The masks are coming off, but not entirely. Variants are keeping some folks cautious. The economy is recovering, but not everywhere. What jobs are essential and what is a living wage are being debated in actions, not just words. Old conventions are being discarded, but many are only on the side of the road, not in the garbage compactor, yet. These are turbulent times, so don’t be surprised if your stomach is a bit queasy, your head is a bit achy, and you’re not quite sure whether to stand, sit, move, or get out of the way. There are just so many changes.
When I write these posts I like to concentrate on one topic, maybe with a few side anecdotes to demonstrate interconnections. Find a topic, note its progress and maybe its conclusion, and make it personal. This is about personal finance, so of course it should be personal. Besides, I’m not a certified financial advisor or broker or any such roll within that realm. (I am a licensed real estate broker, but I mention that more to adhere to WA State disclosure regulations than any plug or brag. Dalton Realty, Inc. http://whidbeyrealtor.com/)
There is more than enough to think, write, talk, and do something about as the pandemic recedes, the US elections are behind us, and climate change change becomes less debatable and something too tangible. But. They’re all changing at the same time, confusing trends, leading to unintended consequences, and acting a bit like the early days of the internet. Everything is possible, but it is hard to tell what is probable.
A hint when talking to very literal people. Thanks to quantum mechanics and infinity, anything is possible. If you want a more useful answer ask what is probable.
So I sit here, typing away at the end of a Friday, trying to let my mind sort through the topics that come to mind. One topic is about why I am writing on a Friday night, but that has more to do with working in real estate in the summer in a tourist area after a pandemic lock down while median house prices are accelerating. (Whidbey Real Estate And Affordability Trends – July 3, 2021)
Let’s step off into an attempt at current topics from the perspective of income, expenses, assets, and liability. (See, I was able to bring it around to personal finance.)
Wages are up, as long as you’re in the right job. These times are a faint echo of the rise of the middle class after the pandemics of the Middle Ages. That’s appropriate because the Covid pandemic is only a faint example of what happened back then. Workers became in demand, and they also had demands. They wanted more autonomy, and money, and choices – and largely got them. The rich kept getting richer, but the right skills meant some peasants were finally able to climb out of the severest poverty. Employers who refuse to adapt find their businesses facing struggles while adaptable businesses surpass them.
At the same time, some workers are realizing that being required to work to someone else’s schedule at someone else’s facility means spending much of their life basically living someone else’s life. People are refusing to go back to work if it means low wages, long commutes, and unhealthy conditions. That’s a battle that can take decades to resolve on a societal level, but only days for many individuals.
Costs are up, unless you can avoid them. The pandemic disrupted supply chains, demonstrating that hyper-efficient just-in-time processes are also hyper-sensitive to disruptions. Warehouses full of parts were considered wasteful, but only as long as the supply chain wasn’t interrupted. A little extra slack in the system can be more robust and better in the long term than filing every step of the process to a sharpness that cuts.
Lumber prices are up, which has led to more trees being turned to vacant land. Some are switching from forest to clear cut to residential developments. Food prices are up. Long distance shipping may be cheap, but only as long as it successfully delivers the produce and the product. Seemingly insignificant components are delaying complex items, raising the awareness that every piece is important. Chips make many things work, but won’t until the manufacturers can catch up. Even bicycles are back-ordered out into 2022. The surprise may be that prices haven’t risen higher.
The stock market it up. And one of the questions is whether that is from stimulus packages or real growth. Housing prices are up. Maybe many urbanites are more interested in having a bit more room in and around a house. It can be isolating trying to survive a lockdown within four close walls in a building with many spaces that have to be shared with strangers. There really is a value and a use to that white picket fence around a tidy yard, or acreage fenced against deer and planted for production instead of ornamentation.
There is more interest in specific assets like de-centralized alternative energy (solar), good internet (which can happen without relying on wires overhead or in the ground), and electric vehicles which keep running even if a pipeline bursts somewhere.
Bitcoin continues to confuse, but that’s because it isn’t obviously settling to no or an infinite value.
Debt will always be with us. Or, will it? Probably for a while. Borrowing is back up, either from delayed gratification or from a lack of income, or both. At least interest rates are down, for now. Mortgages are getting refinanced. Some of that money goes to improvements, some to expense reductions, some to fill in for shortfalls in living expenses. One fact continues, if it takes money to make money, and you have to borrow that money, you get to advance someone else’s wealth to possibly build yours. Unless governments declare a debt jubilee in one or more areas, we’ll continue to deal with the burden of debt that delays the return of that money to the economy and real growth.
As for the debt being carried by governments around the world as they launched a series of necessary and astonishingly large stimulus packages, well, that macro issue must be worrying economists. We were already heading towards negative interest rates. Are we now going to have to deal with much higher inflation, or will the economies fail to recover, or will we finally have the incentive to re-invigorate the money flows by taxing tax havens, closing loopholes, enforcing securities laws, and generally aiming for a more equitable wealth and income distribution?
So much of it ties back to who is a creditor and who is a debtor, and whether that system should change.
All the rest
Many things that sounded academic to many are now proven to be essential. Public health, infrastructure, environmental protections, emergency preparedness, social injustices, et al.; we’ve seen the consequence of so many issues that are no longer abstract that public awareness is rising. Whether we’ve reached critical levels is uncertain.
Uncertain is the key word. This is a time of transition. It is a great time for saying “This is possible.” “That is obvious.” “Now’s the time to do…”; but many of our assumptions have been revealed to be ready for an update. Predicting the future is always a silly game, but one we must play. Trying to understand just one topic is difficult enough, but today’s world shows how connected every aspect can be. Some country that doesn’t get enough vaccines can mean critical materials can’t be shipped because the dock workers are sick. The miners can mine. The manufacturers are ready for the next step. The consumers want that they bought, and may need instead of just want; but the flow of something in health can disrupt farm equipment on another continent.
Maybe that is the one topic that I’ve been looking for this Friday evening. We can convince ourselves that this one thing, whatever that one thing is, this one thing can be important and understandable, but our society and planet are one thing. We are all parts of one thing. We’re no longer scattered and disconnected villages. It truly has become a world where, if one of sneezes, the rest of us may catch it too. We have to consider everything as one thing.
Maybe this wasn’t the sort of thing that lets me get a good night’s rest before going to back to work tomorrow. Fortunately I have some locally grown and produced wine. I might just need, or at least want, that.