The Problem Ain’t The Cost Of Money – It’s The Cost Of Stuff!
Guest Post by Dennis Miller at Miller On The Money
New Year’s Eve, 1999 – a special time for Jo and me. We took our motor home to Key West, Florida. We celebrated the magic moment, the turn of a century, in front of (famous Ernest Hemingway hangout) Sloppy Joe’s Bar.
As the conch shell slid down the pipe, people yelled, “10-9-8-7″…until the clock struck midnight. Happy New Year! I kissed my bride and we headed back to the bus (hoping Y2k didn’t fry our computer).
The intimacy of a motor home provides a great opportunity for lots of conversation. 2000 was a personal milestone, I turned 60. Jo and I spent a lot of time reflecting; wondering what the future would bring.
I predicted we would recall the last decade as “The good old days.” Little did I know how right that would turn out to be.
What was so good about them?
Interest rates stabilized from the double-digit Volcker years. After a short 1990 recession, business was booming, moving quickly into the internet era.
While Clinton pushed through the largest tax increase in history, House Speaker Gingrich kept his campaign promise, holding the line on government spending; creating the last budget surplus we will likely ever see.
On January 1, 1990, the Fed funds rate was 8.25%, dropping to a low of 3% in 1992 and hovering in the mid-5% range for most of the decade.
With Volcker bringing inflation under control, interest rates stabilized and mortgages were affordable. CD and bond interest rates were above inflation.
| Interest rates were not an impediment or incentive to doing business. |
I was managing the money for both sets of parents. We invested in safe, secure investments. Their interest income, coupled with social security allowed them to live comfortably, without worry. Times were good.
What the heck happened?
What happened ? We the people allowed the Fed to exist when it should have been killed at the onset.
Interest rates falling (albeit with ups and downs along the way) from 16% in 1981 to 0% in 2010 (and staying there) goosed real estate and stock values. What will happen if that is reversed? You do the math.
This is why the politicians want more immigrants. Educated ones if possible, but stupid, crime-prone ones if necessary.
Its quite a quandary. I like money. And stuff. And 1990 America. But I can only pick none of them. How to decide?
We were supposed to inherit 1990 america from our parents but we got current year and good tacos instead.
Because the collateral for those Safe and Secure investments of the before times was us.
And we just got Safe & Effective so our kids can have their current year one day too.
Meanwhile grandpa has never seen his grandsons diaper but uses his own box of Kirkland Signature diapers to wipe down his classic car collection every Saturday night before his Sunday drive but we won’t see him because we live “in the boonies” and our dirt roads would get his car all dirty.
Quite a quandary.
A single grapefruit was $3 today. I felt compelled to steal it but I didn’t. Highway robbery!
The problem has always been MAYNARD FUCKING KEYNES.
We now return you to your regularly scheduled bullshit.
Cans of condensed milk sold for twenty-five cents a can are now three dollars a can. Right now I’m looking at used cars. Many of them have over two hundred thousand miles. About ready for major parts to need replacing, going for twenty grand.