Post #1
/(You can reply or comment at the end)
December 25 Christmas Day 2024
While the Allies were living and dying on Omaha Beach, my father Elliot was parachuting into the French countryside behind enemy lines. The Nazis didn't know it was happening because they were rushing to defend the incursion from the coast. The troopers floating down to farmland were barely out of their teens and had little practice with parachutes, many wound up DOA, impaled on or hanged from trees. My father was younger than most because he'd doctored his birth certificate to make himself old enough to enlist, figuring it made no sense to attend another year of college and then get drafted. He also thought he could make a difference in this world-altering war.
Safe on the ground, his group fought their way east, toward Germany, and, six months later he found himself in the middle of that bloody frozen nightmare that came to be called The Battle of The Bulge.
Against all odds, the Allies clawed their way out of the Ardennes and my father and his unit were the first to the bridge at Remagen and the crossing into Germany itself.
Germany soon surrendered, and my father was recruited to a secret unit. He was whisked to the south of England, briefly trained in special skills, and immediately found himself dressed as a merchant fisherman in a fishing boat closing in to the islands of Japan. (They didn’t do make-up to slant his eyes like they did for James Bond/Sean Connery in “You Only Live Twice”.) My father and his small team were to be slipped on to one of the thousands of tiny uninhabited outer islands to do recon, prepare sabotage and diversions, and set up communications that would allow US warships to sneak closer to military targets on the main islands before they were noticed.
My father told me he didn't consider this a suicide mission not because it wasn't but because he didn't think about it.
Then the atomic bombs were detonated days before my father's camouflaged fishing boat got there, and World War II was over. My father never made it to Japan then or ever. Back Stateside he refused to buy Japanese or German goods, but then that changed around the time "Hogan's Heroes" started to air. He'd also always kept a Luger hidden in his underwear drawer. He'd traded his Colt for it back in Germany, and he let me and my brother play with it unloaded. In fact I brought it to fourth grade show and tell, and everyone thought it was great. A few years later I used it as a prop in one of my first little 8mm movies about a spy and Sweet Tarts that could trigger storms. This was also the movie where my unexpected first kiss was documented. I had no conscious relationship with my tongue until that moment, until Jennifer's tongue suddenly appeared in my mouth. Who ever knew tongues were so, so... peripatetic. But Jennifer had been raised in Europe, so she knew; and I subsequently learned a tongue-fact that I cherish and dentists share as a fraternal handshake, namely that tongues fill whatever space they are in.
Meanwhile, back to my father, home in New York after the faux fishing expedition, he finished undergrad work there, then moved to SoCal to get his Master's in Engineering at USC and go to work at The Bridge Department, which was in charge of putting up massive traffic infrastructure in California. He met my mom there, they got married, had me, and bought a small craftsman meets bauhaus house in a borderless town called Reseda, in "The Valley", one of zillions of new little tract homes. It cost just a tad over $10,000.
Nine years later, along with my younger brother, we all moved about three miles due north, right next to what was then called San Fernando Valley State College and which would eventually become California State University Northridge. The college and the nearby homes were all pocket-mirages of construction amidst miles of cornfields planted and harvested by independent Mexican farm families who lived in trailers and peddled their ridiculously good corn wrapped in newspaper, to everyone who pulled up and tendered small change.
My parents had sold the old Reseda house for $20,000 and bought our new and larger tract home for $42,500 just as its construction began. My father hired a succession of firemen to help him execute tweaks in the piping and the wiring in their off-hours, and, later, to help him pour a concrete patio and build a badminton court and excavate a hole for a big swimming pool in the backyard. In those days the economic mantra was do not pay more for a house than an amount equal to your total salary for the year. My father was quite a successful engineer, working for private construction firms at the time, and he proudly earned $20,000 a year. This was 1962. Twelve years later our Northridge house was worth about $60,000. At the same time, by comparison, a fabulous new designer house in Trousdale Estates in Beverly Hills, a house that my mom wanted but did not live long enough to have, cost $100,000.
All those numbers skyrocketed as time went on. Trousdale is in the tens of millions now, and our old house in Northridge is worth a million and a half. Same house now as then. Except all the cornfields are gone and there are houses and condos everywhere there for miles and miles around.
AND THIS IS WHAT MAKES BRI CRAZY. One of many things that make me crazy. Which I shall post about, right here, as regularly as health will allow, with my recollected cultural moments and space for you to comment and share your own recollections, and me to reply and all of us to dialogue.
Here goes:
1. It makes me crazy how the last election went. Per the relentlessly continuing surveys, most of our country made their 2024 votes to reflect their upset at the prices of things, of goods and services, and mostly groceries and homes, and somehow migrants are to blame. And, supposedly, GenZ voted because they can't see clear to buying the homes that they want because home prices and mortgage interest rates are "too high", much as their incomes are very frequently six figure.
2. It makes me crazy that a majority of all voters voted for the guy who said "I alone can fix it", and less than a majority voted for the woman who had a detailed plan of how she intended to fix it. (Spoiler alert: if given the chance, both candidates would fail at it.)
What all this proves to me is that most people don't want to take the time to understand issues, they just want to complain and then hand off to someone else to be responsible. The issue is not whom you voted for , it is why you voted and what you expect your government and its leaders to do for you.
So let's begin with what has been quite loosely and inappropriately called "inflation". We all see the increases in prices, and none of us like it.
Welcome to history. Welcome to a free market economy. Welcome to the Founding Fathers' design for the United States of America. Welcome to the world actually being exactly what you would want it to be.
Today's post specifically completes my little story about home costs.
The increase in home prices is not "inflation". It is not wrong. The way most people grow wealth is not by savings accounts paying three or four percent per year. It is not by investing in stock, which requires money and lots of work and even more luck or insider knowledge. The tried and true and expected way to increase your net worth and access to cash is by owning property, and the one piece of property that matters to everyone is their home. The working classes can only count on creating net worth for retirement or other investment by owning a home. It is nothing short of morally criminal that not every family can afford to do this, and it means they are being deprived of participating in the American dream. It means they are absolutely stuck in place and generationally relegated to a lower, poorer class. (There are other ways in which people are held back as well, but that’s another post.)
This is not because home prices go up, it is because income has not increased at a similar rate, and -- most important -- whenever pushy prices for homes or shaky home loans drive foreclosures, the carpetbagger investment groups ride in and grab up the properties and turn them into rental units, where they make profit by high rents and also by the ever-increasing market values of the properties due to the investors reducing the number of homes available for sale. The mortgage bust of 2008's Great Recession is the prime example of this. Garbage mortgages to buyers who couldn't actually afford them, based on values that were therefore artificially high.
This is how it worked: home prices should/must/are intended to go up incrementally over time, as wages go up incrementally to match, but buyers were willing to pay more than that, and so home owners were seduced to sell, and the only check was the mortgage lender who should have turned down the applications, but the lenders wanted to make more loans and their investors wanted more profits and they wanted them NOW, so bad loans resulted. And then the carpetbaggers -- those investors who are greedy but also smartly patient -- swooped down and grabbed up all the properties, and now you can't buy those, you can only rent. So, yeah, GenZ gets screwed. And so do so many others as well as the NextGens to come.
Who's to blame? Who wrecked everything for the average home buyer? It wasn't the sellers or the lenders, and it wasn't the government's failure to regulate tightly, all fault really falls to the buyers who could not avoid temptation. You don't get to blame the devil for all the souls he collects, in the end you learn to blame the newly soulless who bought into the patter.
So who can fix things? The devil won't, and even if he takes a hike, there is always another evil temptress who will come along. No, the answer is... the buyers. Home buyers need to fully understand the economics of home buying, as well as make sure they have long term goals to increase their wealth through increases in home value, not just want the immediate high or satisfaction of a vain sense of what is due them by having a home and having it now!
And once you only have smart buyers, the devil shrinks away, and what else happens? Home prices stop rising. In some cases they even "cost-correct" and go down.
Buyers and voters have got to stop expecting others to protect them and they have to start protecting their own interests.
Because, for every person who voted for a leader to cut high prices on anything, go fish. The President of the United States has literally no power to directly dictate prices. The Congress has no such power. And you wouldn't want the government to be able to tell you what to charge for goods and services nor come in and tell you the maximum you are "allowed" to earn for whatever it is that you do. The Constitution was written to make certain that the government stays out of the economic marketplace. So any candidate who says they can control prices is lying to you. Straight out. Republican, Democrat, anyone.
Meaning, you or someone you know based their 2024 Presidential vote on false premises.
Instead, we all need to act individually but together to bring down prices for all things, for homes, for goods, for services, you name it.
The Founding Fathers stood upon a Free Market Economy. That means prices are to be determined by supply and demand and intrinsic value, not by government.
But the Constitution also promises all of us equal opportunities for success and happiness. Why? Because if there is dramatic economic disparity and an elite rich class is created to the exclusion of the majority of the citizens, then that will eventually bring down the country. The havenots will not tolerate their position forever. At least that is what history shows. Every society, every country, every empire has eventually collapsed, much as it's hard to look around and think that enough of the people we know will really ever stand up for each other and against any form of injustice.
And that's another issue for a futurepost here.
For today, re our economic discussion, I know what some of you are thinking: you think I am wrong because you see the government messing with prices all the time.
But that is not direct action as the government, it is as a massive Consumer/Buyer/Purchaser. When the government spends tax dollars to buy something -- like to underwrite drug costs through Medicare -- they are doing it as Buyers of drugs for you. Their power comes from the vast size of their purchases, not from what would be an illegal law or regulation ordering Big Pharma to sell cheaper to all buyers.
Which means what?
American citizens are the biggest buyers of everything, en masse. So take a lesson from government purchasing power: the way to reduce the price of eggs is for all of us to refuse to buy them at too high a price.
Donna reports that this week our favorite market is charging eight dollars for a dozen eggs! Eight bucks, when two should be more than plenty. All ostensibly because of bird flu. (Which, by the way, is likely to be our next pandemic.) But eight bucks doesn't cover higher costs that the store has to pay because supplies are down, it covers maintenance and even increase of the full proft the sellers expect when demand is high. So, as a group, let's stop paying exorbitant prices. The sellers will drop the prices quickly rather than let their inventory of eggs perish.
(Legitimate supply disruptions from COVID reminded sellers that profligate American consumers will vastly overpay for what they want, so even when supplies went back up and prices should have come down, sellers kept them high. Grocery sellers admitted this publicly last Summer 2024, when they finally decided maybe they better drop prices a little because consumers and politicians were screaming about it. At the same time, Russia and OPEC advised that they were going to cut oil production in order to raise prices so Biden wouldn't be re-elected. And I will bet most of you missed the reporting on this because there was all but no follow-up by the media after the initial accounts.)
Here, let's remind ourselves that Coca-Cola has gone up from a few cents everywhere to $1.10 at Walmart this week for a regular old 8 ounce glass bottle. I recall Cokes being 5 cents when I was a kid. That original nickel price had actually lasted seventy years at that point. It finally started inching up in the 1960's and then more and more and more and more. And this is for a fungible good -- meaning they are all alike and there are zillions of them, there is no intrinsic value and there is always sufficient supply to meet demand. So Coke is one commodity where the price increase is mostly and actually due to the increasing costs of production. Do we call that inflation?
"Inflation" is a horribly misused term. Historically, the term was devised to tag price increases that were not driven by normal increases in cost of production or the increase in intrinsic value for items of scarcity like real property or flawless "D" diamonds. Inflation came when governments screwed around with the value of their printed and coined money, or when borrowed money was too available and plentiful at low interest rates, or any situation where actions by government and business caused there to be an increasing gap between value and price, where there was no natural incremental reason for prices going up.
Unadulterated greed is also a driver of real inflation. And that sort of inflation -- real inflation -- leads to economic collapse and money itself becomes worthless. But, despite the Fed's freak-out over higher prices the last few years, that was not actually inflation, it was just a fear of it, a fear that greed would get out of control, and yet the Fed’s solution was not to curtail the greed, it was to disincentivize the buyers from acceding to it. And this strategy was wrong on both counts and relied more on political response than any fiscal consideration. The Fed has only one power: they can alter the federal funds interest rate. And this action is many steps removed from what things actually cost you. It’s not like using a pile driver to hit a trim nail, it’s like using a bulldozer to run through the trim. Yes, the nail will get hammered home, but the home will be trashed all around it. So every interest rate increase by the Fed screwed up lives and businesses throughout America for a generation to come. Once again, no government entity has the legal power to directly change prices. But the folks hurt by Fed policy were automatically going to blame the contemporaneous President, so the Fed affected the election as much as anything. Will the next President be non-inflationary? Don’t bet the farm on it.
I've mentioned "intrinsic value" but let's make sure we all know what that means. A house -- even a tract home -- has intrinsic value because it is considered a unique item, because every piece of real property is unique, every one is in a different location, every one has a little something to it that makes it more or less desirable than any other one. As such, its pricing increases are predicated on demand outstripping supply, by definition. Meanwhile, gold and diamonds have intrinsic value because their supply is limited, again by definition. Every gold bar may be like every other gold bar; and while diamonds have a range of differences in quality and size, each defined set of attributes has a respectively limited supply. So while changes in demand can alter the price, the basic limitations in supply maintain a certain value at all times.
So a house on the coast or a house atop a hill has a higher intrinsic value than an equivalent structure that doesn't have an ocean or scenic view.
And that is neither inflation nor inflationary.
Inflation is not the word to describe any goods or services whose price has gone up or is higher than something similar.
But when prices go up despite no increase in costs of production and no limitation in supply or higher intrinsic value, now that is inflation. And if due to greed, it can actually be stopped rather easily. Not by government, but by us, by the buyers.
So, the inflation index and the Fed's constant references to inflation need to be fixed. And that can be done, but we will discuss that in a future posting here, along with an assay of that fixed gambling den called the stock market. For today let's just stop talking about inflation and refer to higher prices by pointing to what instigates them: eggs cost too much because the egg suppliers want profits. And Presidents cannot directly control egg prices, but consumers can.
Which starts by every one of us realizing there are fewer things we need than we want; we can get what we want at the right price simply by refusing to overpay; and if we don't get everything we want, that's okay. Prices are high because sellers know that final stricture is the toughest one for us to embrace.
Finally, "economics". Have you ever read what Nobel laureates in economics do to earn their awards? Have you ever read PhD dissertations on economic issues?
What you find is that economics is a faux discipline. It is not a science. It is not even about money and the marketplace. It is nothing more than obvious social psychology.
In one high-falutin' way or another, economists simply ask why people act the way that they do in the marketplace. The economists create some esoteric observation about why we buy what we buy or sell what we sell, or why we borrow or invest, or why we take some jobs but turn down others even when we're broke, and whether we treat the marketplace as a zero sum venue or see it as part and parcel of a social net, and then they claim to prove or disprove their own observation simply by counting heads. They try to reduce human behavior to numbers, and then they use that predictively while never answering the "why" questions they posed and mostly being wrong in their predictions.
So what economists do is sell us on them, their mission is simply self-perpetuation. And that proves a perfect smokescreen for others who have nothing of value to sell but want you to invest in them anyway.
All economic matters are the result of human nature. And the best way for you to navigate these matters is to be a student of yourself and those around you. Know why you do what you do, assume others have the same range of motives, and -- regardless of your age -- start questioning whether what you've done and what you are intending to do are really in your best interests and society's best interests.
And that's it for this post. Yes, it was long. The next ones will be shorter. But this one is the call to action or at least a call to contemplation. Next post we'll answer more of your complaints. Meantime, none of this is the fault of migrants.
Your host,
Bri Lane
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