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How is the current economic situation different that what we had in the 70's/early 80's?

I don't think we will have expanding real industries necessarily rescuing us this time unless we can keep kicking the can down the road and keep borrowing tons of money to fuel some supposed growth. The 1970's were a funk I guess. The 1980's into the 1990's was expansive and people made out. I think a lot of that was because huge amounts of borrowed money became the standard. Do we have the same luxury of using money to spur growth? Where can the growth be, by the way?

People were more willing to work because it didn't pay more (or as much) to stay home and collect a check. We were in a lot better shape as a nation as far as our debt. We weren't fighting 10 year wars in Afghanistan. Student loan, credit card and housing debt wasn't strangling Americans as bad (although interest was much higher). Health care costs hadn't gotten quite as crazy as they are now yet. Baby boomers were still working. I would say there are a number of things that all add up to a freaking mess we are in.

In our situation we have a very low overhead business. To expand and just double our bottom line we would have to increase our gross receipts by about 450-500%. Taxes and regulations are making me hold back big time. With all the cash sitting around, we could see that put to work and get things going but nobody want's to stick their necks out due to all the uncertainty. Not to mention we could see massive inflation if/when the cash does break loose.

It it were the same is that bad? I was alive then and not super wealthy and it felt pretty fine

A few ways off the top of my head:

1. Computers. Smaller, faster, better. They existed then but in infancy stage. In the early 80's the Apple 2e was around $1,000 and now for $1,000 you can buy 2 smart phones that both over power it by 1,000x! Or but a nice desk top and monitor that are 2,000x as powerful. Working at home is now common place as opposed to virtually un heard of a few years ago.

2. HIV has been removed from the "instant death" list. It's till really bad, of course, but the "live with it" drugs are on-par with the "live with it" drugs for severe allergies now. Being alive has a lot of economic benefit fyi As does not having to quarantine people. (Until a couple years ago HIV positive people could not fly!)

3. Air travel is almost flawlessly safe now. Large planes have gone a few years without a single blazing inferno crash. The economic cost of death is generally under rated

4. Stock trading can be done by anyone for $5 a trade unlimited shares. Back then it was broker-only and they took a 1% to 2% cut!

I thought of another BIG one while on the plane and noticing a lot of foreign people

5. You can do business internationally VERY easily now. In the early 80's it took a contact in the other country. Now you could set up a web site and sell things nation wide the same day!

Oh and here is another great one:

6. Interest rates on loans are insanely low. So if you believe in leverage you can leverage on the extremely cheap. I know there are people on this board using that as a mechanism to buy more bullion.

7. And with the proliferation of the Internet you can get answers to business related questions in a second instead of paying a consultant.

8. Also with the Internet you can hire or collaborate with people all across the country or world.

I think this age (2005+) is the age of the small business entrepreneur. If you are one of those then this is history's greatest time for you. For those trying to find jobs for someone else there are jobs out there but the chances for job growth and the quality of the jobs is probably not what it once was.

You can start a small business doing anything and have wide open venues for selling and advertising your product. That's pretty cool.

Interesting points on how life is different Barry, but I don't think you're addressing his question.

Several things are fundamentally different.

1) we were fundamentally a manufacturing driven economy then. Most of our manufacturing has been sent overseas and it continues to decline. We have far less ability now to take care of ourselves, and more of the jobs now are less challenging and pay far less.

2) the government was far more careful about lying to us; not so now. Now they lie with impunity, especially about statistics.

3) we had a far higher effective employment rate. Don't look at the unemployment rate, especially now, as it is a rigged statistic.

4) we have far fewer people on government assistance, and it was considered a stigma to take it, or to declare bankruptcy. Not so now. We are still very productive as a people, for those that do work we have the highest gross worker productivity in the world, but those that work are bearing an ever increasing burden of the non-working, and the net population productivity is declining at an alarming rate. As a result of the number of people on assistance, the people have now figured out how to vote themselves benefits and are now in the process of actively killing the goose that laid the golden egg.

5) the forced low interest rates are a blessing for some but a curse for pension plans, and the retirement plans of the retired. They are forcing artifical changes in the way the economy functions - it's a "low interest bubble" which will collapse.

6) the change in presidency in 1980 came at the right time with the right will to kill inflation, which was the will to absorb some short-term pain by allowing the Fed to force super high interest rates in order to get inflation under control. I felt that pain, but it was better for the long-term. Inflation came under control, the government was able to use supply-side economics then to reduce taxes and stimulate investment, and the 80s and 90s were - in general - high-growth times as a result. There is no will for that same solution to be employed now to stimulate the economy.

7) The boomers (and I'm one of them) have proven to be - in general - miserable failures as parents. (I consider myself and my children an exception to this.) They have catered to their children and grandchildren and left us with two generations and counting of spoiled, gimme-mine people who have too high an opinion of themselves. Too many of the children of the boomers are whiney, lazy, complainers who don't know the meaning of hard work.

8) we were fundamentally a better educated people then. The larger portion of the population has become a type of idiocracy. I'm constantly embarrassed at how stupid Americans have become as a population.

Individual exceptions to the above abound, but there is a reason that many stereotypes exist - because they capture aspects of truth.

68Camaro: Great points and I agree across the board.

#4 is scary and VERY true

#8: Teaching to the "test" is just plain bad teaching. And that's the REQUIREMENT now


It's interesting though 68Camaro that you chose 8 points where it is WORSE now. May I ask if you think that nothing is better and/or that I covered all the "better"?

Brilliantly said Camero!

Barry pointed out the things that are better today. Most were due to technological advances. You can do that with any 40 year span in history. The invention of the car, telephones, light bulbs, planes, power tools, and many more common things today were once non existing. The internet has made things easier and faster. My daughter and I had a conversion yesterday and I said encyclopedia and she said "What is that?

Having said all that, today America hardly makes anything. China makes almost everything we use. In the 70's and 80's there were more.manufacturing jobs here. I believe that Americans would be not only better off financially if we had more American made jobs, they would be more proud because they built it ( Obama would say "you didn't build that")

Advances in technology have made things faster and easier, but in doing so we are on the brink of replacing the human with machines.

It seems most of the bad is on a Macro level which is not good, of course. Obviously schools, trade, etc. all borked to a level of probably no return.

That said, slickeast, it isn't true that 40 years of tech lead to such benefits to the small-guy as they have lately. Tech is great, of course, but the last 30 years of tech has given the great opportunity base to the person starting with nothing of any tech ever.

barrytrot wrote:It's interesting though 68Camaro that you chose 8 points where it is WORSE now. May I ask if you think that nothing is better and/or that I covered all the "better"?

The question appeared to address the macro, so my points addressed the macro. In the macro economy there is NOTHING that is better now than 30+ years ago. So I wasn't focused on the negative, I was focused on the macro - which does happen to be all bad...

In the micro, for someone with inherent drive there are great options and opportunities. One is the incredible educational opportunities which have been developent (and continue to be improved) on the internet.

People with drive can still do well, but even that is (will be) coming to an end.

Drive appears to be largely genetic (though with some teachable environmental component), but when the larger system truly rewards hard work others with lower drive get caught up in the leadership shown by the hard drivers, they themselves thrive, and a larger number of people do far better. When the system fails to reward hard work then the true inherent drivers remain, but are seen to be a small minority of the population who then get punished for doing well by having the product of their labor stolen by the "looters".

You guys have summed up the economics of the question pretty well, so I'm just going to weigh in with my own naive, big-picture opinion.

I had just started my working career in the late '70s, and I was there when interest rates and inflation were front page. The difference then was, as I remember it, was that there was a general expectation that eventually things would work themselves out, and better times were still ahead.

Today, practically everyone agrees, and sadly passively accepts, that they and/or their kids are not or will not be as well off as the preceding generation. THAT'S what I believe is the difference between then & now.

So would the same "fixes" work for today's problems or is the collapse inevitable?

Even I would say - macro collapse is inevitable.

Could changes work? - Of course. But those changes happening are impossible.


That said, even in a collapse situation there will be plenty of opportunity for the hard working and innovative, so I still have to say the environment of today isn't half bad!

Inevitable is the word.

No-one is trying to fix anything.

What's next? Back to the Gold Standard? Chinese intervention? Beats me.

Chinese control

barrytrot wrote:Chinese control

unfortunatly but.. probably true..

Not positive that this should be listed here, but it seems to fit to me. The internet not just as a busniess tool but as a source of knowledge. There is indeed aLOT of junk online. Lots of good stuff as well. Including FREE college level course, although you dont get a degree.

In my case it will take me awhile to get going (setting up orchards) but without the vast wealth of knowledge I had online it NEVER would have happened. This area is officially "non arable" yet I can do it WELL. I moved out here to farm wide open land, as naive as it gets. Everything I knew from working on farms back in ohio now useless. I mention this because Ive meet several folks from previous generations who did the same thing. ALL of them failed or at best had weak little gardens producing a small portion of their food. Those along the rio grande which is warmer fared a bit better then my locale, but most of them found it to hard as well. They fell back to the basic back to the land books of their era which were watered down copies of older methods. Didnt help most of them i this particular area. I had the internet though! It took some time and study of everything from cropping systems to soil sciences to methods of ancient cultures and then lots of trial and error, but now I can do what is officially not possible. All because of a tool that was born in my lifetime.

The internet is a major wildcard imo. Our growing police state for instance, if it goes over the edge a little TO far, how does a society with an internet react? We are seeing a whole new economy blossom here as well. Knowledge spreading even into remote parts of africa now that communications is affordable. Im seeing some truly amazing crop production work evolve there that isnt on most radars and potentially can keep them all fed well! Which by the way historically leads to stable populations, such as the western world today.

No doubt in my mind we face severe economic and government issues. The entitlement folks baffle and scare me. Our fiat system is destined to fail imo. I even fear there is already an "answer" on a back burner somewhere from the global power players that will lead us further to serfdom.... But as was mentioned above SOME people thrive through adversity. Its the nature of our species and society for that matter.

My post probably isnt entirely on topic, but this is where my mind went so I posted anyway. LOL.

How is this different?

Financialization of every aspect of the economy which has resulted in a level of debt unrivaled in the history of mankind.

Delawhere Jack wrote:How is this different?

Financialization of every aspect of the economy which has resulted in a level of debt unrivaled in the history of mankind.

Ding...Ding...Ding...We have a winner!

The entire financial system is a house of cards which will crumble some day soon.

Engineer wrote:

Delawhere Jack wrote:How is this different?

Financialization of every aspect of the economy which has resulted in a level of debt unrivaled in the history of mankind.

Ding...Ding...Ding...We have a winner!

The entire financial system is a house of cards which will crumble some day soon.

Ya know, the debt weighs heavily on my mind and I would normally focus on it. I agree with you. But I didn't put it in my 8-point post above, and I've been asking myself why it didn't make it.

I believe it's because the debt isn't the root cause, rather the debt is the result of the issue(s). If the mood of the country's ethic and morality was what it was following WW2 and earlier, then the issues I noted above wouldn't (mostly) exist, and the debt (even if accumulated, as it had been during WW2) would be able to be dealt with. The country would suck it up, buckle down, people would work hard, sacrifice a lot (let's not kid ourselves - it would take some sacrifice), and we would be able to pull out of it over time. But with the 8 points of issue above, there is no way, and no will, and the debt is not only impossible but growing, and the majority of the people actually do not care. Instead they've voted for more debt.