3 ms·

People always quote the 1950s to 80s as some golden age, and surely it was for some, not all who lived it, like your father, but it was due to the very specific

People always quote the 1950s to 80s as some golden age, and surely it was for some, not all who lived it, like your father, but it was due to the very specific circumstances of World War 2 and how only the US was not destroyed while much of Europe and Asia was. We were able to lend a lot of money to these countries and rise our standard of living significantly, but that is the exception that proves the rule. Recency bias especially is prevalent for this sort of thinking. Unless you want another world war, that time period is simply irreplicable.

TuringNYC 2y ago
You raise good points, and I certainly do not hope for another world war. I do hope a different thing though -- normal interest rates (normal being something different than what we've seen in the past 30yrs). One thing you'll see in the mid-90s and beyond is artificially lowered rates, which cheapen money. Low rates boost asset prices, so they are great for asset owners (and there are very few asset owners in the US on a % basis.) This doest really help normal people, because while borrowing becomes cheaper, prices go up commensurately. Debt:income ratios inflate. Costs inflate overall. Overall it hurts normal people because you end up with the same outcome but more leverage and hence more risk. Worse, because rates are low, income-seekers (e.g., insurance companies, foundations) steer away from traditional means of income (bonds) towards buying up homes, infra, assets, as they "reach for yield". Again, this just worsens the problem for everyone. With rates lowered and debt volumes ballooning, we've given a one-time boost to asset owners and in the process, spread stress and risk to all working class individuals.
SR2Z 2y ago
> We were able to lend a lot of money to these countries I always thought this was true, but it's not. The entire Marshall Plan gave out about $80B over a decade in today's money, which is peanuts by our modern financial aid standards. The main value the US provided to Europe after WWII was security, a stable common currency (almost all European ones were pegged to the dollar), and private investment.
- satvikpendem 2y ago
  Yes, by lending money I should have clarified that I meant private investment along with the Marshall Plan. $80 billion does however go much farther when your cities have been razed to the ground than to for example incrementally improve a new rail line.

TuringNYC 2y ago

You raise good points, and I certainly do not hope for another world war. I do hope a different thing though -- normal interest rates (normal being something different than what we've seen in the past 30yrs). One thing you'll see in the mid-90s and beyond is artificially lowered rates, which cheapen money. Low rates boost asset prices, so they are great for asset owners (and there are very few asset owners in the US on a % basis.) This doest really help normal people, because while borrowing becomes cheaper, prices go up commensurately. Debt:income ratios inflate. Costs inflate overall. Overall it hurts normal people because you end up with the same outcome but more leverage and hence more risk. Worse, because rates are low, income-seekers (e.g., insurance companies, foundations) steer away from traditional means of income (bonds) towards buying up homes, infra, assets, as they "reach for yield". Again, this just worsens the problem for everyone. With rates lowered and debt volumes ballooning, we've given a one-time boost to asset owners and in the process, spread stress and risk to all working class individuals.

SR2Z 2y ago

> We were able to lend a lot of money to these countries I always thought this was true, but it's not. The entire Marshall Plan gave out about $80B over a decade in today's money, which is peanuts by our modern financial aid standards. The main value the US provided to Europe after WWII was security, a stable common currency (almost all European ones were pegged to the dollar), and private investment.

satvikpendem 2y ago
Yes, by lending money I should have clarified that I meant private investment along with the Marshall Plan. $80 billion does however go much farther when your cities have been razed to the ground than to for example incrementally improve a new rail line.