I began my work career in 1971, making $600 a month. Not much, but liveable. I got my Master's degree in August 1973 and got a raise to $900 a month. Through the years I realized it kept getting harder and harder to get ahead. I remember seeing an ad in the paper in 1973 for a new Porsche 911 for $8,000--less than 75% of my annual salary. Gradually, despite job changes and raises, that Porsche was never that cheap again. Nor was housing. When I retired in 2020, I was making $110,000. But I can see, as I knew all along, that the most money I ever made was that $900 a month in 1973. Sad! But it's even sadder for young people today.
Well written, Lau!...........for some reason young people today seem to want everything for 'free", or they just cannot seem to motivate. Yes, things are expensive, but grow up and WORK. I am afraid that it comes from parents wanting their children to not "suffer" like THEY did, during hard times. I have no sympathy, because I went to work at 14 years old, and my parents were so-called middle class. I told my son, when he wanted a car, to go work for it. Socialism is attractive to the uneducated!
As far as the government goes, and the problems we are in right now; there is no "President " who is actually running the government. They are a figurehead. They represent what the powers that be dictate to them. Call them the Rothchilds, the Illuminati, the Crown, the multi-billionaires, or whoever. The leaders are elected on promises. When they win, they are called into a room, and told, "this is how it is going to be"! Global debt is not the fault of one man or one country. Right now, we (the US) are in trouble, and we must think carefully, individually, how to spend what we have. Every country has over borrowed, and no president or political party is going to save anybody.
Sorry to be the prophet of doom; but this is realism.
What did it give us, eventually the most unhealthy generation in history.
A large portion of the costs created by all the Public Sector Unions .
In the early nineties the education system was completely taken over by Leftwing Ideology, resulting in a generation who now wants to get paid and treated like they have 20 years experience first day on the job .
I for one agree with your description and cause of the fall. I definitely know it didn't happen overnight, it was like the frog being boiled in slowly rising heated water.
The question is whether it was intentional or just the result of people not wanting to go back to the restrictions let's say of the gold system and trying to find hackery that would allow the profligate spending to continue.
I think it's the latter, I don't think they intentionally try to throw a class of people into the dirt, I think that's just what happened when they tried there trickery to pervert the financial system.
Now, having done that we have all kinds of secondary artifacts. The first one of course is that once you decide that inflation is good and necessary, and that having anything deflationary would be bad, then I think you automatically take away the store of value aspect of money. That of course teaches people to not save, which in a real capitalist system is the way that investment monies are corralled together to make credit for productive expansion.
The other thing of course was that credit became much more available, available to the average person which would be fine if the credit were only given for productive purposes. But credit suddenly became the way that people went to dinner or you know bought consumption good they didn't help them reinforce their productivity in order to not only pay off the bills but enhance their cash flow. Anyways, that single thing resulted in a lot of people digging a lot of holes, and it seems okay, actually preferable when you consider that inflation is helping you with your repayment process. That is to say your repaying with less
The new system created new spenders and the idea of savings went out the window when you could simply apply for and get more and more debt. What's the sense of saving and putting it in a place that loses value to inflation.
So now people don't even know that they have a part in the economy. That is to say they don't know how to use it, they don't even understand what money is, they have no concept of saving, and I have no concept of productive assets. Back in the farm days, people made their living on their farm and they understood how making the farm productive meant a better living better eating and a better trade relationship within their community. People don't even appreciate why they go to work, they just sort of expect things to just come their way. I'm sure I'm being way too judgmental and difficult or as hard on people, but I honestly think we've lost our way. One example is to compare the average person with the average Amish person. Now I'm not saying we should want to be amish, but I think the Amish still have quite a bit of those characteristics in their lives and in their dna.
What's the solution, who knows. It's a complicated problem that we have to dig our way out of and it will take literally generations because that's how long it's taken us to get where we are.
I agree with what you say, but only to a point. Firstly, as I was going through life, I learned the ropes from the guidance my parents gave me, and the experiences I was able to learn. Let me say that my parents prescriptions we're very good for the era that they grew up in, and they've done well for me, but they were very suboptimal for the times we grew up in.
My parents taught me to be a saver, which is a great thing even today because most people for some reason did not learn that. But my parents were very inexperienced with debt, mainly because that didn't really exist to the level that we had it as we grew. My point is simply that, I didn't use debt to my advantage. The only way I did was in my refinancing of my home. That in a way was an accident, simply because I lived in a time of decreasing interest rates. I didn't understand the advantage of that, I just noticed it happening and took advantage of it. Now that we live in a time of increasing interest rates, some of the lessons that we've learned over our lives are not going to be working. I'm trying to learn the shortcuts for a rising interest rate environment. I don't mean shortcuts like ways to cut a line, but the relationships of different assets that probably act differently with a rising rate environment.
My point is that everything is different now. The last rising rate environment was one when the dollar was still tethered to gold and people had no credit. Now it's flipped on its head, where people buy their groceries on credit cards have no savings and have very large expectations of government transfer payments in many cases. (And while I am on social security, and I do believe we've paid for it and deserve it, that is along with Medicare one of those transfer payments)
So I'm not sure what the answer is, or what the new rules of engagement are for keeping up with inflation and investing, and quite frankly I still think we're at a point where we're not on a steady glide path and so I believe diversification is key. I only say that because of my unsure thoughts about what the future holds for the world economy and in particular for the United States in its place in it.
The effects of fiat money are the reason for much of the wild societal effects. Divorce, stress, violence, poverty are all on display. Sound money would fix so much of this. Hopefully the citizens figure this out through writings like this and put THEMSELVES on a gold/silver standard
Whenever I read your articles (and to be fair articles from other financial journalists) I'm always amazed by the level of research and the tracking down of the various graphs and tables used. This piece is a good example of that.
Great article. I really feel for young people. I have 3 children in their 20’s . Life is way more challenging to them than it was for me , even though I grew up in a country embedded in a war, had to do military service and were living under sanctions.
Going back even further in time, when the fraudulent scam of the federal reserve was hatched in 1913, only 4 years after the equally fraudulent 16th amendment in 1909.
That was the beginning of the end for the former USA.
An important consequence of population growth was the loss of resource self-sufficiency.
Charles Walters argued that Walrasian economic models ("Walrasian" economics named after the French mathematical economist Léon Walras) are fatally flawed because they ignore the physical reality of nature. Walters asserted that a nation cannot simply rely on mathematical market equilibrium if its population expands while its domestic raw materials and primary sectors (agriculture, mining, timber) are being depleted or outsourced. In Walters' view, relying on foreign imports to sustain population growth destroys a nation's wealth-creating foundation and leads to structural decline.
An argument can be made that population growth crossed the line from resource self-sufficiency to import-dependency around 1950, and it took roughly two decades for the effects to become severe. The Paley Commission Report of 1952 marked 1950 as when the US lost its resource independence. Of course there are other factors that took place during those two decades that exacerbate the decline of the US, one example being the Coinage Act of 1965 that corrupted what had been the coins in circulation. Vlad Lenin's quote, "the best way to destroy the capitalist system is to debauch the currency" has been proven correct. Nixon's ending of dollar convertibility into gold in 1971 was the final step in the corruption of what had been money in the US.
I have some reservations on the Malthusian theory. For one glaring example, looking at our present day wholesale destruction in the Hormuz it would behoove the average consumer that he or she may need to adjust their consumption expenditures to meet their personal ability to retain capital ie,.. Savings. Furthermore the 20th century plagued in WWI WWII including internal foreign jurisdictional conflicts, sport wars and the like is proof positive wars are profitable. The only question then, becomes, for who ?. And at who's expense duh, comes to mind. The idea that people in general can sit on their duff at a loss to question their lot in life could be partially blamed in those indoctrination camps aided and abetted to string along the unholy unwashed masses. But I digress the fact of the matter is the entire globe is on a paper standard or confetti standard, simply put, an IOU NOTHING.
Retaining capital becomes increasingly difficult and eventually impossible for consumers faced with necessary expenditures, stagnant wages, and rising inflation. The paper standard acts as a vortex to pull all wealth away from the masses and into the hands of the cabal that is running everything.
Going off the gold standard is correlation not causation. The reason everything went to shit in the 70’s is after WWII all of the developed world except the US was bombed to hell, which bought the US a few decades of absolute economic supremacy which started to erode in the 70’s as countries like Germany and Japan recovered.
And the other of course is the oil embargo. Having gold isn’t going to bring oil out of the ground if OPEC is embargoing you.
Lastly, imo silver is better than gold, since most silver is used for industrial purposes, whereas gold is mostly speculative. Although the down side of silver is it gets impractical at a point if you want to have tens of thousands of dollars in physical metal.
Oasis is back in 2027 for all the rock and roll fans out there. If you've never seen them live its MEGA. Almost like a religious experience in a way. Bring the whole family all are welcome.
The kids will be fine, just like the billions before them through the millennia. Imagine life before electricity, or antibiotics, or you name the thing. Just because it's hard doesn't mean you quit. You ancestors suffered in ways you can't even imagine.
Get busy living. Tell someone you love how much you love them. In 100 years it won't matter anyways. Frolic in the sunshine, smell the flowers and enjoy this pale blue dot while you still have time to do so.
In furtherance to the comments, I read a statistic somewhere that housing when measured i gold since 1971 has actually gotten cheaper but compared to wages, wages have dropped even more significantly in gold terms thus explaining why housing is so expensive in dollar terms. it would be great if we went back onto a gold or a hard asset monetary system, not just simply as a means to control unfettered government spending.
As I understand it: "Situation normal" is the present state of our economy as it has devolved since 1971 when Nixon unfettered the US $ (reserve currency) from US gold reserves, enabling the Federal Reserve to print money without worrying about those dollars being cashed in for gold. Correct? Therefore monetary constraint/discipline disappeared and financing government spending by creating more fiat money seemed like a magic solution. And so the spending monster has grown ever since, in effect eating the middle class's lunch and the real wages of the bottom 90 %. Most of what had been splendid opportunities to do well in the US in the 1970s have become ever more difficult if not impossible for most folks to achieve. You sum it up: "Position accordingly." That's both in terms of Plan B, if things get unbearable here. And, if you have personal reserves, invest accordingly.
I began my work career in 1971, making $600 a month. Not much, but liveable. I got my Master's degree in August 1973 and got a raise to $900 a month. Through the years I realized it kept getting harder and harder to get ahead. I remember seeing an ad in the paper in 1973 for a new Porsche 911 for $8,000--less than 75% of my annual salary. Gradually, despite job changes and raises, that Porsche was never that cheap again. Nor was housing. When I retired in 2020, I was making $110,000. But I can see, as I knew all along, that the most money I ever made was that $900 a month in 1973. Sad! But it's even sadder for young people today.
Well said.
Well written, Lau!...........for some reason young people today seem to want everything for 'free", or they just cannot seem to motivate. Yes, things are expensive, but grow up and WORK. I am afraid that it comes from parents wanting their children to not "suffer" like THEY did, during hard times. I have no sympathy, because I went to work at 14 years old, and my parents were so-called middle class. I told my son, when he wanted a car, to go work for it. Socialism is attractive to the uneducated!
As far as the government goes, and the problems we are in right now; there is no "President " who is actually running the government. They are a figurehead. They represent what the powers that be dictate to them. Call them the Rothchilds, the Illuminati, the Crown, the multi-billionaires, or whoever. The leaders are elected on promises. When they win, they are called into a room, and told, "this is how it is going to be"! Global debt is not the fault of one man or one country. Right now, we (the US) are in trouble, and we must think carefully, individually, how to spend what we have. Every country has over borrowed, and no president or political party is going to save anybody.
Sorry to be the prophet of doom; but this is realism.
Its been said, when the money goes, everything else goes with it.
Great article
The Healthcare spending is a great example.
What did it give us, eventually the most unhealthy generation in history.
A large portion of the costs created by all the Public Sector Unions .
In the early nineties the education system was completely taken over by Leftwing Ideology, resulting in a generation who now wants to get paid and treated like they have 20 years experience first day on the job .
I for one agree with your description and cause of the fall. I definitely know it didn't happen overnight, it was like the frog being boiled in slowly rising heated water.
The question is whether it was intentional or just the result of people not wanting to go back to the restrictions let's say of the gold system and trying to find hackery that would allow the profligate spending to continue.
I think it's the latter, I don't think they intentionally try to throw a class of people into the dirt, I think that's just what happened when they tried there trickery to pervert the financial system.
Now, having done that we have all kinds of secondary artifacts. The first one of course is that once you decide that inflation is good and necessary, and that having anything deflationary would be bad, then I think you automatically take away the store of value aspect of money. That of course teaches people to not save, which in a real capitalist system is the way that investment monies are corralled together to make credit for productive expansion.
The other thing of course was that credit became much more available, available to the average person which would be fine if the credit were only given for productive purposes. But credit suddenly became the way that people went to dinner or you know bought consumption good they didn't help them reinforce their productivity in order to not only pay off the bills but enhance their cash flow. Anyways, that single thing resulted in a lot of people digging a lot of holes, and it seems okay, actually preferable when you consider that inflation is helping you with your repayment process. That is to say your repaying with less
The new system created new spenders and the idea of savings went out the window when you could simply apply for and get more and more debt. What's the sense of saving and putting it in a place that loses value to inflation.
So now people don't even know that they have a part in the economy. That is to say they don't know how to use it, they don't even understand what money is, they have no concept of saving, and I have no concept of productive assets. Back in the farm days, people made their living on their farm and they understood how making the farm productive meant a better living better eating and a better trade relationship within their community. People don't even appreciate why they go to work, they just sort of expect things to just come their way. I'm sure I'm being way too judgmental and difficult or as hard on people, but I honestly think we've lost our way. One example is to compare the average person with the average Amish person. Now I'm not saying we should want to be amish, but I think the Amish still have quite a bit of those characteristics in their lives and in their dna.
What's the solution, who knows. It's a complicated problem that we have to dig our way out of and it will take literally generations because that's how long it's taken us to get where we are.
Get off your ass and go work when I bought my first house in 1987 interest rates for a mortgage or 14 1/2%. I refinanced all the way down.
These kids are afraid of their own shadow. They have no balls.!!!
Is it the parents fault? Yes, probably they’re flying helicopters around their kids but now I think they’ve upgraded the drones.😜😳
I agree with what you say, but only to a point. Firstly, as I was going through life, I learned the ropes from the guidance my parents gave me, and the experiences I was able to learn. Let me say that my parents prescriptions we're very good for the era that they grew up in, and they've done well for me, but they were very suboptimal for the times we grew up in.
My parents taught me to be a saver, which is a great thing even today because most people for some reason did not learn that. But my parents were very inexperienced with debt, mainly because that didn't really exist to the level that we had it as we grew. My point is simply that, I didn't use debt to my advantage. The only way I did was in my refinancing of my home. That in a way was an accident, simply because I lived in a time of decreasing interest rates. I didn't understand the advantage of that, I just noticed it happening and took advantage of it. Now that we live in a time of increasing interest rates, some of the lessons that we've learned over our lives are not going to be working. I'm trying to learn the shortcuts for a rising interest rate environment. I don't mean shortcuts like ways to cut a line, but the relationships of different assets that probably act differently with a rising rate environment.
My point is that everything is different now. The last rising rate environment was one when the dollar was still tethered to gold and people had no credit. Now it's flipped on its head, where people buy their groceries on credit cards have no savings and have very large expectations of government transfer payments in many cases. (And while I am on social security, and I do believe we've paid for it and deserve it, that is along with Medicare one of those transfer payments)
So I'm not sure what the answer is, or what the new rules of engagement are for keeping up with inflation and investing, and quite frankly I still think we're at a point where we're not on a steady glide path and so I believe diversification is key. I only say that because of my unsure thoughts about what the future holds for the world economy and in particular for the United States in its place in it.
The effects of fiat money are the reason for much of the wild societal effects. Divorce, stress, violence, poverty are all on display. Sound money would fix so much of this. Hopefully the citizens figure this out through writings like this and put THEMSELVES on a gold/silver standard
Whenever I read your articles (and to be fair articles from other financial journalists) I'm always amazed by the level of research and the tracking down of the various graphs and tables used. This piece is a good example of that.
I bought a Zenith Transoceanic in 1956. It still works.
How amazing is that? The technology of yesteryear. Thanks for sharing, Xavier.
Great article. I really feel for young people. I have 3 children in their 20’s . Life is way more challenging to them than it was for me , even though I grew up in a country embedded in a war, had to do military service and were living under sanctions.
>What one Sunday evening in August 1971 did to the American Dream
It happened a month earlier:
"On July 5, 1971, Nixon signed the 26th Amendment into law"
which gave 18 year olds the right to vote
now they just needed to be educated on how to vote
Going back even further in time, when the fraudulent scam of the federal reserve was hatched in 1913, only 4 years after the equally fraudulent 16th amendment in 1909.
That was the beginning of the end for the former USA.
An important consequence of population growth was the loss of resource self-sufficiency.
Charles Walters argued that Walrasian economic models ("Walrasian" economics named after the French mathematical economist Léon Walras) are fatally flawed because they ignore the physical reality of nature. Walters asserted that a nation cannot simply rely on mathematical market equilibrium if its population expands while its domestic raw materials and primary sectors (agriculture, mining, timber) are being depleted or outsourced. In Walters' view, relying on foreign imports to sustain population growth destroys a nation's wealth-creating foundation and leads to structural decline.
An argument can be made that population growth crossed the line from resource self-sufficiency to import-dependency around 1950, and it took roughly two decades for the effects to become severe. The Paley Commission Report of 1952 marked 1950 as when the US lost its resource independence. Of course there are other factors that took place during those two decades that exacerbate the decline of the US, one example being the Coinage Act of 1965 that corrupted what had been the coins in circulation. Vlad Lenin's quote, "the best way to destroy the capitalist system is to debauch the currency" has been proven correct. Nixon's ending of dollar convertibility into gold in 1971 was the final step in the corruption of what had been money in the US.
I have some reservations on the Malthusian theory. For one glaring example, looking at our present day wholesale destruction in the Hormuz it would behoove the average consumer that he or she may need to adjust their consumption expenditures to meet their personal ability to retain capital ie,.. Savings. Furthermore the 20th century plagued in WWI WWII including internal foreign jurisdictional conflicts, sport wars and the like is proof positive wars are profitable. The only question then, becomes, for who ?. And at who's expense duh, comes to mind. The idea that people in general can sit on their duff at a loss to question their lot in life could be partially blamed in those indoctrination camps aided and abetted to string along the unholy unwashed masses. But I digress the fact of the matter is the entire globe is on a paper standard or confetti standard, simply put, an IOU NOTHING.
Retaining capital becomes increasingly difficult and eventually impossible for consumers faced with necessary expenditures, stagnant wages, and rising inflation. The paper standard acts as a vortex to pull all wealth away from the masses and into the hands of the cabal that is running everything.
My 2¢
Going off the gold standard is correlation not causation. The reason everything went to shit in the 70’s is after WWII all of the developed world except the US was bombed to hell, which bought the US a few decades of absolute economic supremacy which started to erode in the 70’s as countries like Germany and Japan recovered.
And the other of course is the oil embargo. Having gold isn’t going to bring oil out of the ground if OPEC is embargoing you.
Lastly, imo silver is better than gold, since most silver is used for industrial purposes, whereas gold is mostly speculative. Although the down side of silver is it gets impractical at a point if you want to have tens of thousands of dollars in physical metal.
Oasis is back in 2027 for all the rock and roll fans out there. If you've never seen them live its MEGA. Almost like a religious experience in a way. Bring the whole family all are welcome.
The kids will be fine, just like the billions before them through the millennia. Imagine life before electricity, or antibiotics, or you name the thing. Just because it's hard doesn't mean you quit. You ancestors suffered in ways you can't even imagine.
Get busy living. Tell someone you love how much you love them. In 100 years it won't matter anyways. Frolic in the sunshine, smell the flowers and enjoy this pale blue dot while you still have time to do so.
In furtherance to the comments, I read a statistic somewhere that housing when measured i gold since 1971 has actually gotten cheaper but compared to wages, wages have dropped even more significantly in gold terms thus explaining why housing is so expensive in dollar terms. it would be great if we went back onto a gold or a hard asset monetary system, not just simply as a means to control unfettered government spending.
As I understand it: "Situation normal" is the present state of our economy as it has devolved since 1971 when Nixon unfettered the US $ (reserve currency) from US gold reserves, enabling the Federal Reserve to print money without worrying about those dollars being cashed in for gold. Correct? Therefore monetary constraint/discipline disappeared and financing government spending by creating more fiat money seemed like a magic solution. And so the spending monster has grown ever since, in effect eating the middle class's lunch and the real wages of the bottom 90 %. Most of what had been splendid opportunities to do well in the US in the 1970s have become ever more difficult if not impossible for most folks to achieve. You sum it up: "Position accordingly." That's both in terms of Plan B, if things get unbearable here. And, if you have personal reserves, invest accordingly.