benjamanfranklinAs I write today I am listening to Fed Chair Janet Yellen say the same things she has said for several years now: Economic conditions are fairly good although growth is very slow, we can’t determine why things are not better, and we are petrified to let the classical economic principles work as they always have in the past. She might not admit the last part.

Finally some Senators are pushing back, attempting to shine a light on the mediocrity—failure in my opinion—of the Fed’s theory of free money since 2008. Free money meaning zero or almost zero interest rates. On the other hand, Senators Menendez of New Jersey and Warren of Massachusetts would rather grill Ms. Yellen on the lack of racial diversity of leaders of the various Federal Reserve districts. Yellen is for diversity. Do they really think that is the reason only the rich are benefiting from artificially low interest rates? Novel reasoning if they do.

The one thing Professor Yellen is quite confident about is that everything would still be in utter chaos if the Fed had not printed all the free money. This is despite the fact that every crisis including 2008 is a financial crisis and the free money course of action has led to the slowest recovery of the past 100 years at least. Truly these financial emperors are naked, but still unashamed. Has any of it trickled down to you?

A common saying today is that insanity is doing the same thing over and over and expecting different results. In this case, continuing a policy that is mediocre at best and expecting different results must also be nonsense. But no one seems to have any courage to do anything about it.

Something we can achieve by ourselves is to make wise personal financial decisions, beginning as young adults. While on vacation I bought another Benjamin Franklin biography for my library and began reading it. Timeless wisdom is the best. Franklin was a keen observer of human nature, even his own faults, and published great principles for a successful life.

First, he learned to control his wants and to save money no matter what his income. He learned firsthand that he could fritter away whatever he earned on drink and entertainment during his first stay in England in his late teens. From then on, he became a saver, hence his admonition that a penny saved is a penny earned. Sometimes I have emphasized to young people that the people who save are generally the people who will employ the non-savers.

Second, be very careful about borrowing money for anything and pay off your debts as soon as you can. He realized that his personal liberties and choices were restricted whenever he was financially indebted to another. Even after he had become very successful, retiring from day to day work in his printing business at age 42, he moved to a new house but rented it instead of borrowing to purchase it.

Third, he quickly learned that he could earn far more if he did the very best he could as an apprentice/employee and later in owning his own print shop. He mastered his trade in such a way that he could take jobs that others could not fulfill. In that way, he raised his margin of profit.

These three principles in my opinion are far more important than any other cause for financial success. They are far more important than even what your money earns for you in the way of interest or capital appreciation. If you don’t ever save any money, then 50 percent per year on nothing will still be almost nothing.

The Fed and our regulators may continue to make it a hard row to hoe for us, but we do not have to accept their excuses as our individual fate. Teach your children and grandchildren the time tested principles of earning well, saving well, and later, living well!

(Advice is meant to be general in nature. Past performance is no guarantee of future results.)