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Front Page » June 20, 2006 » Opinion » The Wasatch Behind: Spud's school of economics
Published 3,025 days ago

The Wasatch Behind: Spud's school of economics


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By TOM McCOURT
Sun Advocate reporter

"I'll bet an old codger like you has a whole mattress full of money stashed away somewhere," I chided Uncle Spud as we drank sparkling diet Dr. Peppers and basked in the afternoon shade of the porch.

"No," he said. "If you save today's money for more than a few months it looses value faster than you can ever gain it back."

"That can't be true," I said. "The government says inflation has been very low since the 1970's. Companies usually give their employees a two or three percent cost of living raise each year."

"That's why it takes two incomes to feed a family of two nowadays," he said. "With only a two or three percent pay increase, you are loosing ground every year."

"I find that hard to believe," I said.

"What was a typical coal mine wage in 1974?" he asked.

"About $15,000 per year," I ventured.

"And what does that same job pay today?"

"Well, there aren't many coal mine jobs left, but if you can find one, they pay around $50,000 per year."

"That's a wage increase of about 330-percent in 32 years," he said. "A little over 10 percent per year."

"And what did you pay for your house in 1974?" he asked.

"Thirty-five thousand dollars," I said.

"And what's it worth today?"

"Well�it's a humble home and I've let it get run down some, but it appraises at around $175,000 in today's market."

"Bingo," he said. "That's a 500 percent increase in 32 years. That's over 15 percent inflation per year. If you subtract your 10 percent annual pay increase from the 15 percent of real inflation, you come up with a 5 percent deficit every year. That means your wages for doing the same job are considerably lower than they were in 1974. A coal miner today should be making $75,000 to have the same buying power he had in 1974."

"So a person should invest in the stock market?" I asked, hopefully.

"The fat cats manipulate the market," he smiled. "I learned that fact when I lost more than $25,000 overnight. I bought market shares with real, hard earned money, but when the market went down they told me the value of my portfolio was only on paper and I lost most of it in a "market correction." I never did figure out who got away with the real money I used to buy all those shares that were only on paper. At least Butch Cassidy stuck a gun in my ribs and I was able to wave goodbye to my money as he rode off over the hill."

"And, the money in your pocket has no real value anymore either," he said. "It used to be backed with silver and gold but now it's backed with government promises. We all know what those are worth. The old, real money has never lost its value. A silver dollar is worth 15 to 20 dollars today, a 1000-percent increase of its original value since 1974. Compare that to a 1970s federal reserve note that's backed with promises. The promissory note is still worth a dollar after more than 30 years. In real buying power, that paper dollar you tucked away in 1974 is worth about 12 cents today."

"Jeepers," I said. "What's a guy to do to plan for retirement?"

"The best way is to cut costs and reduce your living expenses by participating in the Vicente Fox retirement plan," he said. "We've got to get to Tijuana and then sneak back across the border as illegal aliens."

"What will that do?" I asked innocently.

"With illegal alien status we can get free medical care, free groceries, and social security without paying into the system. We can get a drivers license and run the car without auto insurance. We won't need a real social security number so we can take most of our pay in cash to duck the taxman. We can even supplement our income with petty crimes. As long as we stick to burglary, shoplifting, auto theft, and common assault, they won't deport us. In many cities they won't even report us. And, congress will soon grant us amnesty and it will all be legal."

"So what do you think?" he asked.

"El Passo," I said. "I've already invested everything in the Idaho state lottery."


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June 20, 2006
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