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Thursday, September 26, 2013

Better Now or Then? (2013 vs 1913)

For today's posting, we're going to do some comparing between 1913 and the present, and not just because its fun or interesting to compare different points in time that are separated by 10, 25, 50 or 100 years of space..

1913 is also the origin year for the Federal Reserve.

Took 5 years for those bedbug banking elites to convert their secret Jeckyl Isl, Ga. meeting into irreversible law..

But A Lot of campaign contribution dough to Presidential candidate Woodrow Wilson going up against a fat yet weak incumbent (William H Taft) and a 'Bull Moose' in Teddy Roosevelt the previous year (1912) goes a long way..
So was life better then or presently?

Oh sure today we enjoy great advances in technology and creature comforts that we take for granted which the world never heard of..

Who can rightly argue against the advent of central air conditioning/heating, machines that wash clothes and dishes and heat up meals in fractions of time..

Of course there were no such things as nuclear weapons,  patriot missiles, stealth fighters and unarmed drones either..

And in 1913, there was yet to be a savage bloody "Great" war that needlessly took tens of millions of lives for absolutely nothing while sewing the seeds for a sequel a generation later
People also socialized face to face and actually acknowledged others vs today where the young in particular do everything humanly possible to ignore all living breathing life around them to bury noses in texting devices

So we call the whole technological debate a 'push'.

But we asked if life was better.. Not if the technology was..

In 2013, most women work because they Have to.   In 1913, most those who worked did so because they Chose to.
Feminism propaganda aside, it is a hell of a lot Better in life to do something by freedom of choice then the necessity of survival.

A man usually was the sole wage earner in a home of 4 and supported all quite well and without second mortgages, credit cards or other forms of debt acquisition to keep the family afloat.

The average salary back then was $585 which interestingly only comes to $12,929 today.

Think about that...
The average salary today is around $47,000 and most families need both adults to be working and contributing to make the house run efficiently.  In 1913, one breadwinner earning just under $13k in today's money was sufficient...

A lot of it has to do with the rise in inflation.

$20 in purchasing power then equals 85 cents today. Yes... $0.85    And if you had $20 in your pocket back in 1913, it would be like carrying $472.28 at present.

That's a cumulative rate of inflation of 2262.4%
Here's a little perspective to understand how dramatically our purchasing power has fallen in 100 years thanks to the Federal Reserve and their continual never-ending policy of weakening the US dollar...

The average new car in 1913 cost $600 which would be like someone purchasing a brand new Camry or Altima today for $13,261.

If you took that $13,261 and transported yourself back in time to 1913, you'd have over $313k in purchasing power which would allow you to feel like a Mr (or Ms) Monopoly as you gobble up property (average new home in 1913 was $5,935)

It boggles the mind today but all these figures are based on the Fed's inflation calculator.
See its not simply about how much $$ you make in the year you live in vs what you can buy and its price point at that time.  There's also a comparable inflation adjustment that must be made that people often forget.

So yes, theoretically, you could take $13k, transport yourself back in time to 1913 and have enough capital in your possession to buy 52 new homes or 521 Model T automobiles.

Conversely, an average wage earner in 1913 would have to work over 37 years to be able to afford a new mid-sized car if he/she ever teleported to the present.

See why we never have any time travelers from the past?
To be fair, the Federal Reserve is not the only reason we've seen a dramatic fall in the quality of living in this nation and inability for one wage earner to support a growing family.

The 16th Amendment has something to do with it too--  the institution of an income tax to be collected which was ratified in early 1913.

Prior to the tax with the exception of wartime, government revenue was collected through customs duties and excise taxes.

When the law was in place, originally it was one tax rate-- 2% on incomes over $4,000 ($106,000 today).  They poor, working class and what would generally be considered 'middle' class did not pay a penny...
Today we collect 10% from the poorest of the poor worker and 50% from the top wage earner.  And what we can't take from the everyday person via income tax, we do in consumption taxes, 'sin' taxes and turnpike/bridge tolls.

One can argue on the merits of the modern tax code or even argue in today's society its not enough...

But in plain math, you take someone working today earning $75k and not take 1/3 or more of their livelihood to give to the government, that's an additional $25,000 in purchasing power to perhaps use toward buying a home with less down or buy a new car out the door...

And poor banks... however could they make excessive profit off the people if they now have the discretionary spending to buy what they wish without need for credit and loans?

See how this all works?
So the depreciable standard of living we feel today is based on a multitude of reasons.. the Fed essentially 'F'ing with our currency and devaluing the dollar, the institution of the Federal income tax in all its unfairness, the fact US workers had jobs-a-plenty in 1913 vs this outsourced world we live in today..

It all adds up.. And the only reason most survive.. and we do mean ONLY reason is because credit i.e. debt acquisition fills in the void and changes people from once planning for the future, to living year to year, paycheck to paycheck

So yes we may have computers, cellphones, iPods and all that..  but we also work much much harder to just keep in place on the economic treadmill of life and many are slipping under...

Are we truly better now or then?
P.S.   Today (Thursday) the Dow closed at 15,328

Do you know what the Dow was in 1913?


Yes..   Eighty-Eight.   The Dow would not reach 100 for the first time Ever until late 1919.