What to do with a million dollars?

I recently finished reading “The Millionaire Next Door”, which was a mega-bestseller about a decade ago (yeah, I’m pretty late to the party).  This book was the most recent in my list of personal finance books I’m reading this year.  The first half of the book is pretty much what you would expect: this is how millionaires made their money, this is how they keep their money, this is the type of person they are, etc.  Then the book suddenly veers off course and starts talking about why you shouldn’t spoil your kids with your money if you are a millionaire.  The book is fairly preachy throughout, but it becomes especially so in the second half.   One reviewer on amazon.com summed up the book this way “You can be a millionaire if you never spend any money.”  And yes, that’s the gist of the book.

However, when the authors talk about how money spoils the 2nd and 3rd generation, they paint themselves into a corner.  They make a pretty good case for not throwing money at your kids, which basically just demotivates them and sets them up for hedonism and failure.  However, I kept waiting for the explanation about a “good way” to give your money away, but it never really came.  Basically, they sort of punted, saying that you can give your kids money once they are older (40+) and are incredibly frugal, like yourself (at which point they will never spend the money anyway).  All the way throught the book, the authors are praising people who accumulate money and never spend any, even to the point of not enjoying the finer things that money can buy.  The only moral good in the book is accumulation, which the authors never seem to understand is only a means, not an end.  I guess I wouldn’t be spending so many words on this point if the book weren’t so preachy – I guess I’m trying to refute the dead-end message of the book.

It’s actually a pretty interesting book, which is probably why it sold so many copies.  I guess the reason for this post is to pose a question – if you were one of these frugal millionaires who isn’t going to spoil his/her kids by leaving them all the money, what would you do with it?  I like some of the things that the Gates (Bill Gates) Foundation is doing, like trying to wipe out malaria, buying AIDS drugs for people who can’t afford them, etc – those ideas seem like good ways to spend money which help a lot of people.  I also like the “microcredit” movement, where you can lend money in small amounts to 3rd world small businesses and help “bootstrap” them.   What would you do with your million(s)?

Who owns the gold at Fort Knox?

What building lies on the corner of Bullion Blvd and Gold Vault Rd. in Kentucky?Fort Knox  Answer: Fort Knox, or U.S. Bullion Depository if you want to be official.  Next question, who owns the gold at Fort Knox?  Yes, there still is gold at Fort Knox a significant amount in fact.  If you took all the gold and formed it into a cube it would be 20 feet tall and wide.  The U.S. holds more gold than any other country in the world.  Again, who owns that 20 foot cube of gold.  I’m not going to directly answer that question.  I’ll let you decide.  But first let me provide some historical information.

U.S. Monetary System
The gold standard is when currency is backed by gold.Gold Bars  Meaning that the issuing entity (United States Government) guarantees to redeem the note or currency for gold valued for the same amount.  Believe it or not the United States used to follow the gold standard all the way up to 1971.  To be more accurate it effectively came to an end in 1933 when President Franklin D. Roosevelt outlawed private gold ownership.  Then we were completely severed from the standard on August 15, 1971 with President Richard Nixon.  We replaced the gold standard with a system called fiat currency.  Fiat money is currency that is not backed by anything but the good faith of the government and that the currency will continue to be stable, trade-able and of some “value”.  It is NOT redeemable for precious metals or anything else.

The Dollar
To further clarify the point of the gold standard take a look at the partial image of the one dollar bill.  Do you notice anything different?Crop of old dollar  There are two subtle but extremely substantial phrases on this bill that you don’t see on your bills today.  They are “United States Note”, and “Will pay to the bearer on demand”.  On our notes today the first phrase is replaced with “Federal Reserve Note”.  If you think the Federal Reserve is a government agency then the difference between the phrases may seem insignificant.  But, the Federal Reserve is NOT a federal agency, it is a private organization.  The U.S. government is no longer in control of printing our currency.  The second phrase was replaced with “”, that’s right nothing!  This is what leaving the gold standard means.  You no longer can redeem your note for anything of “real” value.

The Heist
Your ancestors held notes, currency, dollars or whatever you want to call their money.Fort Knox Building  The notes they held was representative of actual gold sitting in a vault somewhere that they were entitled to.  They could at anytime walk in hand over their notes and receive that amount of gold in return.  So in effect all (or a substantially large percentage) of the gold at Fort Knox was owned by our ancestors, the common hardworking God fearing men and women who made this country great and worked hard to earn that gold.  Then, the U.S. Government decides to stop backing the notes in gold, and refuses to redeem notes for gold.  I now repeat my question one more time.  Who owns the gold at Fort Knox?  Did the government just steal all the gold from every single American in the entire country?  Or, are they just keeping it “safe” for us?

Please… do your research and come back and tell me the answer.  I want to know.