Back to the Future

We were the Chevrolet family tucked comfortably between the Oldsmobile Super 88 and the Buick Roadster households to the right and left of us in our line of post World War II bungalows on Patrick Avenue.  My Dad paid around fifteen hundred in 1953 for our Chevy Coupe while the Buick and Oldsmobile models were for the rich folks next door at twice the price. Saying they were rich really wasn’t that much of an exaggeration since a three thousand dollar car on a four thousand a year salary for our blue collar neighborhood was a lot of money. How did they do it? This collective of factory workers, postal employees and bus drivers all shared the commonality of not having a lot of money. What was the secret to owning more expensive things?

General Motors was cleaver using different makes and models to offer buyers what they could afford. The Buick and Oldsmobile hood ornaments were rockets, the Chevy hood ornament looked more like a jet plane. These were the small symbols to remind a united nation of one goal to go faster and conquer space years before President Kennedy made his promise to go to the moon. Another brilliant moment for GM was an idea ahead of its time in the 1920s. That major disruptive concept was the auto loan. This revolution  launched GM to the number one spot and created a consumer demand to get what you want today and pay for it later. Soon people all over America were financing  just about everything such as appliances, radios, and furniture by 1930.

You might say things have not changed much since a one hundred thousand dollar salary buys a seventy five thousand dollar car.

Since then, we have been adding decimal points and digits to the pile to create four trillion dollars in consumer debt. That’s just about the size of the entire GDP of Japan where all those new cars come from. Four trillion is a lot and here’s how Americans borrow so much:

  • Credit cards eat up a little over a one trillion.
  • Nearly three trillion in non-revolving debt which includes things like college loans and car payments.
  • Debt for your neighbors has climbed in double digits since 2013, and that does not include mortgage debt.
  • Those house payments add another nine trillion to the debt Americans will owe the banker.
  • Approaching fourteen trillion in debt meaning we all owe a sum nearly bigger than the GDP of China.

All of this is personal debt. That’s the debt that grows every time you swipe your smart phone at Starbucks for a five dollar coffee increasing the debt to four trillion and five dollars. For those that push for wealth distribution this should be alarming, since the only thing left to distribute is debt; not wealth.

The really big number is the National Debt now over twenty two trillion. The only time the national debt was paid off was in 1835 when Andrew Jackson was president. No wonder his picture is on the Twenty Dollar Bill.

We need more Billionaires! We do not need wealth distribution.

In 1953, thirty one percent of the population was considered to be in the top one percent, with sixty nine percent in the bottom ninety-nine percent where General Motors made all their money. The numbers have not changed dramatically as in 2010 the top one percent was thirty five percent and the bottom ninety-nine making up sixty five percent. It just takes more money to get there, but surprisingly it is not a group only for multi-millionaires and billionaires. If you make around four hundred thousand, you are in the top one percent. Some doctors make that as do some sales people.

Are you ready to fork over seventy – eighty – even ninety percent of your money to a government that losses no sleep over twenty two trillion in debt. Or, would you rather keep some of that revenue to pay down that personal debt for that new car? The decision to choose the 1953 Chevy with a jet for the hood ornament, instead of a rocket, may be a prudent way to go forward into the future.


Sources:

https://en.wikipedia.org/wiki/Distribution_of_wealth

https://finance.yahoo.com/news/consumer-debt-track-reach-4-trillion-2019-203504452.html

https://www.investopedia.com/insights/worlds-top-economies/

https://www.magnifymoney.com/blog/mortgage/u-s-mortgage-market-statistics-2018/

https://www.housingwire.com/articles/46455-americans-now-have-more-debt-than-ever-before

https://www.focus-economics.com/blog/the-largest-economies-in-the-world