by James Altucher: I
ruined my life. I’m going to cut right to the chase. When
the Japanese invaded Pearl Harbor, provoking our massive WW II response,
in a very direct way, it cause the financial crisis of 2008, my
divorce, my potential poverty, and most other problems in my life.
yeah, and so did Lincoln’s assassination, right? No, I didn’t
say that. Don’t put words in my mouth. In fact, originally
I was going to say women caused the financial crisis but it’s
not their fault and it’s a bit more accurate to say Pearl Harbor
did. We are going for accuracy here. And through accuracy we will
eliminate all of the BS, find the truth of what is happening to
our financial system, and much more importantly, what is happening
to us as a society, as a family, as individuals, and where we are
heading. Without truth lies despair.
And why should
we? For the past three years I’ve been reading non-stop
nonsense about what caused the financial crisis. And even though
the events are now three years old and its thoroughly boring to
read about collateralized debt mortgages over and over again, the
events of that foul period have reared their ugly heads again in
the anger made manifest by the “Occupy” movements. And
then another flurry of articles (and that’s what they are –
a flurry – the first taste of snow in a new season of blame,
anger, finger-pointing, she said-he said, we’re broke, they’re
rich, world is over, contagion, storms that are hitting both coasts
and will begin to move inwards.)
just quickly decide what didn’t cause the financial crisis:
Bush and Obama were too clueless. They messed up the bailouts but
whatever. Andrew Cuomo when he was Secretary of HUD under Clinton
certainly contributed by lowering the lending standards of Fannie
Mae so more people could buy a house. But lets not blame the sick
and the ill: he had the best intentions, little knowing that allowing
more people to get into massive debt is not necessarily a good solution
interest rates artificially low for a long time, allowing the lending
splurge to continue, but he did not really know what he was doing.
He was afraid of the Internet bust, of 9/11, of Enron, of Bush,
of congress, of his reputation falling to pieces, of his sycophantic
lust for Ayn Rand. Psychotherapists are now handling him in the
asylum so it’s a sad situation and we should let the mentally
What we really
want to get at is not the finger-pointing. It does me no good to
blame you, her, him, them. I only care what’s going to happen
for ME and my family NEXT. And here it is. I will be as straight
as possible, Disagree in the comments but here’s the real historical
and psychological roots of what happened and NOBODY has gotten to
the heart of the matter until this very post:
- Men went
to war. All of the men. Except for me. I wasn’t born but
if I was I certainly would not have gone. But
that’s another story.
- With all
the men at war, women went to work.
the war was over (only several million civilians had to die from
nuclear radiation or massive city-wide bombing) and the men came
- Along with
the men, there was a new family that arrived on the block and
try as we might we can’t kick them out: the Jones Family.
Oh those Jonseses.
What a bunch of braggarts. They have everything we don’t have.
And starting after World War II, they had two incomes.
The wife had
gone to work in World War II and tasted the first sip of that
syrupy but addictive monetary freedom and WILL NOT go back. So
Mrs. Jones is hard at work so they can afford an extra station wagon,
a pool, a watch, a television set (for those notborn then, that
means “a TV”), a phone, two radios, a vacation, an HP
calculator, and so on.
- And good
for the Jones family! No more War! No more Depression! Let’s
put it all behind us. We’re going to buy things now. Buy,
BuY, BUY! There’s nothing we can’t buy in a no-inflation,
two income world.
- But inflation
creeped up. Recession happened. Our spending was cut off. HELP!
We need to spend. We NEED to keep up. Early 60s malaise. So we
had to boost things. Kennedy started cutting taxes so we could
have more take-home money. This spurred the stock market again.
We had a boom for almost 8 years in the 60s.
we can spend again. Stocks were going up. Money managers were
starting to be superstars. With all that extra money what should
we do? Johnson had an idea – “The Great Society”.
Might as well have government join in the fun. Money was not only
being spent by the Jones family but by the government. We were going
to have one Great Society while we bombed another Great Society
(Vietnam) all to hell. No problem, we had the money.
But then of
course, inflation creeped in. We needed more money than we had.
How were we going to KEEP UP WITH THE JONES FAMILY? So Nixon said,
no problem, let’s get off the gold standard and we’ll
just GIVE people the money to spend. PHEW! That solved that problem.
For a micro-second. And then inflation got out of control. Which
at first sounds good. People had more money to spend. But first
Ford, then Carter, got scared about it. Ford even made these nifty
little buttons (I own a few in my political items collection started
as a kid): Whip Inflation Now.
Why did anyone
think a campaign button would whip inflation?
So the Carter
/Volker team decided to raise interest rates until everyone lost
their jobs, lost their businesses, and spending stopped.