Thursday, May 21, 2015

Rapious Bankers

Peter Grant’s blog often has excellent information on current economic and financial conditions. If you don't follow it, I would recommend you start.

His post on “The War on Cash” sparked a memory. While he focuses on macro issues, this memory is decidedly micro and narrow relating to Routt County, CO circa 1970.

Routt County (Steamboat Springs) in 1970 had a population of 6,754 and a median income (in 1989 dollars) of $35,005 per the Census Bureau. Now it has a population of 23,501 and a median income (in 1989 dollars) of $74,547.  Within the great Steamboat Springs area it is probably over $100,000.

My parents were well positioned to ride the real estate boom of the 1970’s. Mom left her job with the US Forest Service and Dad left his job as a power plant control room operator. They got their real estate licenses and prospered for awhile.

One day my father and I were talking and I remarked about how everyone was getting rich. My Dad gave me a stern look and said, “All that is being exchanged are mortgages. There are no hard dollars changing hands”.  He went on to say after every boom there is a bust. In the case of Steamboat, there were several busts.

What I take from Peter’s blog is the picture of a world wide exchange of paper with nothing of tangible value backing it. I've read elsewhere all the oil future contracts floating around amount to 250% or more of all known oil reserves.  Similar examples abound in every financial sector and commodity exchanges.

What should the average person do? Read the information available from places like Peter’s blog. Get whatever retirement money you have into something tangible you control. While we all need checking accounts, etc., we can do so with Credit Unions. I left Wells Fargo twelve years ago and have not one dime in any commercial bank. When the firewall between the commercial and investment sides of banking went away so did I.

Lastly, I would caution you not to think I'm some sort of financial wizard because I’m not. Read and learn for yourself.


Momma Fargo said...

Very good read, Thank you for the link. Cash might become obsolete. Scary.

Well Seasoned Fool said...

Glad you found it interesting.

Old NFO said...

It is scary... And I've been an NFCU member since the 1970s.

Well Seasoned Fool said...

For years I tried to have a relationship with a local bank. The bit banks, like Wells Fargo, kept buying them. That is when I went Credit Union.