Posted On: Monday - July 16th 2018 7:05PM MST
In Topics:   Humor  Global Financial Stupidity  Economics  The Future
The Peak Stupidity blog has been off of the Global Financial Stupidity topic for quite a while now. It's not like we don't see the bad stuff coming. In fact, we maintain that financial/economic calamities will be THE cause of a rapid decline of the stupidity we have been documenting so well [if we may say so ourselves - Ed]. The election of Donald Trump may have given us a few years of respite though. I don't mean that this guy will really MAGA - he can't. There is just a lot of confidence right now, due to the President not being a total anti-American, and in fact, happily quite the opposite. That means markets may stay propped up longer than they would have. This post on the financial state of old people has been on the back burner for quite a while, and as a look at long-term trends, all here is still applicable, American president or not.
Of course it depends on you, the reader's, age here, but I have memories of older Americans being frugal, settled down, and sedate. As much as I have bad-mouthed Hollywood and TV for having sold an agenda for a long time now, the old shows and movies still give this general picture, even if one doesn't have any memories going far back. I would say things changed for the better for American older people starting in the early 1980's.
America has had the richest old people ever seen in world history over the last 3 decades, but I think that trend is already on the wane with the Global Financial Stupidity reaching its peak. Again, maybe you can't remember, but it's only recently that the senior citizens do more traveling than yuppie jet-setters, eat out as much as the young foodies , play more golf than corporate management, and put more miles on golf carts than millennials put on their cars. Now, the intention of this post is not to bad-mouth the elders that have been living the good life. I don't fault most of them for it. Things just worked out really well for that generation or two.
The financial and demographic stars lined up for the people retiring about 40 - 10 years back. The financial distribution scheme knows as Social Security was good and solvent for them. I see another post coming right up on SS, but to put it fairly succinctly, as younger people, lots of these elders had not paid in the kind of money the US Gov't confiscates now, and they have been able to get money doled out while this scheme was in its prime, with lots of deposits still for their withdrawals. Then, theirs was a time in which there still were real honest-to-God pension plans from the age in which IBM or GM figured they could cover all this. (They could ... for a while.) The state and municipal retirees had it just as good, with plans beefed-up via government unions in cahoots with politicians who promised the world.
Lastly, interest rates on simple deposits or market "instruments" of all kinds were realistic wrt the time-value-of-money until ten years back when the FED forced them via cheap lending of created money, to the basement. Yes, I am aware that inflation hit the mid- and almost high-teens back in the late '70's and had been fairly high since the elimination of sound money and creation of the welfare state 15 years earlier. The thing is, interest rates rose accordingly, to higher numbers than inflation, as should be the case. The decent amounts of interest that could be earned meant two things:
1) Even if many in these generations were not particularly frugal, simple savings accumulated very well for them at the 5-8% rates seen during much of this time period. Making a nest egg of a quarter million or so in today's money over 30 years was not all that hard for them, and that would result in:
2) Having a decent or even fairly lame (call it $100,000 in today's money) life savings sitting in even the most risk-free investments like CDs would result in interest payments of $1000 to $400 monthly, respectively, with no bite out of the principle - yeah, sure, inflation will eat it away, but we all get eaten away anyway.
Between some sort of, or multiple instances of, pension payouts, SS checks, and interest payments, retirees have had it very very good for quite a while now. It may seem to be the norm. It's likely more of a fluke though. Demographics are changing, Social Security will go bust (again, more in another post) or become fairly worthless, and pensions are becoming a thing of the past.
Enjoy it while it lasts, Golden Girls, and all the rest in your Golden Years. It's been a great ride ... trips twice a year to Europe, the Great Wall, or the Galapagos Islands, big RV's hauling ass from coast to coast at 52 mph, McMansions with 3,500 sq.-ft of space that you can't clean yourself, eating out at Wolfgang Puck's every Friday until 6PM instead of gumming down that creamed corn at the Early Bird special, paying for 575 channels of TV on that 80" screen instead of settling in to fall asleep during The Golden Girls.
It's not gonna stay this way, so don't get your hopes up, you who are not of the 1% or so. We all shouldn't relish what's coming... hell, we may not even be able to afford relish ... on top of our meals of cat food. No, it may not be that bad, but what can't go on, won't go on, as "they" say. It'll be time to read the entire telephone bill again to see where they ripped you off, check prices before you buy stuff, maybe move in with, or at least near, the kids and grandkids. Above all, please don't buy that 50 ft. long RV - you people have cost me enough in traffic tickets already passing your ass on the grades on the two-lane roads!
Speaking of The Golden Girls, it may have been the show on prime time, or possibly reruns at that hour, but as a young guy, I can somewhat remember the show due to the following: It seemed like this show came on on Saturday night, and the only time I recall noticing it was at the ski lodge our group would rent. It seems like downhill skiing would not tire you out so much, right? I mean, physics would say that you aren't doing work on the hill, but the hill is doing work on you. I guess it's the non-noticeable fighting off the cold, but we would get so tired after going the whole day. We'd get the fire going at the lodge, drink a few beers, and someone would turn on that damnable TV and The Golden Girls would be on. It would put me right out. I'd wake up and think "and then there's Maude" or something and feel older than whoever the hell the rest of audience was.