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Inflation was also 12%, which means that your debt load went down by 12% per year by doing nothing. The real interest rate is the nominal rate minus inflation.
I do think think that excessive government loans are driving the price of higher education upwards, since said loans create infinite demand.
Yes it was. But someone earlier said that was good because it caused housing prices to go up.
Yes it was. But someone earlier said that was good because it caused housing prices to go up.
sounds like a mischaracterization to me.
Volker raised rates in order to slow down wage inflation. You know, businesses wanting to pay their employees more. Unions were still powerful and those wages increases were widely believed to be uncompetitive for the US economy.
Back when interest rates were 12%, wages were going up at 8-10% and homes could be purchased at 2 times annual salary. It really wasn't a bad deal, at all, despite all the complaining you hear about it.
Buying a house when rates were 12% resulted in a massive windfall for those owners as rates fell and home prices spiked.
Today the median sales price of a home is $328,600. Back in 1980 it was $63,700. Home prices doubled between 1980 and 1990 alone.
Volker raised rates in order to slow down wage inflation. You know, businesses wanting to pay their employees more. Unions were still powerful and those wages increases were widely believed to be uncompetitive for the US economy.
Back when interest rates were 12%, wages were going up at 8-10% and homes could be purchased at 2 times annual salary. It really wasn't a bad deal, at all, despite all the complaining you hear about it.
Buying a house when rates were 12% resulted in a massive windfall for those owners as rates fell and home prices spiked.
I assume you are referring to the late 70s and early 80s. Interest rates were high, but so was inflation. Wages would have needed to go up by 8-10% just to keep pace with inflation.
And inflation includes, not just the cost of milk and bread, but the value and cost of housing assets.
It's not just about whether your wages are growing as fast as inflation, but whether your assets are growing faster than your debts. And in the case of the boomers they enjoyed many, many years where inflation eroded the cost of their debt.
Volker raised rates in order to slow down wage inflation. You know, businesses wanting to pay their employees more. Unions were still powerful and those wages increases were widely believed to be uncompetitive for the US economy.
Back when interest rates were 12%, wages were going up at 8-10% and homes could be purchased at 2 times annual salary. It really wasn't a bad deal, at all, despite all the complaining you hear about it.
Buying a house when rates were 12% resulted in a massive windfall for those owners as rates fell and home prices spiked.
Today the median sales price of a home is $328,600. Back in 1980 it was $63,700. Home prices doubled between 1980 and 1990 alone.
To make your high number valid, or at least you have to remember the following point, is that number is somewhat driven by a small number of metro areas which also tend to have higher wages. Not to mention median family income differences.
so what you're saying is that you never had to deal with getting laid off due to structural changes in the economy?
sounds like you had it easy
lol, this post reminds me of an old Electric Company song:
We are the kids known as Whimper and Whine.
Whimper And Whine.
Whimper And Whine.
That’s what we do when we sit down to dine:
Whimper And whine, whine, whine.
If you give us peas, we hardly can wait
To whimper and whine them right off of our plate.
Oh, we are the kids known as Whimper and Whine.
Whimper And Whine.
Whimper And Whine.
It’s not very nice, but it always works fine
To whimper And whine, whine, whine.
Though we love ice cream, we whimper for more,
And whine till our one scoop turns into three more.
Yes, we are the kids known as Whimper and Whine.
Whimper And Whine.
Whimper And Whine.
That’s what we do when we sit down to dine:
Whimper And whine, whine, whine.
The weather is bad, and Mom wants us neat.
Still, we want our galoshes right off of our feet.
Whine! Whine!
Whimper, whimper, whimper, whimper.
We are the kids known as Whimper and Whine,
Wondering why we’re alone all the time. Maybe it’s ‘cause no one else thinks it’s fine
To whimper and whine, whine, whine. To whimper and whine, whine, whine.
To whimper and whine, whine, whine.
In 1982, I'd just have gone to the oil refinery in my town straight out of high school, told them my dad worked there and I'd be put on a list to get called when they had a spot for me, and I'd have made well above minimum. Not anymore.
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