Quote:
Originally Posted by DoubleK
If you were investing in 1964, that would put you in your mid-to late 70s.
I do think that your macroeconomic points are relevant to the current situation, but most of them bear no relevance to what happened in the 80s, which was my point.
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I am actually in my mid 80s.
If you are asking what are the parallels between the 1970s and 1980s and today, I would answer as follows:
1. The sudden rise in inflation due mainly to high energy costs associated with the OPEC oil embargo of 1973. I recall WTI ranging in the order of $1. 50 to $2.00 through the 1960s rising to $10.00+ a bbl by 1980. Today there appears to be a strong link between the price of oil and inflation.
2. In those days we were more concerned with running out of oil and gas (peak oil), and as for climate change, people were more worried about another ice age, than global warming.
3. The Federal Reserve raised interest rates to combat inflation, but were constantly behind the curve. I recall everything taking off in 1969, with interest rates in the 5 to 14% range (averaging 8%) through the 1970s peaking in 1981 at around 16%. Of course mortgages followed suit only at least 2% higher, and many companies held off paying their bills for 3 months. In the year 1980, a person could invest $20,000 from their RRSP with the Canadian Government, and receive a 20% return for one year.
4. With all the uncertainty, the stock market crashed on occasion, and was very unstable. With the high interest rates, the safest investment, for those who were frugal enough to save money, was to buy Canada Government Savings bonds, and just clip coupons. There were periods of recession or stagflation.
5. House prices took off and many people, particularly the younger generation, could not afford to buy houses.
6. With the rising price of food, fuel and manufactured goods, and accelerating wages, the Canadian Government, under Pierre Trudeau, put in place mandatory wage and price controls in the mid 1970s.
7. The citizenry was very politically polarized, and the young spent a lot of time protesting against the Vietnam war. I recall watching the tv each evening in the late 1960s and early 1970s, where they announced the number of body bags flown home to the US each day. I seem to recall it was 50 or more.
8. It was a time of high anxiety and uncertainty. The stress relievers/mood elevators were sex, drugs and rock and roll. Things haven't changed much except they are much easier to acquire, thanks to technology and help from the Liberals e.g. pot.
just a few of the things I recall