Friday, November 23, 2007

Piggybank's Tale

A sick and hollow feeling came over me this morning as I watched my youngest proudly bring his piggybank downstairs. Middle child emptied hers to donate to a local charity, causing youngest #3 to fetch his. And he was was positively beaming at the sound and weight of what he'd collected and saved, the physical affirmation of an expected future reward to foregoing the temptation of instant gratification that bombards us everywhere we go, even though at five he can hardly grasp what it might buy or the concept of relative value. Normally, the sight of this cute lad's magical smile in the morning, visible seven days-a-week, 365-days-a-year, brightens-up the darkest and wettest of dismal days, and dissipates the most acrimonious of spousal disagreements. But this morning, the sight of his happy face juxtaposed with his piggy-bank made me profoundly sad, for imbued in his pride was a trust and optimism that his not inconsequential delay of gratification will be preserved and rewarded accordingly, but authorities responsible for upholding their end of the bargain - i.e. the implied promise that a unit tomorrrow will not differ materially from a unit today, so preserving the confidence in the exchange value of a unit - were laughing and mocking the pure-hearted optimism and trust of my son. I hadn't the heart to explain the near-absurdity and futility of the piggybank in a era of fiscal irresponsibility in the west coupled with monetary and mercantile irrresponsibility in the east. The world is sufficiently cynical as it is without destroying yet another myth about the virtues of thrift, hard work, honesty and responsibility. I might as well shoot the tooth-fairy, loudly proclaim that Santa, too, is but an instrument of deceptions. But that can wait.

I recall the incessant advice "to save" from my late, depression-era gradparents, who rewarded me on their visits with cheques, and bills that I would religiously entrust to the local bank, my mother filling in the deposit form, and the teller duly making the required entry into my "passbook", after which I replaced the passbook into its protective sheath, and got to choose between a cellophane-wrapped red, green or orange lollipop. When the time came, I typically spent my savings on books science fiction), or shortwave radio equipment, but back in the 60s, I never, never, never had to consider the possibility that the value of my saved gifts and promises of future rewards might be grossly devalued due to forces beyond control. Of course that too, was misplaced innocence, given the 70s, culminating in Volcker's Friday night massacre, and the most-painful post-war contraction that followed. Nonetheless, I'd thought that we'd learned our lessons. I'd worried through the 90s that despite the appearance of prosperity, there were worrying and unsustainable longer-term trends that would need to be addressed. By 2001, I was rather certain that these fiscal and trade issues, serious and real as the were, would not be confronted, and things would play out, demagogically, how they may. Since then, everything that could go wrong has gone wrong. Credit growth (unil recently) has continued to increase causing all manner of asset bubbles, while Americans en-masse extracted equity from their homes to consume and speculate. Real wages for a large percentage of the people have been stagnant or been falling, whilst inequality returns to near-revolutionary levels a century ago. Energy policy remains non-existent while energy costs skyrocket. Taxes were cut in 2001, and thereafter coincidental to an expensive war and dramatic increase in military expenditure, emerging, GCC and mercantile nations seeking competitive advanntage have subverted BWII interest-rate and FX market adjustments further preventing the most fundamentally important message from reaching the brains of thick-skulled American's that they are, or will shortly be, f*cked if they persist on this course (which they have, thankyouverymuch Bush Admin and people who voted for them). And the response to this grand confluence of [avoidable] events is already known: fiscal policy will get even more generous, and monetary policy will return to uber-accomodative levels to prevent those who've wrecked the system from wrecking the system further. No where, in any policy dictates, or discussions is there any sense of "public interest", "culpability", or responsibility ascribed to those who've benefited more-than-enormously to stump up for bills of days passed. No where, is there any demand upon ordinary Americans who blindly and blithely facilitated it to retrench, cut-back, drive-less, turn the thermostat down, don't fly or driive a 1000 miles this thankgsgiving, eat-less meat, or simply eat-less.

So I look at the innocence and purity upon my lad's face, and the confidence and pride he has in thrift because I taught him that by example, and wonder whether I have done him well, or whether I have, in fact, failed. He IS very clever. Perhaps he's ready for the truth.

7 comments:

Devang said...

There is only one solution: there needs to be an inflation fairy that takes money out of the piggy bank if not spent. Lesson: spend wisely!

"Cassandra" said...

devang - you are wise beyond your years.

Devang said...

I don't know about that, but I would watch a fake financial news show based on the content of your blog. At least until the WGA strike ends and Colbert comes back.

OldVet said...

A penny saved is a penny burned. But don't tell my daughter.

Charles Butler said...

Cass,

When the shoe dropped in 1981, I was working in a business of predominantly fixed expenses (exactly like a leveraged position on the wrong side of the trend, now that I think about it) that was mostly dependent on the discretionary spending habits of customers. In other words, it was really bad. The curious part of it, though, was that when the night was finally pulled back in the fall of 1983, it was as if the recession had never happened - this even more notable because it coincided with the inherent seasonality of the endeavour. Business resumed exactly where it had left off a year and a half earlier - hurtling towards 1989, as was later to become evident.

In the end, the expectations of baby boomers continue to be the determinants of reality just as their wage inflation brought on the Friday night massacre. In the end, Volcker's knuckler ended up plastered on the Green Monster, regardless.

Anonymous said...

So when will we finally be rid of these baby-boomers that cause so much trouble?
Clare

Charles Butler said...

I don't know, Clare. Let's ask M. Lamarck.