I am cleaning out my New York City apartment in anticipation of a final move to West Shokan, NY. The biggest problem is all my books. I had to discard a number of old books, including many of no-longer-used labor relations books from my doctoral program. I came across a tiny soft cover volume published in 1993 by James Dale Davison, founder of the National Taxpayers' Union. I don't remember where I got it. Here are some excerpts:
"The Fed has been pursuing a loose money policy for three years, and the money supply is still falling like a rock. The Fed has moved heaven and earth to get the money supply up, and it's not working...the markets are confused because interest rates are going down, and that is always good for the stock market. At least that's what people think."
Davidson points out that monetary expansion does not work if banks are failing or contracting. He notes that in the Great Depression the Fed reduced interest rates but the money supply still contracted because of bank failures. The process did not occur in the early '90s as Davidson feared, but is what many fear is happening now.
Here are some of Davidson's predictions from 1993:
>I see Social Security benefits being cut to the bone. They'll probably only go to the most needy.
>I see at least 40 million unemployed to make-work public assistance jobs
>Sick elderly will be cared for at home. Almost no one will be able to afford nursing home care.
>I see millions of homeowners upside down--with the mortgage bigger than the market value of the home. A lot of them will hand the key to the lender and walk away. There will be a lot of empty houses with "For Sale" signs.
>Banking industry problems will return, much worse than anything we've seen. And much too big next time for the government to bail out. Either your savings will be wiped out or you'll be paid in worthless paper dollars.
>I expect to see 'extended families of 10 to 15 crammed into three-bedroom houses. Millions of retired folks will be forced to live with their children. Young people in their twenties and thirties--including young marrieds with their children--will move in with their parents. In many cases, not a person in the house will have a full time job.
>The suburbs will become slums
Davison argues that knowledge workers will become affluent.
>Small communities two hours away from major cities are the fastest-appreciating real estate in the country. These communities are already benefiting from the "Fifth Migration" in American history. The Third Migration was from the farms fo the cities, and the fourth (1950-70) was from the cities to suburbs. Now, people like us are bailing out and moving to small, clean, safe towns. Technology makes it possible for us to work anywhere...Even if you're not ready to move yet, a rental property in these areas is the best investment in the United States."
Quite a coincidence. Hello West Shokan.
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2 comments:
I just found a copy of this book that I've had for years and just happened to read a little of it. I'm stunned at how much written in their has come to pass! Had I read it and heeded it when it was first published I would have been a lot better informed of the things going on now in 2011!
Hi Darrin, you may be right when you said you wish you have read this book when published. The problem is there is so much hype and noise it is very difficult for a layman like me to understand, evaluate and believe what is said. If you are economist then probably you already know where the economy is heading and you can appreciate such writings. In summer of 2005 I read the article written by Nouriel Roubini published in Foreign Policy magazine where he predicted what is going to happen. That exactly happened in 2007. I had invested money in real estate. I could not understand what he said.
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