The dollar fell forty years ago because that is how Viet Nam was paid for.
WWII was pay as you go, with top tax rates at 90%. Holding wars on credit could work if you won. A loss and it is time to pay up. The importance of Viet Nam was the South China Sea, It was a play on offshore oil.
Inflation reduces the value of debt, and is a tax on money. Someone had to pay, and the people who favored the war also did not want their taxes raised. They held assets, war production factories, that would go up in value with inflation. They produced oil that would be priced higher.
So the war was paid for by devaluing everyones savings, paycheck, and a mortgage on buying a home went over 18%. Unemployment soured just as the war babies who survived, started working, buying homes, and the cost of oil wars lost was put on them.
This started a cycle of boom and bust, recessions in 1970, 1980, 1990, Dot Com in 2000, housing in 2006, bank fraud in 2008, and two wars that have lasted twice as long as WWII. Each one of these have further reduced the value of money and labor.
The truth is we have a surplus of oil, labor, capital, but we have bankers and brokers who would rather make some quick money in second and third world economies, where interest is 20%.
The second problem is goods are cheap. I wanted a 24" flat screen a few years back, $1200, and a recent ad had them for $125. A 14Mp digital camera is the same price. Kids in my neighborhood are running the streets with electric motor bikes, that will do 30, and are plug in. They cost a few hundred and will last for years. Robot factories have replaced humans.
Education is over priced and always outdated. Being a decade behind just does not work anymore.
I repaired computers since punch cards, the money was good, but my advice now is buy a new one. The programing is worth more than they sell for, and they work.
Looking at housing in Florida, once was $150,000, current market $50,000 and no sales, has sat, been looted, AC is missing, worth $30,000, I will take $10,000 in cash or trade. 25% are sitting empty.
I have been putting together a publishing company. $15,000 in machines, used, needed some work, $500 rebuilt. I am paying 3% to 5% for machines still in production.
Computers, robots, and the Chinese do not write books, paint, make music, or keep a garden and a few dozen laying hens.
"It was the best of times, it was the worst of times." It is a great time to own a home, and the lot next door, run an internet based business and buy the means of production.
It is not a good time to own a McMansion and two SUVs. In the 1700s most homes were one room, the 1800s brought in the two room cabin. The 1900s brought the kitchen and bath inside.
A lifetime of living space and food production is cheap. It is a great time for living your own life. Most people through time did just live their own lives. Any roof over your head, food on the table, enough clothes to stay warm and decent.
Progress, Getting ahead, and Status is what caused the economy that just failed. Going in debt for future income, living beyond your means, makes you a wage slave and indentured servant. When you are no longer needed, you still have the debt.
"Broke is the new rich." I owe nothing, what I have I own free and clear.
The status Ponzi that just failed brings us back to the real world, where most people have lived. Being your own person is the greatest value. Living your own life the best.
"Be true to yourself and you will be false to no man,
but wear the best clothes you can, for clothes make the man."
01 May 2011, 12:50 pm
