What is the difference between a good economy and a bad economy? A lot of it is perception. If we feel it is a good economy it must be a good economy. You feel better about buying things and going in debt. So the ability to spend on things and activities may make for a good economy. So does easy credit make a good economy?
During the mid 2000s the easy credit on homes sparked a construction and home buying boom. Construction workers were making money. Developers. Retail business. But people were racking up debt that they ultimately could not or would not repay. So credit tightened up. Building stopped. People lost jobs. Foreclosures skyrocketed. Banks nearly failed. The merry go round stopped. Governments lost tax revenue.
Jobs that were previously hard to fill suddenly had droves of people turn out to apply. Factories closed. Retailers closed. The government extended unemployment benefits. Investors and retirees seen there assets disappear over night. Those that thought they had a secure future were back to square one.
Fast forward to today. They say the economy is better. Or is it just that we have come to accept the way things are. Savings accounts pay almost nothing. Most do not have any savings anyway as they are living hand to mouth. The number of people on disability and food stamps are through the roof. Making for a lot of people who are permanently unemployed. To a certain extent they have kind of hit the jackpot. Being able to get by without having to have a crummy job. But it is the new norm. This is our better economy.They say the average income is around $50,000. That is about $25 per hour based on 40 hours per week. How many people do you know making $25 per hour? The big money people drive up that average. People making millions, combined with the statistics that probably eliminate about half of the population is where that average comes from. Most workers are in the $10 per hour range.
Grocery, clothing, fuel and services have risen in price. To the young person now nearly $4 a gallon gas seems the usual. $4 a gallon milk and box of cereal. $4 for a 5 pound bag of potatoes. The list goes on and on. But this is now the norm.
When you get down on street level. There seems to be sadness, depression, anger or general unhappiness in the air. not much optimism. Some people seem grumpy and rude. Others have this look on their face like they are trying to figure out a way to be pestilent. Just because they can. When it would take no more or even less effort to somewhat cordial. People just groping to get by. People are sitting there staring at their phones. Like a baby with a pacifier. As a whole most people just do not seem to be very happy.
Most everyone seems to be living hand to mouth. That is the new norm in this good economy. Younger people do not have a lot of goals. Just plug on through life. Take what they can get when they can get it. Considering this is as good as it gets.
Just today there is an article on MSN about the solid economy. Next to it there is another saying Cisco is laying off 6000 workers. Why is the stock market so high? European Union countries today reported negative statistics on their economies. Even Germany, France and Italy are among the many.
The early eighties suffered from a bad economy. Interest rates for borrowing with good credit were 18% to 21%. But banks were paying high savings rates. Business and home construction came to a standstill. Automobile and durable goods purchased dropped way off. people were out of work. Picking up aluminum cans along the road. Taking anything they could get for work. Joining the military for a job. Telephones hung on the wall then connected to a wire. And unless you made long distance calls were cheap. Most still watched over the air TV. So no cell phone or cable bill to worry about. But if you did have cable you could get all these cool channels like CNN, Showtime, HBO, TBS, WGN and MTV. A real treat then. Cable companies were providing jobs as they had to run the cable, install it in your home. And sell it, collect the payment etc. Bottom line though the economy did not start to do much better until about 1985 when they loosened up on credit and lowered interest rates.
Go back to the Great Depression that started in 1929 and lasted till basically World War 2. It did however let up some in the late 1930s. After World War 1 there was a slight blip in the economy. A million troops home wanting a job. At that time however many came from family farms and simply went home to their family. World War 1 was a modern war. A lot of new technology. Although the American Civil War was probably the first modern war. With the advent of the Industrial Revolution many started to work in factories. Living in cities where the factories where located. The consumer was invented. People were living in apartments in a city working at a factory. The food you ate no longer came from the family farm. But stores. You most likely could not afford to eat every meal out in a restaurant. So you needed appliances. Something to cook with. And something to preserve your food you bought at the store. You did not eat much canned products as your family on the farm did. So you needed an ice box. Well the enterprising Americans came up with all these great appliances so you could get by. Knowing that you could not afford to buy one of these great new appliances outright (cash) they came up with consumer credit. Rolling the dice that most people would make their payments. The ones that did not were offset by the profit of the ones that did. Then Mr. and Mrs. factory owner says let's go public. Most of the big ones were anyway. They also owned the financial companies that gave you the credit. To take this another step we want to get the working poor involved some more. Offer or dangle a chance to really make some money. We will make shares of stock in our company available to you as a worker. So the stock market went wild. Everybody was making money. And if you did not have the money on hand you could buy it on margin (read credit). After a while everybody had all the appliances they could get. The merry go round came to a halt. Booze was illegal but that didn't seem to stop anyone from drinking. Everyone was a hundred dollar millionaire, on paper at least. Well when that paper became worth nothing a lot of folks lost a lot of money. Perceived money. All of the real owners broke camp and sold while the stocks were still high. Leaving the chumps to be stuck with what would eventually be worthless paper.
Initially President Hoover gave money to the factories. As a pretty good President this was not the answer. FDR came on and ended Prohibition. It seemed like Americans still liked to drink. The American government had no debt at that time. So they started programs. That is what got Americans out of hard times. The government programs sponsored great public works. Like the great dams. The large bridges in San Francisco and New York City. And countless other road and bridge programs throughout the country.
The unemployment rate was above 25%. The younger people then were having the children that are in there late 70s to 90s now. Known as the The Greatest Generation. Not only did they get to grow up in the hardest of economic times. They had the opportunity to participate in World War 2. Which as a whole could be considered the largest human event. Much of the world today is still a ramification of that human event.
After the war and shortly afterward the participants in the conflict were thrown back into the reality of having to find a job. Many of the heroes at war were just flunkies in the workplace. As the factories started switching from producing wartime material there was another adjustment in the workforce. A lot of women were working in the factories while the men were sent to war. Most of the women had the opportunity to go back to the house. As the men could go back to work in factories. Everybody who wanted one needed a house. And to fill the house with all the modern appliances. And the start of modern home life was established.
The factories turned out washing machines, dryers, stoves and refrigerators. The television had actually been around since the late 1920s. But only the very wealthy had the luxury watching a few experimental stations around the country. So this is when the TV became a big part of our lives. So you got your little house. With your little family. And were on your way. Establishing a lifestyle that is now starting to deteriorate after about sixty years. It spawned the Baby Boomer Generation. It was not however without its own problems. There was a Cold War going on. That got hot in 1950. Called the Korean War. Eventually leading to the Viet Nam War. Another chance for the big powers to face off. Throughout this time the United States had a good school system. You could actually learn something in high school. For the most part high schools should be able to provide enough education to prepare you for a avocation. Why would you need to go to college to have a retail or service job that requires training for that specific job? It would not mean much. Only people who are going to be professionals in a specific field need to go to college. College has became another high school with which unless you have a specific trade is worthless. It looks good on a resume. But not much else. We need to as a nation to think about doing the best you can do. Not the least. Help each other. Do not fight amongst your selves. We are in the same boat together. Let's make it as pleasant as we can.
These ups and downs have went on since the beginning of the United States. They use to call them panics in the 1800s.
So now our better economy is through easy low interest loans. No interest paid on savings and government support. How much longer can it work? MSN seems to think everything is fine.
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