I pay my taxes. I need to say that upfront.
And I don't have tax lawyers to cut corners for me. I just have an accountant, rely on him largely because I'm lazy and easily confused. I pay for it, but as in other things, one can and should pay for peace of mind.
So I had to catch up on the prerequisite paperwork, and I drove over to the credit union to check out how much interest my account had acquired last year. The amount was earth-shattering: $1.47.
Yup. A buck forty-seven. That's all it earned. That from a savings account of more than $3,000 (Not my only one). For the whole year.
Three thousand bucks, you would think, would be worth putting in the bank and letting it grow a little. You should be anticipating something like a new nest egg, you know?
Our parents told us to save money for a rainy day. Put it away and it'll be there, and more, if you just leave it alone.
Well, I left it alone. I even added to it. And got a buck forty-seven for my trouble.
I don't think my parents were kidding, nor being cruel, when they suggested that I be frugal. I think it was one of the most sincere things they ever said, along with eating vegetables. not breaking curfew and, of course, no sex before marriage. One of those things that, with deferred gratification, I'd be happy with upon later reflection.
But it turned out to be nonsense. My later reflection tells me that I was a complete fool. I should have taken that money and blown it on, well, anything.
So how to put money away and earn something with it? Well, there are stocks and bonds. You take your chances and you roll the dice.
But if that's the only real way you can earn money by putting it away, what does that say about our way of life? Seems to me the reason our generation was told to put money into a savings account so that it could earn money sloooooowly, is that the previous generation, that of our parents, went through some awful economic times in the 1930s.
Banks failed by the thousands, many because of wildcat panic, which led to people taking their money out of banks when there was no real reason to do so other than believing it was a good idea because everybody else did; economic hysteria. Anticipation of poverty is, to some extent, poverty itself.
FDR stepped in and assured everyone that the banks were sound by first of all, declaring a four-day bank holiday (in his inaugural address), checking their books, and keeping the best ones open. That assured the average Joe that he could take his money out from underneath his mattress or out of his closet and put it back in. That gave the banks the underpinning to make more loans, which gave people confidence to take out those loans to open new businesses and buy property. It happened slowly, but it happened.
The second thing, the one that lasted and still lasts, is to get a heavily Democratic Congress to establish the Federal Deposit Insurance Corporation, the FDIC, an acronym that's as American as Campbell's soup or Colgate toothpaste. It ensured that, up to $25,000 for an individual account and $50,000 for a joint account, monies deposited in banks were guaranteed to be paid to the claimant simply by walking up to the nearest teller and doing so, no questions asked. It also assured people that, if the bank failed, they'd get their money back. The amount is now $100,000 for individuals and $200,000 for joint accounts.
Slowly, once again, people responded. And the FSLIC for savings and loan accounts was also established, if people wanted to go that route. And they began to save, with assurance that interest would be compounded and they would make money if they would so much as let some of it go and establish a regular process of putting something aside.
The crucial thing about that is that people who weren't rich grew a new attitude, supported by government guarantee. But markets are strange things, and interest rates for loans have dived in recent years. You can borrow money quite cheaply right now, but that's partly because banks significantly dropped the percentages of interest they paid out in savings accounts.
It's down to practically nothing now. See above. It says something very sad about the state of our culture as reflected in our economic welfare. It's a betrayal.
Saving conservatively, with assured dollars making money slowly but definitively, is now gone. People put their money in banks so they don't lose it, not so much as to gain much of anything. The culture now screams to take risks. It's working. For now.
It's working well enough that another Democratic Congress, put in place marginally by anxiety over the pandemic, is now borrowing money like wildfire to rebuild an infrastructure that's sorely needed it for an entire generation now. Bridges, roads, airports and ports are in very rough shape. They represent the very arteries of our commerce. We have to hold our collective breath, though, because should the economy tank, we would plunge into despair again.
After saving some jobs and businesses and schools and the like, we're adding on to that gamble with another $3 trillion. At one dollar per second, it would take over 32 years to count out one billion dollars, or one-three thousandth of three trillion, in case your mind wasn't already blown quite enough.
To help pay for that, our government will raise taxes, yes, but also issue bonds with a slower, lower but steady rate of return, and hope that people will buy them, probably at reduced rates. And that separate gamble will assume that the value of those bonds will only grow and people will be able to redeem them at listed value, and more, in the time alloted while we're unable to access it.
But for that to happen, people will also need to adapt the very attitudes that our parents did, and that we did--confidence in government and patience--until it all went badly south. Hence yet another gamble; it has to return more than a buck forty-seven, and I have to think it will.
But that assumes that people will settle for the assurance that's been missing for some time now, that making the quick buck in the market isn't always the best way to develop the underpinning of sound economic progress.
So I'm not going to report such a pathetic return on my taxes. I wish I could, but that would mean a far different, far stronger economy than the one we have, and a far better outlook.
Be well. Be careful. Wear a mask. With some luck, I'll see you down the road.
Mister Mark
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