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When you have a period of high prosperity, you get used to it, making adjustments to your lifestyle. When that period is over, it's hard to accept it. In the 5

When you have a period of high prosperity, you get used to it, making adjustments to your lifestyle. When that period is over, it's hard to accept it. In the 50s, you could have a modest job, provide for your entire household with one salary, buy a nice house, a car, send your kids to college. The government made massive investments on infrastructure, defense, science, space, etc. How was all of that paid? From 1945 to 1971, the economic reality was: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one." That system was known as the Bretton Woods system. Since its end in 1971, America has been struggling to adapt with its new economic reality. It is much harder to make a living in the US, buy a house, a car, raise kids and send them to college. Or even retire.

benrbray 5y ago
Relevant: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ (disclaimer: I don't agree with the authors of this site that Bitcoin is the solution (: )
- 29athrowaway 5y ago
  The answer to "wtf happened in 1971" is the Nixon Shock, which marks the end of the Bretton Woods system.
lotsofpulp 5y ago
>From 1945 to 1971, the economic reality was: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one." Is this not true after 1971? I would be surprised if it costs even $1 to produce a $100 bill today. Why would the cost of physical currency even be relevant when the government can digitally increase money supply?
- 29athrowaway 5y ago
  The premise was that each dollar was backed by a fixed amount of gold. The only problem was: there was no way to audit how much gold the US had. So when it became clear that the US was spending too much, France announced they wanted to cash out their gold and the US responded by suspending convertibility of dollars into gold (the Nixon shock). Since then the US has a floating value instead of a fixed precious metal-based exchange rate.
  - deleted 5y ago
    [deleted]
  - lotsofpulp 5y ago
    I do not see what that has to do with my question. The fact that it costs a country nothing (or near nothing) to make its own currency and that another country has to pay face value for it seems like a trivial truth. What was different between 1945-1971 and after 1971?
jlhawn 5y ago
I hope you're not suggestion that we go back to a gold standard? I wouldn't mind certain capital controls though, specifically limits on credit money issued for purchase of land.
- 29athrowaway 5y ago
  The outcome of WW2 was extremely favorable for the US. WW2 is not happening again. If the US is going to remain being as prosper as the period immediately after WW2, some economic miracle would need to happen. AI and robotics could be that miracle.
  - CryptoPunk 5y ago
    It is not just the US that experienced rapid economic growth in the post-war period.. From what I recall, growth rates in Western Europe were even higher, as were growth rated in Japan. The best explanation for that growth is that the burden of regulations, including zoning restrictions on building higher-density housing, and the share of GDP consumed by government spending, was much lower, for nearly every advanced economy, in the 1950s and 60s. Look at the Japanese experience for example: https://www.econlib.org/library/Enc1/JapanandtheMythofMITI.html https://www.econlib.org/library/Enc1/JapanandtheMythofMITI.h... With respect to growth in regulations that restrict expansion in housing supply, and how they have stifled economic growth in the US, I recommend this paper: https://www.aeaweb.org/articles?id=10.1257/mac.20170388 https://www.aeaweb.org/articles?id=10.1257/mac.20170388 To get an idea of just how rapidly government spending has increased in the advanced economies, see this graph: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long...
    - inglor_cz 5y ago
      The developed countries also had much younger population. This matters for innovation, people over 65 rarely come with that kind of innovation that moves the needle visibly (e.g. semiconductors).
      - 5y ago

benrbray 5y ago

Relevant: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ (disclaimer: I don't agree with the authors of this site that Bitcoin is the solution (: )

29athrowaway 5y ago
The answer to "wtf happened in 1971" is the Nixon Shock, which marks the end of the Bretton Woods system.

lotsofpulp 5y ago

>From 1945 to 1971, the economic reality was: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one." Is this not true after 1971? I would be surprised if it costs even $1 to produce a $100 bill today. Why would the cost of physical currency even be relevant when the government can digitally increase money supply?

29athrowaway 5y ago
The premise was that each dollar was backed by a fixed amount of gold. The only problem was: there was no way to audit how much gold the US had. So when it became clear that the US was spending too much, France announced they wanted to cash out their gold and the US responded by suspending convertibility of dollars into gold (the Nixon shock). Since then the US has a floating value instead of a fixed precious metal-based exchange rate.
- deleted 5y ago
  [deleted]
- lotsofpulp 5y ago
  I do not see what that has to do with my question. The fact that it costs a country nothing (or near nothing) to make its own currency and that another country has to pay face value for it seems like a trivial truth. What was different between 1945-1971 and after 1971?

jlhawn 5y ago

I hope you're not suggestion that we go back to a gold standard? I wouldn't mind certain capital controls though, specifically limits on credit money issued for purchase of land.

29athrowaway 5y ago
The outcome of WW2 was extremely favorable for the US. WW2 is not happening again. If the US is going to remain being as prosper as the period immediately after WW2, some economic miracle would need to happen. AI and robotics could be that miracle.
- CryptoPunk 5y ago
  It is not just the US that experienced rapid economic growth in the post-war period.. From what I recall, growth rates in Western Europe were even higher, as were growth rated in Japan. The best explanation for that growth is that the burden of regulations, including zoning restrictions on building higher-density housing, and the share of GDP consumed by government spending, was much lower, for nearly every advanced economy, in the 1950s and 60s. Look at the Japanese experience for example: https://www.econlib.org/library/Enc1/JapanandtheMythofMITI.html https://www.econlib.org/library/Enc1/JapanandtheMythofMITI.h... With respect to growth in regulations that restrict expansion in housing supply, and how they have stifled economic growth in the US, I recommend this paper: https://www.aeaweb.org/articles?id=10.1257/mac.20170388 https://www.aeaweb.org/articles?id=10.1257/mac.20170388 To get an idea of just how rapidly government spending has increased in the advanced economies, see this graph: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long...
  - inglor_cz 5y ago
    The developed countries also had much younger population. This matters for innovation, people over 65 rarely come with that kind of innovation that moves the needle visibly (e.g. semiconductors).
    - 5y ago