No. 23
Why Read?
Lower your anxiety level by putting current events in perspective
Learn a little history
Because I took the time to write this
Several readers have asked for my thoughts on just what is going on in the U.S. right now and how to prepare for a possible recession. There seems to be a poll every week stating that most Americans think the country is on the wrong track. I don’t put a lot of faith in polls since they are usually conducted by organizations or publications with a political agenda. Leading up to the midterm elections any politician within ten feet of a microphone dared to frighten Americans into believing the Democracy is at risk. Last Sunday’s New York Times reviewed 8 books claiming to fortes the end of democracy as we know it.
I’m calling bull sh%t on them all. This democracy has had bigger issues in the past and “We The People” did what was necessary to right the ship. I have faith it will happen again.
It was the summer of 1967 - the “Summer of Love.” I don’t quite remember it that way. I was only six years old, but I have some vivid memories of the latter part of the 60’s.
There was a constant smell of smoke and sound of sirens that filled the air as the city of Newark burned from race rioting and looting that plagued several other cities as well. National Guard trucks rumbled down the street forcing my parents to banish us to the yard – a 12’ x 12’ patch of concrete and a grape vine. Uncle Vito created a makeshift bocce court in the alley between our house and our neighbor’s house to keep us occupied and off the street. My mom carried a .22 tear gas pistol in her purse. My dad kept a loaded shotgun in his closet. Things only got worse the following year when the Reverend Martin Luther King Jr. and Robert F. Kennedy were assassinated. Our neighborhood and all who lived there were forever changed.
My Uncle Tony was in the National Guard and there was constant angst that he might be called up to go to Vietnam. My neighbors Sal and Bobby were already there. On my frequent trips into New York City with my Great Uncle Tony (Different Tony from the one that was in the National Guard. There were a lot of Tonys in the house) we would encounter people protesting the war. I didn’t know it then, but anti-war protests erupted around the world that year and would continue into the early 70’s. Students were being beaten by police officers on college campuses, where there were also divisions amongst students of the counterculture and those who honored the draft and went off to Vietnam. In May of 1970 four students at Kent State were killed by National Guardsmen who fired into the crowd of protesters.
I also remember on one of our visits to NYC seeing large groups of women protesting for equal rights. That movement covered a broad set of topics including employment discrimination, reproductive rights, maternity leave, child-care tax breaks, to name a few.
Black Americans marching for equal rights were met by overzealous police in riot gear, beaten and arrested. Some parents and citizens protested desegregation of schools often resulting in fights. Families were split on the war, equal rights, segregation, women’s rights, changing morals, dress, and even hair length. Musicians and Hollywood were divided. Sports teams were divided. College students were divided. Neighbors were divided. If you think we are divided now, think again. I’m just glad that we didn’t have social media – the thing that gives voice to the banal and ignorant - to stoke anger through misinformation and make things worse.
Believe it or not, things were just starting to get crazy.
Our relationship with post-WWII Russia was deteriorating. In school we did active nuclear bomb drills where we either hid under our desks or went into the hall, faced the wall, and put our arms over our faces. (Not sure how this would protect us from anything other than watching our peers get incinerated.)
Then there was Watergate, the impeachment and resignation of the President, the fall of Saigon, the Gay Liberation Movement, the Oil Embargo, The Iran Hostage Crisis, and the Three Mile Island Nuclear Incident. (And the worst event of all, the rise of disco.) Every day a new protest or incident eroded the American’s faith in democracy and government.
In 1972 the stock market crashed, and Americans were introduced to a new term, Stagflation. This was essentially high inflation with little or no economic growth. Interest rates rose to nearly 20%! What it meant to me was mom and dad were home more often as their company would furlough employees to save money. We ate more from the small garden behind our house. Mom would shop with a hand-held adding machine and often have me return items to the shelves as she made choices about what food we could afford to buy. We wasted nothing. The Dow Jones was a dial tone from the late 60s until 1982.
The early 80s weren’t much better. Gas prices were still high and mortgage rates were twice what they are today. (My brother purchased his first home with a rate of 14.7%.) Fed Chair, Paul Volcker wrestled inflation to the ground by raising rates which also caused two severe, but brief, recessions. By the end of the 1980s inflation was ebbing and the economy was booming.
Though many of the same issues continue to require our best efforts and attention today, America survived and even thrived. The media tends to only tell us about the negatives and ignore the positive changes in society since the 60’s and 70’s. (And thank goodness any efforts to revive disco have failed as well.)
This is a good time to segue to the point of this post. Are things a bit crazy these days? Yes, but they have been crazier in the past and America and Americans always do what is necessary to right the ship. (Winston Churchill is credited with saying, “You can always depend on America to do the right thing, after it has tried everything else.”) Will the current Fed Chairman cause us to go into recession? That is anyone’s guess. Here are some quick thoughts:
The Fed recently raised rates another 0.75% and does not appear ready to pause anytime soon.
Inflation expectations are still high and trailing inflation in not yet trending down.
Rising rates are already influencing the economy and may cause a recession sometime in 2023.
The Fed appears to be willing to do whatever it takes to restore pricing stability even if it roils the financial markets, or the Feds own finances.
Where are things going and how things will turn out is anyone’s guess. However, there is one thing I do know. No one can predict the future. All you can do is be prepared for various outcomes. In other words, focus on what is within your control. Here are a few tips:
If you haven’t reviewed your budget lately now is the time to do it.
Reduce your personal burn rate by eliminating subscriptions that you aren’t using or find/negotiate cheaper alternatives.
Eliminate some little things in your budget to try to preserve those items that truly matter.
Downgrade and postpone expensive items.
Dine out less.
Re-examine every membership.
Pay attention to your food bill and look for substitutes and less expensive alternatives.
Watch your utility bills - lower the heat a couple of degrees and watch your use of electricity as well.
Carpool to save money on gas or share your Uber/Lift ride.
We have all been spoiled by easy money and low interest rates. A revision to the mean is about to occur and life will change some. Now is the time to be building up that 6-month rainy day fund. If you need to tap it, you’ll be happy that it is there. If not, you’ll still be happy that it is there.
Focus on what is in your control. Save where you can and keep developing new skills and stop worrying about the things that are not within your sphere of influence.
Remember that Democracy is a Contact Sport.
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Great read! Thank you for sharing your insights. I agree: "stop worrying about the things that are not within your sphere of influence."
Hope all is well!