Introduction
After I posted Part I it occurred to me that this needed some kind of introduction so any reader might understand where I am going. I think great changes are coming to our country, some of which are already underway. What follows is my thoughts about these changes, starting with some history. This history is not intended to be all inclusive. It is all from my memories of the times unless I have provided a link. I am starting with the 1960s because this is the time I entered adulthood. Some of the trends had been in progress for many years before, but 1960 seems as good a point to start as any.
I do not know whether anyone is interested in my thoughts. I am doing this as an exercise for myself. But readers and comments are welcome. If you think I have made a factual error, please let me know and I will correct it if I agree.
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When I sat down to write the reflections after my 75th birthday, I first read those comments posted after my 74th, and determined that in that year, not much had changed.
Upon further reflection, I realize that that is not true. We are undergoing great changes in our country, culturally and politically. As an old timer, that is a bit unsettling.
I suppose every generation as it reaches elderhood thinks the younger generations have lost their minds, or is getting off the track, or are failing somehow. Mine is probably no different.
My thought today is that we have failed the younger generations.....our children and grandchildren. We have failed them both in our actions and our inactions.
My cohort (which is pre-baby boomer) had a great childhood. America was ascendant, everyone that wanted to work had jobs, and although the Cold War was in progress, and we had the "police action" in Korea, we had relative peace at home.
That world ended on November 23, 1963 when President Kennedy was assassinated. From that date, it seemed that the world we had known simply fell apart.
We had already gotten committed in Viet Nam, and that commitment soon escalated, even though there was no broad public support for the war. This of course led to the anti-war protests, which gradually escalated throughout the decade and beyond until the end of the war.
This was paralleled by the great civil rights movement led by Martin Luther King, Jr. and others. Although peaceful, this movement too frequently incited violence from die-hard segregationists.
Through the 1960s and well into the 1970s, these two movements led to a great deal of civil unrest throughout the country.
At the same time, our culture rapidly changed. The old social mores were thrown out, and license took their place. A revolution took place in our music, language and in sexual relationships. The Baby Boomers really fundamentally altered our society as they came of age.
With these revolutions came the beginnings of some really harmful trends. Divorce rate soared, as did the number of out of wedlock births. The concept of family began to fall apart, abetted by the welfare requirement that made a household ineligible if there was a man in the house. This latter requirement virtually destroyed the African American family and did significant harm to other groups as well.
All of the social and cultural trends remain in place today.
The economy has also seen great changes which stem from events and policies that began in the 1960s.
When Lyndon Johnson escalated the war in Viet Nam, he also began the War on Poverty. Nobody likes poverty, but LBJ determined that he was going to wage both of those very expensive wars without raising the necessary revenue to even start to pay for them. He would borrow the money.
This, of course, was very inflationary. Theretofore, the Bretton Woods Agreement had made the US dollar the world's reserve currency, used in all international trade. Other governments could freely convert the dollars they held into gold from the US Treasury.
The "guns and butter" approach by LBJ left the US with huge deficits, both fiscal and in trade, and other nations, particularly Switzerland and France, began to convert their dollars to gold. This forced Nixon, in 1971, to close the gold window, essentially ending to Bretton Woods Agreement, and detaching the dollar from gold. This made the dollar a purely fiat currency. It has also led to very large changes in the nation's economy which have been very costly.
More in Part II.
Friday, July 11, 2014
Great Changes in Progress, Part II
We left Part I with the end of the gold standard. This was the pivotal point in this history as will be shown.
1972 brought the election, and Watergate. The Viet Nam War was still in progress, with the attendant demonstrations and domestic violence from the anti-war crowd. With Nixon's re-election, he was able, at least some what, to pacify Viet Nam, and our troops were pretty rapidly with drawn, leaving a viable, but needy South Vietnamese government in charge, dependent upon American aid to be viable.
At the same time, shocks in the economy were constant, a result of the abandonment of the gold standard and a de facto devaluation of the dollar. OPEC caused oil prices to skyrocket, and the result was inflation throughout the economy.
The entire remainder of the decade saw inflation and a stagnant economy. This was commonly called "stagflation."
The 1970s was not a good decade for the United States. Stagnation, inflation, scandal dominated the scene. Viet Nam was ultimately lost when Congress pulled the aid from the South Vietnamese government, which promptly fell to the North, rendering the 52,000 American live lost purposeless.
We continued to have high inflation and energy woes through the end of the decade.
One may now ask why the gold standard was so important. What that did was require the US Government to exercise some fiscal restraint or face losing our gold. Without the convertibility, the government and the Federal Reserve had the ability to spend and print money as they wished, without an immediate apparent penalty, even though there would be an invisible penalty. Politicians love that kind of money availability, for they can then spend their way to re-election after re-election. And they did.
One thing that occurred in the overall economy was the beginning of the financialization of it. Manufacturing jobs began their decline, and Wall Street began to grow in power and influence. Money was "free" more or less.
And the invisible penalty began to be paid. Inflation adjusted earnings for men age 25 and up peaked in 1972, just as the gold standard was axed and the dollar devalued. They have never recovered to that point. Only the top quintile has done better, and particularly the top 5%. And these latter groups do better only when you count the households, not individuals.
We heard a lot about the "misery index" back in those days. Voters tended to hold the politicans responsible for that, and they were certainly partly to blame, but the Federal Reserve had the power to rein in the excesses, but failed to do so.
The president being forced to appoint a tough Chairman of the Federal Reserve marked the end of the decade. Paul Volcker would, in 1980, bring inflation to it knees. And that is where we will start Part III.
1972 brought the election, and Watergate. The Viet Nam War was still in progress, with the attendant demonstrations and domestic violence from the anti-war crowd. With Nixon's re-election, he was able, at least some what, to pacify Viet Nam, and our troops were pretty rapidly with drawn, leaving a viable, but needy South Vietnamese government in charge, dependent upon American aid to be viable.
At the same time, shocks in the economy were constant, a result of the abandonment of the gold standard and a de facto devaluation of the dollar. OPEC caused oil prices to skyrocket, and the result was inflation throughout the economy.
The entire remainder of the decade saw inflation and a stagnant economy. This was commonly called "stagflation."
The 1970s was not a good decade for the United States. Stagnation, inflation, scandal dominated the scene. Viet Nam was ultimately lost when Congress pulled the aid from the South Vietnamese government, which promptly fell to the North, rendering the 52,000 American live lost purposeless.
We continued to have high inflation and energy woes through the end of the decade.
One may now ask why the gold standard was so important. What that did was require the US Government to exercise some fiscal restraint or face losing our gold. Without the convertibility, the government and the Federal Reserve had the ability to spend and print money as they wished, without an immediate apparent penalty, even though there would be an invisible penalty. Politicians love that kind of money availability, for they can then spend their way to re-election after re-election. And they did.
One thing that occurred in the overall economy was the beginning of the financialization of it. Manufacturing jobs began their decline, and Wall Street began to grow in power and influence. Money was "free" more or less.
And the invisible penalty began to be paid. Inflation adjusted earnings for men age 25 and up peaked in 1972, just as the gold standard was axed and the dollar devalued. They have never recovered to that point. Only the top quintile has done better, and particularly the top 5%. And these latter groups do better only when you count the households, not individuals.
We heard a lot about the "misery index" back in those days. Voters tended to hold the politicans responsible for that, and they were certainly partly to blame, but the Federal Reserve had the power to rein in the excesses, but failed to do so.
The president being forced to appoint a tough Chairman of the Federal Reserve marked the end of the decade. Paul Volcker would, in 1980, bring inflation to it knees. And that is where we will start Part III.
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