Wikinvest Wire

Waking up from a 22-year coma

Thursday, July 24, 2008

What would it be like for someone to wake up from a 22-year coma during this summer of our national discontent?

To be sure, someone having the misfortune of lapsing into a deep sleep in the year 1986 would wake up today to find a very different and new world. But after catching up a bit and comparing the world they left behind to the one they re-entered, they would probably be disappointed at how things turned out.

Of course the internet and other technological advances along with globalization and the rise of China would probably be overwhelming at first, but then they'd look around and see how unhappy everyone is today in what is seemingly an era of plenty.

Think about how bright the nation's future looked back then, when people didn't have nearly as much to show for their labor - smaller houses, smaller cars, smaller waistlines.

Sure, millions of Americans were worried that Japan was going to take over the world and the great Russian menace had not yet been vanquished, but people were generally hopeful after surviving a tumultuous two decades since the 1960s.

The personal computer was being born and a difficult stretch for the U.S. economy had just ended.

Fed Chairman Paul Volcker had administered tough love to a nation that proved it could handle it and it seemed to do the trick.

Short-term interest rates had been raised to almost 20 percent earlier in the decade and now they were at about six percent.

Inflation had been as high as 15 percent in 1980, but by 1986 it had been beaten back to just a few percent. You could actually stay well ahead of rising prices simply by putting money in a certificate of deposit at the local bank.

In the previous four years, after a 16-year bear market, stocks had doubled - from under 1,000 on the Dow Jones Industrial Average to almost 2,000.

Crude oil averaged just $14 a barrel that year, down from $40 a barrel around the time that U.S. hostages were being held in Iran and Ronald Reagan began his first term.

Gold had lost more than half its value when measured in U.S. dollars after peaking in 1980 at over $800. In a world full of fiat money, a multi-year decline in the price of gold doesn't happen often, but when it does, it means real prosperity - at least for a while.

Credit cards were quickly growing in popularity.

One year later, the unpopular Paul Volcker would retire.

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5 comments:

Anonymous said...

: ) what happened to all the yuppies in Orange County driving Porsches, snorting gobs of coke and staring at horrible pictures by Nagel?

Larry Nusbaum said...

1986? No one would have believed that the Boston Red Sox would have no less than two World Series wins....especially after the way they blew the 1986 World Series.

C'mon, isn't this the most important thing?!

Monetizin' the Debt said...

Hey Nussbaum,

How's that "there's no bubble in real estate" thing going?

Surprised you even show your face on blogs anymore.

Monetizin'

Larry Nusbaum said...

How's that "there's no bubble in real estate" thing going?

Well, dopey, it was fine in 2001, 2002, 2003, 2004, 2005 & 2006. But, I suppose you started talking housing bubble in 1986, right? So, you are right 22 years later. Nice job. Btw, your July rent is late.....

Larry Nusbaum said...

He must be a Stankee fan.........

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