Do you remember the days when a home could be purchased for $5,000? Or a car that could be bought for $80? How did we get from that point to today, where homes, cars, education, and more cost a fortune? Read more from Mike Savage, a financial consultant in Pocono Summit.

Weekly Article 10-03-2018

I have felt that many of the articles I have been writing have been similar in scope and the information,  while important in my opinion, can be a bit redundant. This economic experiment has been going on for 10 years now and the only difference at this time is that the numbers just keep getting exponentially larger and our “cliff” that much higher and closer.

I am going to take a trip down memory lane in this article. I am going to attempt to show the impact on our society that all of this money “printing” and its disastrous effects that have taken place in the last 40 years or so.

I remember growing up when our dollar was tied to gold and had real value. A dollar was worth a dollar- or at least its debasement was so slow that it was barely recognizable. Homes could be built and bought for $5000.00. Cars could be bought for $800.00- a decent NEW car! Heck a high school kid could work, save and get a junker for $100.00. I could work my way through college and still SAVE money. Try that today!

It is true that today we have many more gadgets and toys but I remember having more fun with a bat and ball and a few friends than any of the games available today.

There was a certain respect that everyone had for one another. That doesn’t mean there weren’t bad people or crimes weren’t committed but those were the exceptions and for the most part everyone treated each other at least with respect.

Even if there were fights- as there always seemed to be- those fighting would duke it out- no guns or knives like today and afterwards it was likely that both combatants would respect each other and often become friends. It was over.

It didn’t matter what type of a job you had. Things didn’t cost much so everyone was able to live a good life on a meager salary. People were viewed by how they acted rather than for what they had. Of course, there were rich people back then too who excelled in some area and were looked up to not only because of what they had (which being honest- we all wanted too), but also because of their character and involvement in the community.

There was a certain class about people who cared about how they looked when they went out. Other than going to the mailbox nobody would be caught outside in their pajamas. Today, it is totally likely that you will see many shopping and doing errands in pajamas.

Back in those days it was an embarrassment to take handouts. I remember skipping lunch many times growing up because our family “qualified” for a reduced price lunch. The only catch is that everyone would see that and I decided to pass on lunch and keep what little dignity I may have had. I’m sure there were many more like me at that time. That served me well when I moved to New York with $700.00 and everything I owned in my two hands in 1979.
This type of attitude where we all respected each other came from a general sense of well-being. That there was enough abundance around that we could all work together and we would all be better off.

It didn’t take a lot of effort to create a pretty decent middle-class life and most were more than content with their standing in society.

Also back in those days moms generally stayed home and raised the kids. This is why they learned respect and manners. I see the difference and am proud to say that my wife stayed home while the kids were young and we couldn’t be more proud of them. My grandkids all have stay at home moms too. Hopefully it can stay that way. It is much harder these days because of not only the massive price increases over the years but also all of the taxes that are on our backs for all of the giveaways that local, state and national governments provide. Remember the government produces NOTHING. It takes from one and gives to another in the name of benevolence. And possibly the buying of votes.

After Nixon took us off of the gold standard in 1971 the rules of the game changed. It seems to me that we now had a fiat (backed by nothing) currency that could be produced in ever-increasing numbers with nothing to keep a lid on what the central banks were doing. (In 1981 we had a trillion in debt – it is now over $21 trillion with at least another $21 trillion “missing”) and that’s just the Federal government! 1

In just a couple of years inflation became rampant and price controls were put on many items. I remember going with my mom to the store and she asked the owner (yes the owners were local- not some multi-national conglomerate) why there was no American Cheese. The fellow said “It costs us $3.00 to buy the cheese but the government says we have to sell it for $2.00. We have no cheese!

Of course, this type of action is NOTHING compared to what we have witnessed in these past 20 years or so as serial bubbles have been blown up and popped twice and we are nearing the third bust in 20 years in my opinion.

Because the dollar has been debased so bad people have turned on each other. Instead of working together and getting win-win situations it is win at all costs- the hell with the other guy.

This didn’t happen overnight. This has been building since the 1970s where the difference between those who have assets and those who don’t have assets has become unimaginable.

We have billionaires that have massive wealth and 45% of the population doesn’t have $400.00 in case of an emergency. We have generations of people who know nothing of opportunity or education but rely on the state for their sustenance. I often ask myself, is it any wonder why our inner cities look as they do? When there is little or no hope this is what you get.

When your money has value your labor is rewarded in a meaningful way. When money is debased your labor value is reduced and life becomes a struggle. Soon, as the money is debased further it takes two incomes to keep the same lifestyle that you enjoyed just a few years ago. Maybe it starts with a part-time job and then a full time job. After that, people had to go into debt to continue living the way they did just with one income not too long ago.

Of course, as debts pile up the security that we felt in the past is replaced by servitude to those we owe the money to.

By those “printing” money (our “money” is nothing other than an instrument of debt) I believe they are making us all slaves of their system. As we work and try to get ahead we pay our bills, feed our families and hopefully have some excess to save, we hope to secure our future. In the meantime there are people who can push a button, create unlimited amounts of “money” and buy anything they want. Basically making everything we buy more expensive and our labor worth far less than it would be without such actions.

The stocks we buy are bid up far beyond any reasonable value. Bonds yield virtually nothing because those “printing” buy them to keep rates low- mainly to keep governments and banks propped up at our expense. This is not just at our expense today but also for our future. Our pensions can’t survive on miniscule interest rates and bubbles blowing up and popping every 10 years or so.

In addition, let’s not forget that those that remember history and can guess how this ends get beat up along the way while this same phantom money creates the illusion that the dollar is strong by comparing it to other fiat currencies and suppressing the price of gold and silver.

The whole thing is a gigantic illusion. People today seem to worship celebrities and the rich- regardless of their morals or character. I know some amazing people that really do care about their fellow human beings and look for win-win situations but these people are becoming few and far between.

It has become clear to me that we could not have come to this point (Money printing) without losing our moral compass first. This has led to the animosity that is shown between people in every aspect of life.

Because of the inflation of our “money” hard work is not enough anymore. You could work like a dog and still be broke. I know of many who work full time jobs and get SNAP cards.

In this “good as it gets” economy- according to the US 38.5 million Americans are living in poverty. 38.8 million are on food stamps. 96 million who COULD be in the labor force- aren’t. The GAAP (Generally Accepted Accounting Principles) Federal deficit for 2018 is over $6 TRILLION- IN A YEAR!
The illusion that one can get something for nothing has led us to this point where there is no civility to be found in most areas of life. Life has become more of a struggle for all of us except for those at the top of the food chain.

Many who are younger may not be able to relate to this but if someone told me the amount of money I would be earning 35 years ago I would have thought I would have been extremely wealthy. Today, because of this situation- I just do ok.

This is getting awfully long so I will stop here and follow up next week with a few ideas about how to not only survive but hopefully thrive when the illusion is exposed.

Be Prepared!

Mike Savage, ChFC, Financial Advisor

2642 Route 940 Pocono Summit, Pa. 18346

(570) 730-4880

Securities are offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Any opinions are those of Mike Savage and not necessarily those of RJFS or Raymond James. Expressions of opinions are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do n ot guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.

Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only form a small part of a diversified portfolio. There may be sharp price fluctuation even during periods when prices are overall rising. Precious metals, including gold are subject to special risks, including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.

Diversification does not ensure gains nor protect against loss.

1-      $21 trillion reported missing (Forbes Magazine) Dr. Mark Skidmore Michigan State University, Lawrence Kotlikoff