Quote:
Originally Posted by Chrysalis
Was you working during periods of high wage inflation?
My dad brought our old house in the 70s, and wages shot up and he said it was very easy to pay off after that.
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Yes. The period of financial uncertainty spanned about a decade from the early 70's until 1982. During that period many struggled and became poorer and poorer as financial plus political problems followed one after the other. Strikes were commonplace as the hurt was relentless.
High wage inflation followed general inflation as workers simply had to catch up in order to avoid poverty. It is easy to look back without the detail and pick out a couple of salient points but it was a very hard time.
I made some very foolhardy but highly fortuitous decisions through that period and bought a first house, incurred huge fixed interest loans and bought a business. I then levered up several rungs on the housing ladder in one jump using a period of narrowed differentials in price. I paid off my first mortgage out of money accrued in my current account whereas years earlier I had been juggling credit cards
. Salaries did rocket.
Inflation made all the decisions correct. It was the courage of youth, a good job and fortuitous timing in the cycle of financial change that came together to avoid disaster and make those choices good.
That period was extremely painful with a combination of annual erosion of income plus inflation galloping way ahead of earnings with poverty beckoning millions. We have the start of a mini repeat happening now with costs running ahead of earnings but this is nothing compared with the past. I hope it does not become the same because people get hurt badly and the eventual winners are a minority.