I read an interesting article by Lance Roberts entitled Personal Incomes and the Decline of The American Saver. He argues that something fundamentally changed around 1980. (google it to read it) Independently, I think there were two (for me fundamental but as yet) unexplained changes in the late 1930s and the early 1980s that had huge ramifications. I think 1981-1982 started us on the path to world bankrupcy that we are on now. I remember going through 1981 as my mortgage rate ended up at 15% pa and thinking I would lose my house. It changed fundamentally my way of looking at government and finances. I have often thought that something basic changed in society then but have been at a loss for what it might be. My own ideas and thoughts are around the rise of Television, the rise of advocacy through advertising, start of credit cards, demographics, and the like. Does anyone have any ideas what was the biggest driver of change during 1981-1982? ( I think that if we could understand the cause, we might be able to get at the solution. I worry for my grand-daughter who will be 2 in June.)
The biggest change I can think of is that the PC started becoming more commonplace. The recession and decline in oil prices would not have the same long term effect.
On another thread someone mentioned that IRA/401k's were really pushed in the 80's as contributing factor to the market back then. I wasn't alive before 87 so I wouldn't know first hand.
You said it. They started raising interest rates. The thirty year treasury bond went to 13 percent and ocean front lots dropped as low as 8 k. It was a great time, if you had money. Unfortunately, I didn't.
Interesting comment. I had little money (and some debt) then as well. I remember the comment that in the great depression, no one had money then either. So could it be as simple as we need to wait until all of us see great bargains and have no money to begin the next great bull market? (That would imply we ain't seen nothing yet!)
2008. There were apartments in NYC were trading at 1/2 of what they are now. Private investments too. Catch was you had to pay cash.
Outsourcing began in the 80's. That's what changed. Check industrial employment. Peaked in 81, I believe.
It's Japan's fault. The strong dollar in the early 1980s made consuming now more appealing than saving for later, and that explains the twin deficits, ie the trade and budget deficits. Essentially Japanese (and later Chinese) savers preferred to subsidize US consumption (via trade deficit) and those dollars were recycled by subsidizing the budget deficit (making government consumption cheaper and saving (bond buying) less appealing). In exchange, they got pieces of paper which probably won't be worth much.