It also becomes less profitable.
At some point, one hopes the government will stop pushing the car and hand the reigns of recovery to the middle class. The values they hold true made America a great nation. And they can restore us to that stature once again.
New $100 Bill
No doubt you've noticed a change to your currency over the past few years. Paper money in denominations between $5 and $50 have undergone a facelift to enhance security measures and thwart counterfeiters.
Beginning October 8, 2013, the $100 bill will sport a new look, too. The new bill will feature a 3-D Security Ribbon and a Bell in the Inkwell.
A close look at the blue security ribbon woven into the paper shows the imprint of bells at first glance. Tilt the note back and forth while focusing on the ribbon and the bells change to 100s.
In a similar fashion, a bell pictured in the copper inkwell seems to appear and disappear when the note is tilted. The bell changes in color from copper to green to create the effect.
While tilted, the number 100 in the lower right corner of the front of the note will also shift from copper to green.
When you hold the note to the light, a faint image of Benjamin Franklin will appear in the blank space to the right of the main portrait. You'll also reveal an embedded security threat running vertically to the left of the portrait. The letters USA and the number 100 will display in an alternating pattern visible from both sides of the note. The thread will glow pink under an ultraviolet light.
Slide your finger up and down Benjamin Franklin's left shoulder. It will feel rough to the touch.
A large, gold number 100 is printed on the back of the note to help the visually impaired.
These new features were all added to make it easier for consumers to detect counterfeit bills. If you suspect a bill you received is not legitimate, contact the police for their inspection. They'll return it to you if the bill is the real thing. If not, you are best served to let them keep it. Distributing counterfeit money is a federal offense.
All U.S. currency remains legal tender. No need to trade in the bills you have stashed in your wallet for a newer model. They're still good.
The Massachusetts Bay Colony issued the first paper money in the U.S. back in 1690 to cover the costs of military expeditions. The practice spread to the other colonies.
Benjamin Franklin was the first to introduce innovative measures into the printing of colonial notes in 1739. He incorporated raised impressions from actual leaves to make the colonial notes hard to counterfeit.
The Coinage Act of 1792 created the U.S. Mint and established a federal monetary system. It designated the silver dollar as the unit of money in the U.S. and created a decimal system for our currency.
It also authorized construction of a mint building in Philadelphia, the nation's capital at the time. The first U.S. coins were struck in 1793.
Until 1990, all paper money was printed in a Washington, D.C. government facility. The Bureau's Western Currency Facility in Forth Worth, Texas now shares the responsibility. Look for a small FW in the top left corner of the new $100 bill to indicate it was printed in Forth Worth.
Security threads and microprinting were introduced to deter counterfeiting as advanced copiers and printers became popular in 1990. I'm not sure anyone could have envisioned 3-D printer technology back then. But I'm guessing the Bureau of Engraving and Printing is already at the drawing board, ready to tackle all new counterfeiting efforts as they emerge.
Tip of the Week
The FDIC wants to assure banking customers understand DDoS attacks. These attacks are intended to undermine consumer confidence in the banking industry. Instead, they've demonstrated that financial institutions have strong safeguards in place to protect their customer's personal information. No customer or account information has been leaked during this series of targeted attacks.
Banks are obligated by regulation to notify the public if personal information is compromised through any type of cyber attack. GCF Bank has procedures in place to assure this happens in a timely manner, as well as protections established for those customers who may be affected, in the rare event any customer information is breached.
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