WTF Happened In 1971?

The economy changed today because of what happened in 1971

My PO Box:
Andrei Jikh
4132 S. Rainbow Blvd # 270
Las Vegas, NV 89103

WTF Happened in 1971?

HOW MUCH A PERSON MADE IN 1971:
In 1971, the average person was bringing home $10,622 a year or about $885 a month.

HOW MUCH A HOUSE COST:
Anew house cost an average of $25,200 - the most important to keep in mind is context because that was roughly 2.5x the yearly income. Nowadays the median income is $44,225 and the median home value is $428,000 which is almost 10x the annual income today. In the 70s it took roughly 2.4 years for people to save enough money to buy a house - nowadays though it takes the average salaried person over 7 years to do the same. That’s because people’s incomes have not grown at the same pace that home values have.

HOW MUCH A NEW CAR COST:
If you wanted to buy a new car in the 1970s you could actually save some money and do that because they cost $3,560 - brand new. It cost about a third of what the average person was making at the time. Today of course the average price of a new car is $47,000 - obviously more than what the average person makes in a year.

HOW MUCH RENT WAS:
If you wanted to rent a place - the average rent in the 70s was $150 a month or about 1/6th of the monthly income at the time. If you wanted to rent the average 1 bedroom today - it would cost you $1,750 a month, or $2,065 for a 2 bedroom. That’s roughly half of the average monthly income - not one sixth like it used to be.

HOW MUCH COLLEGE COST:
if you wanted to get a college education in the 70s, when it actually mattered to say you have a college degree to employers - you could go to a prestigious Ivy League school like Harvard and tuition would run you $2,600 a year. In comparison to today’s $54,000 a year.

WTF HAPPENED?
It’s called the Nixon Shock when Richard Nixon ended something called The Bretton Woods Agreement. At the time, the United States owned 2/3rds of the world’s gold reserve and that put it in a powerful position to do something kind of interesting and put itself at the top of the world order.

PHASE 1: Executive Order 6102 
Signed on April 5, 1933, - this made it illegal for people to own “a lot of” gold in the United States.

PHASE 2: Bretton Woods Agreement
Signed in 1944 between the countries of the world. In this agreement, each country was to exchange their own native gold backed currency, in place of the the US dollar which could also be redeemed for gold. We made the dollar be the standard unit of exchange for all International business. This made the US extremely powerful.

WHAT'S THE PROBLEM?
The central banks promised to keep the dollar equal to 1/35th of an ounce of gold. The system was fine for a little while until eventually, there was a realization that the central banks could print more of these pieces of paper than the actual GOLD that they promised to keep in their vaults. This created inflation which was the beginning of what happened in 1971 onwards.

WHY DON'T WE GO BACK TO THE GOLD STANDARD OR BITCOIN?
Watch the video to find out the truth!

SOURCES:

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

[docb]

Inflation works the same way you described deflation. Only instead of incentivizing saving, you incentivize debt.

[blackbrd]

The "deflation is bad" argument is flawed... People still need to pay rent on time, food, electricity, water, gas, furniture, transport, clothes, etc...

[renoz]

*binance lagged right now*
*pair btc to ethereum almost x4*
*i dld video , *

[Vellwander]

The idea that deflation causes people to not spend their money is silly. We will still buy everything necessary to us, but indeed not much more than that. Is it bad to not consume excessively? The added incentive to consume, combined with a decreased desire to work for a salary that gets inflated away, just sounds like a recipe for a bad economy

[AJHDuk]

Dude... This is a life lesson that I'll pass on to future generations haha, you've put it in such an easy way to understand.

[charlottemillington]

Andrei deserves so many more subscribers - his videos are soo informative!

[CaseyBurnsInvesting]

I disagree with the idea that people would become responsible savers because their money is becoming more valuable. If that was the case everyone would be investing because their money becomes more valuable that way. Whether we have an inflationary or deflationary currency, consumers will find a way to waste their money and consume, and entrepreneurs will find a way to sell. We don’t need inflation. The banks do.

[shikharv]

Andrei, in a deflationary system people would not just hoard money and wait to buy stuff that they need. It's difficult to get initially but will make more sense once you start earning in something that is deflationary. You just start spending it more efficiently. All a game of incentives.

[ObiWanSatoshi]

I disagree with the idea that an economy needs to have people incentivized to spend. Everyone will be automatically incentivized to spend for food, water, shelter, clothing and transportation. Having hard money makes things like the essentials affordable. That’s why they were so cheap relative to the average income back in the day. Inflation has made it 10 times less affordable whilst income has stayed stagnant for the most part.

[morris]

Great video this is amazingly well put but i disagree with the principle that people won’t spend money. They will have to to get goods and services they want. I think hard money would just incentivize saving instead of consuming people wouldn’t just stop buying stuff they would just stop there overconsumption

[JakeFerrin]

So stoked for your breakdown of this site. I’ve looked at it many times and understood nothing.

[Btcmx_]

Saifedean Ammous wouldn’t agree at all with the idea that inflation is necessary. Maybe having a deflationary currency could make us more financially conscious and better savers, but our mortality as humans would make us spend money nevertheless.

[jeromemorgan]

there's a glItch with rate on binance's chager to ethereum almost x4, i made a vld

[InsectAlien]

dude you are SMART ! thanks for the videos

[marccaruso]

You’re a great teacher, Andrei. Love it! Keep up the good work.

[jon]

I'm not sure why it took so long for YouTube to recommend your channel to be but I'm really glad it eventually did. You have great content and you go at such a great smooth pace. You are one of the few people I don't watch at a faster speed. Great stuff man. Keep it up.

[haikureview]

this is one of the best videos I've seen on youtube. I really liked how you laid it all out on the table and made it simple to understand.

[nodirmakhkamjonov]

Андрей, you nailed it. This is by far your best video IMO and I have been watching you for over three years.

[walternate]

Dude how do you keep coming up with this unique info to share? A true YouTube treasure.

[pmustang]

You don’t need inflation. Besides the war, in the 1800’s prices fell dramatically and the economy had record growth.

The reason you “need” inflation is credit. Because fiat is ponzi economics, if the money supply shrinks then the debt markets collapse.