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.
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.
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.
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
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.
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 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.
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.
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.
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
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.
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.