OPP Newsletter

WhoIsJohnGalt

Everyone was encourage to put at least half of their savings into a home, so they did. It was conventional wisdom that there was no more land to be made and that you could not go wrong buying real estate. You can see what happened. Our birth rate fell and we did not replace our numbers so this resulted in a housing glut just as the "baby boomers" started retiring.

Worse, we have had a horrendous inflation rate since LBJ's Great Society program began making itself felt during the Nixon Administration. Nixon made matters much worse with his wrong headed policies and he was followed by the gutless Jimmy Carter who did not have a clue about what causes inflation. Inflation approached 21% per year under Jimmy Carter. It has never fallen to zero, not even today. The government changed the way it calculated the CPI thanks to Newt Gingrich under Bill Clinton.

It is hard to save anything when your currency has absolutely no value in and of itself. It will not even serve well as a medium of exchange. You are obliged to spend it on something in hopes that this something will appreciate because your money certainly will not. There is an advantage of having a slight, but constant deflation going in the economy. With low but steady deflation, Benjamin Franklin's advice works. Without it, only a fool tries to save money. With inflation, it is necessary to gamble with your money.