I remember when I first heard about biofuel I was shocked. Up until that time it would never have occurred to me that you could run your car on liquid fuel made from plants. It did, for a time, seem like the solution to all of our problems.

It would be good for farmers around the world as they could finally earn a decent income from growing crops for fuel. It would be good for the environment as this was a truly renewable fuel that had a minimal impact on the environment. It would be good for countries that had no oil reserves of their own as they could grow their own fuel supplies and would no longer be dependent on importing oil. It seemed to be a win-win situation that everybody would benefit from.

Unfortunately, today, on the day the UK government enforces regulations that require that 2.5% of all fuel sold must come from renewable sources we are just starting to understand the consequences of this enthusiasm for oil from renewable sources and see the downside. The theory is correct. You can grow enough crops to turn into fuel to supply a whole nation with oil. However, the land you use for the crops to produce that oil might otherwise have been growing food for humans to eat.

We have all seen food prices rising dramatically over recent months and it is not entirely coincidental. There have been poor harvests in Australia and elsewhere but there has also been a lot of crops that have been bought for use as ingredients for fuel production. The demand for oil has led to massive rises in it’s price with the consequence that the economical price that can be paid for crops to make fuel has risen too. There will come a time when the growth in availability of biofuel means the price of oil will stabilise and perhaps even drop but in the meantime, people are starving.

There have been riots in several countries as people protest over the price they are having to pay to feed their families. When 50, 60 or even 80% of your income is spent on buying food for your family you are bound to be seriously affected if food prices double as they have in some cases. When you cannot afford to feed your children, the environment and the price of oil seem pretty unimportant. Your priority is to ensure you have food for your family.

We can all do our bit to help alleviate this problem. Biofuel does have its place as do wind farms, solar power and tidal energy but we have problems now and developments in alternative energy sources are coming along far too slowly. It will be twenty years or more before these alternatives are playing a significant role in our energy production and we need to take action now.

We can all do something right now….. USE LESS STUFF

It is a simple message but the effects of following that simple advice could be huge. We have all become voracious consumers in recent years. We have stuck our noses into the trough of goodies and greedily gobbled up as much as we could whilst stretching the flexibility of our credit cards to breaking point. The financial fallout is all around us now in the credit crunch and the physical impact is starting to make itself felt too.

Has all this consumerism made us any happier? Overall the answer is probably no. We may live more comfortable lives and we have all these ‘toys’ but are we content? I think most would have to say no. If we were content we wouldn’t be looking for yet more new toys, gadgets, gizmos and designer label this, that or the other. Content means being happy with what you have. Not wishing you had more.

There is an old and well used phrase — Less Is More. It applies to many aspects of life but in this case it means having less ‘stuff’ means you appreciate what you do have a lot more. You only have to think back to your childhood and remember a time when you spent hours, maybe days, playing with some simple thing that made you happy. It could have been an empty cardboard box, a hole in the ground or a bicycle but it wasn’t complicated. It didn’t need batteries and it challenged you to use your own imagination which was a large part of the fun. Gadgets that ‘do’ everything for you deny you any sense of satisfaction other than figuring out how to work the blasted things.

Youtube Videos

The world seems like a small place these days. What each of us does has an impact on people in the next town, the next country or even in another continent. We can do helpful and beneficial things or we can do careless and thoughtless things that will have an effect somewhere else in the world. If we in the developed world all use a little more fuel to power some new and ‘exciting’ new gadget someone, somewhere may die for lack of food or fuel because those resources are either not available to them or simply unaffordable. You may say that this is just life and it is not your problem. Would you say that if you were in that situation of possibly starving through no fault of your own?

We all are part of the human race and we all bear some responsibility towards others. We can make a difference quite easily simply by using a little less ‘stuff’. Turn off that light that doesn’t need to be on. Turn the heating down a tiny bit and you probably won’t even notice any change. Walk to your local store rather than drive some of the time and eat less meat once in a while. None of these actions will have a big impact on your life but if everybody were to do these things it would have an enormous impact across the planet. It won’t solve the long term problems we face but it will save you money and it will help people who are living in difficult circumstances, to survive.

So, on this day when we are starting to use 2.5% of Biofuel as we drive to the store or to the park or to work. Think about the effects and the impact of what you do. Making these minor adjustments in your life will save you money and on the other side of the world they could save somebody’s life.

You can do something so significant, so easily and all the while YOU SAVE MONEY.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

The expected move to reduce interest rates further has come from the Bank Of England Rate Setting Committee. The bank rate has been reduce again by 0.25% to 5%

The move will be welcomed by many but there is a growing grumbling that the full rate cuts are not passed on by mortgage lenders who are trying to rebuild their capital reserves having allowed their greed to overcome common sense and poured their reserves down the toilet on mad investments in the sub-prime housing debacle in the US.

There does seem to be growing resentment at the banks who for the last 10 to 15 years have effectively driven the economy with their lending and who could now cripple the economy due to their greed and stupidity. Banks are no longer the glorious bringers of prosperity they claimed to be and are now seen for what they are. Greedy businesses that have no interest in either country or customers. Their prime focus is on profit and they seem to have no allegience whatsowever to either their customers or the country.

Business is indeed business and banks should act as they choose. It does seem to demonstrate that the banks need to be brought under control enough that they cannot cause such problems as the credit crisis. Banks hold a special place in the economy. If a brewer or a car maker makes stupid decisions which cause it to fail the economy carries on regardless. Banks are different and they cannot be allowed to lend money carelessly in their greedy attempts swallow more and more money.

Something radical is required. My suggestion is that:

1) Banks should only be allowed to borrow from their government.

2) Banks should only be allowed to lend and amount equal too their reserves and loans agreed from government.

3) Banks can only borrow as much as the government are prepared to release for lending.

4) If there is a run on a bank the government has first call on the bank. It takes over the loan book and gets the profits on the loans and if it came to it would foreclose on the bank and take it over if somehow it got into difficulties. However, if the banks were only lending money they had in reserves or had borrowed from government it is unlikely they would ever face such a run and people would be reassured that the bank was effectively guaranteed by government.

This gives us all better protection as the banks will only be able to lend against reserves and agreed loans from government and would have to be more careful with their money. It would prevent the current situation, which has got us all in this mess, where a bank can lend nine times the amount of money it actually has in it’s reserves and owed to it.

The government would actually start to benefit from all the financial loans made throughout the country. Yes that is us the taxpayers. We could see enormous reductions in tax as the profits arrived at the treasury from loans made to the banks. It would be tax by another name and arguably a much fairer system of tax.

It is a simple concept. Banks can only lend money they actually have available. It would have prevented the sub prime crisis, the government and consequently the people would benefit and it would give contol of money back to the government where it belongs. Remember, you heard it here first.

I am sure there must be all sorts of reasons why this could not work, though I can’t see them. It seems to simple but maybe simple is what we need instead of the complicated mess that banking is currently. Comments would be very welcome.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

The 147th Carnival of Personal Finance has been published this week over at MoneyNing.com

Well done and thanks to David who has published it this week. For those who don’t know what a blog carnival is – it is a collection of links to, and information about, articles published previously on individual blogs by all the contributors to the carnival. Did that make sense? I hope so. Anyway, no worries. Just be aware that if you visit the carnival blog page you will see links and brief details about a host of excellent articles about all aspects of personal finance. Most of the blogs are American but usually the principles of personal finance are the same even though the details are sometimes a little different.

I have a contribution on there which was my article about investing in your children’s education but there are a lot of others on there and I will mention some of my favourites…

From TheHonestDollar we have an article about inflation. A subject that must concern us all in these current rather confusing, times. Nobody really knows but being prepared for inflation is a sensible step and we are given aheap of suggestions for reducing the cost of living.

TheMoneyKings gives us some suggestions on how we can avoid wasting money on exercise equipment and gym memberships we may never use. I suspect that the whole business model of Gyms revolves around the fact that maybe half the members will hardly ever show up and expect to use the facilities after the first few weeks. We don’t believe in wasting money like that here at the moneywell so we exercise by typing at the keyboard. I have wondered if it is possible to type whilst on an exercise bike though I haven’t actually tried it yet.

ManagingPersonalFinance argues that we should start fighting back against the banks and their persuasive credit card offers. There are hundreds of thousands of people who have been convinced that they were more important because they have particular credit card and they have been encouraged to think there are no problems if they make use of them. This has led untold numbers of people into difficult financial situations. I’m all for fighting back against the banks. A bit more honesty and less greed from them might have prevented the current credit crunch which is continuing to cause problems around the world. The more people are aware of what they are getting into with credit cards the better things will be for consumers.

So, there you have it. A few highlights from the carnival but I do suggest you pop over and have a look for yourself. There may be many of the other articles that will be of interest to you.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)