I remember back in High School I had a conversation with this girl, Kelly (who was my date to the Prom). We were talking about what time period we would like to have lived in. We both agreed that the 1920s would have been awesome. This was really against the grain because most of the kids my age would have said the sixties.
Why did I say the twenties? Well, it was a really exciting time in America. It was a decade long party filled with jazz music and flappers (hubba, hubba). It was an incredible time for artists, architecture(Art Deco), design, and pop culture (movies like “Metropolis”). It was a time of exciting technological innovation like the automobile, radio and flight. There was an economic boom and a stock market boom. Everyone was getting rich, and it just looked so classy!
My younger self always thought how cool it would have been to have lived in such a time. Of course, I wasn’t that concerned about what happened in the decade after the roaring 20s – the Depression.
It’s interesting because the more I learn about the roaring twenties, I see eerie similarities to what has transpired in our country over the past dozen years. The beautiful and popular spent their time and money at clubs where you could pay $1,000 for a private table and spend $400 on a bottle of liquor (with a 2 bottle minimum). Women salivated at $1,000 Jimmy Choo shoes and $5,000 Christain Dior handbags. Not to be outdone, men bought things like $3,000 Plasma Televisions and $50,000 Hummers and Escalades. We also had the internet revolution during this time - think about how much that changed your life. Finally we were blessed with twin bubbles, first in technology and then in housing to power all this excess.
The dark side of the 20s was that it was all fueled by debt. Consumers and Businesses took on massive amounts of debt in order to live “the good life”. Unfortunately, it was all a house of cards. Once the debt reached a certain level, people couldn’t service it anymore. People started to default on their obligations and the economy collapsed in a deflationary spiral. The banking system seized up and there was no more credit or liquidity that people could use to fuel the economy. In order to service the high debt loads, people had to sell their assets (including stocks, bonds and houses) at greater and greater losses. As an example, by 1933 home prices across the country fell 90%! That's a fact that the NAR will never tell you about.
So, I guess I got my wish. Near as I can figure, the past decade has been as close to the 20s as I could have experienced. Did I enjoy it? Yes I did, but I could never embrace the debtor lifestyle. It would have been so easy for me to have pulled hundreds of thousands of dollars out of my house and gone on exotic trips, bought overpriced foreign cars and lots of techno gizmos to impress my friends and relatives. I could have gotten myself a dozen credit cards and maxed them all out on shopping trips, expensive restaurants and entertainment.
But that’s not me. I knew that would be a dead end that would only end in tears. I can only imagine what is happening across this country with people who owe more on their home than what it is worth, who are in danger of losing everything because they took on too much debt. The stress and fear must be overwhelming, and it is something that – hopefully – I will never have to experience myself.
Why did I say the twenties? Well, it was a really exciting time in America. It was a decade long party filled with jazz music and flappers (hubba, hubba). It was an incredible time for artists, architecture(Art Deco), design, and pop culture (movies like “Metropolis”). It was a time of exciting technological innovation like the automobile, radio and flight. There was an economic boom and a stock market boom. Everyone was getting rich, and it just looked so classy!
My younger self always thought how cool it would have been to have lived in such a time. Of course, I wasn’t that concerned about what happened in the decade after the roaring 20s – the Depression.
It’s interesting because the more I learn about the roaring twenties, I see eerie similarities to what has transpired in our country over the past dozen years. The beautiful and popular spent their time and money at clubs where you could pay $1,000 for a private table and spend $400 on a bottle of liquor (with a 2 bottle minimum). Women salivated at $1,000 Jimmy Choo shoes and $5,000 Christain Dior handbags. Not to be outdone, men bought things like $3,000 Plasma Televisions and $50,000 Hummers and Escalades. We also had the internet revolution during this time - think about how much that changed your life. Finally we were blessed with twin bubbles, first in technology and then in housing to power all this excess.
The dark side of the 20s was that it was all fueled by debt. Consumers and Businesses took on massive amounts of debt in order to live “the good life”. Unfortunately, it was all a house of cards. Once the debt reached a certain level, people couldn’t service it anymore. People started to default on their obligations and the economy collapsed in a deflationary spiral. The banking system seized up and there was no more credit or liquidity that people could use to fuel the economy. In order to service the high debt loads, people had to sell their assets (including stocks, bonds and houses) at greater and greater losses. As an example, by 1933 home prices across the country fell 90%! That's a fact that the NAR will never tell you about.
So, I guess I got my wish. Near as I can figure, the past decade has been as close to the 20s as I could have experienced. Did I enjoy it? Yes I did, but I could never embrace the debtor lifestyle. It would have been so easy for me to have pulled hundreds of thousands of dollars out of my house and gone on exotic trips, bought overpriced foreign cars and lots of techno gizmos to impress my friends and relatives. I could have gotten myself a dozen credit cards and maxed them all out on shopping trips, expensive restaurants and entertainment.
But that’s not me. I knew that would be a dead end that would only end in tears. I can only imagine what is happening across this country with people who owe more on their home than what it is worth, who are in danger of losing everything because they took on too much debt. The stress and fear must be overwhelming, and it is something that – hopefully – I will never have to experience myself.
The plus side is that if we do hit a deflationary spiral like what occurred in the 30s, I will be waiting with baited breath and cold, hard cash to buy those assets at pennies on the dollar!
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