Paul Volcker, FED, Stacy discussed on The Indicator from Planet Money


Heroin is Cardiff in Stacey. This is the indicator from planet. Money any welcome to another edition of fun fact. Fridays where I just throw a bunch of facts that I came across it stacy and she judges whether they are in fact fun facts in fact fun facts. Yes that works. Yeah I think that works. We think we need to put it really. Oh my God will be here all week and so I think before we do facto since we need to give you a name like you're the fact judge of the Fine Judge Fun Judge Your. You're judge fun that's what you like. Judge Dredd Yeah but fun that on maybe not very well received movie starring Sylvester Stallone. where I think he? There's a judge in space or something like that. This is a work listeners. You tell us what we should call Stacy Yak Fridays. Yes okay so I picked nick three themes for this one. One is the Volcker era in honor of former fed chair. Paul Volcker who sadly passed away last week. Okay another is building on last last week's theme of household caution and then the last one is something about people who buy houses. I'm very excited here. We go phenomenon is is set support for NPR and the following message. Come from capital. One where you can in opening savings account in about five minutes and earn five times the national average this is banking reimagined. What's in your Wallet Capital One? NA member member FDIC this message comes from NPR sponsor state farm. Why do you need state farm renter's insurance because it helps protected this stuff landlords? Don't don't like your furniture that gets drenched by a broken pipe. State Farm Renter's insurance find an agent or get a quote at State Farm Dot Com. Okay Stacy you're ready for set a fax number one. Oh yes this is from the Volcker era so Paul Volcker was the Fed chair from nineteen seventy nine to nineteen eighty seven. Yeah I wonder if enough people know how different the world was back then so he's sort of famous for being the Fed share who crushed inflation because inflation was super high. You know how high inflation was back then was like sixteen percent or something close. Close it peaked. At more than fourteen percent in April nineteen eighty right now. Inflation is two percent to huge difference. Can you imagine trying to take out a home. Loan if interest rates are facts. That's one of the big. Okay so let's talk about mortgage rates for a second mortgage rates so right now mortgage rates Are about three point seven percent. That's for a thirty year. Fixed rate mortgage okay. Nineteen eighty-one peak mortgage rate more than eighteen gene percent. Oh My do you buy a house right. You've don't buy a lot of people worried that they never would be able to buy houses right because if you have one hundred thousand dollar mortgage Organiz you're paying eighteen percents less on neutra shark. That's like break. Your knee pads interest payments right piece of wood at the track that that is is is nc what Paul Volcker deemed necessary to crush inflation was to raise interest rates and then other interest rates in the economy like mortgage rates followed owed the interest rate that he controls which is the federal funds rate. I just thought it was amazing. To see how different the world was back. Then yet is amazing. we're going with. I'm going with one out of one on that one. Second set of facts household caution. Something we talked about last week actually households become can more cautious over the past decade. They're saving more money saving more money of their income than they used to. Yeah okay. And they're de leveraging. Okay as a share. You're of the economy. They have a lot less debt than they used to. Okay so here's the fun fact. Okay for the first time he the Judge Fair enough. Here's as my attempted to fuck Ya. Okay okay for the first time since one thousand nine hundred ninety one households now have less debt overall than both American businesses and and they have less debt overall than the American government. I'm surprised that it wasn't always that way. So personal debt was above Corporate debt in government debt it was above corporate debt. I'm not sure it was above government but I do know that essentially just now households and businesses have kind switch places businesses have just overtaken household that so like what maybe like. What does that mean? Gene I'm not sure people debate whether or not the rise in corporate debt over the last ten years is something to worry about right in some sense There's there's a reason that businesses have been taken out more debt. Interest rates are Super Low. So it's cheaper to take out that debt and the economy has gotten bigger. It makes sense sense that some companies would take out bigger loans in order to like finance their operations. The question is are they taking out too much debt. And that's the thing that everybody's sort of debating right now now. Okay Yeah Okay so phenomenon I or two four four to four point five interesting. It's interesting it's definitely not fun. Fair okay Last one right after the wounded wounded. It's it's going to happen it's going to happen. You gotta be able. Don't feel terrible phenomenon is always so you only unmerciful honesty. The bride be honest and UNMERCIFUL Caz all right from almost famous goes okay last set of facts. Okay it's about homebuyers fires all right back in nineteen eighty one. The typical age of somebody buying a home was thirty one years old. WHOA that's super young right? You know what it is now forty seven years old really is GonNa below okay. Is this housing crisis this recovery and people not having. It's a long money. It's from a series of longer term trends than that so for one thing that's all homebuyers homebuyers not people who are buying their first home. The rise in the age of first time homebuyers has been more modest but still something to note so it's gone from twenty nine years old back then to about thirty three years old now. Okay and the reason that's happened is because young people now have like more student. Loan debt. Right they got hit really badly by the financial crisis of ten years ago earlier. Generations didn't have that okay so they were able to buy homes a little bit earlier. Okay but also this has to do do with the fact that the population overall is aging and so people who buy home like their second homes or people who trade in a home and buy a new home so repeat homebuyers. Their their typical age has really skyrocketed. It's gone from thirty six years old to fifty five years old just by virtue of the fact that the population is aging and some of them also had to wait a little while to buy their next home so well. My parents just bought a new home this year. And they are in their seventies. Congratulations yes you the Vanik. Smith's Smith I haven't seen it yet actually. But so why did they buy a home in their seventies. They were pretty far outside of town so they wanted a place that was smaller. And in a little more manageable they had like a big yard and everything like that was a lot to handle so they wanted to like a place. That was a little more manageable. Here's one question for them. Yeah I why wait until seventies to do that. Why not buy that home in their fifties or sixties well? They really loved where they were living. They were living in a great place. It was just like a little bit far outside of town and it was kind. The belong drive and it would take a while to get plowed in the snow and bright and he loved that house though and I loved that house okay. Yeah meanwhile Brooklyn Night Stacey Vanik Smith yes. It's like me a renter I I know I know. I don't know what is going to have to happen to my finances for me to buy. But I'm like in the forty seven thing because that makes me feel like I've got at some time all right excellent so those were three facts. I'M GONNA call it two out of three there. You seem pretty interested in very interested. I think that's a very fun fact. Also because it makes me feel less anxiety which is a good thing over the holidays right the whole feeling of like I got some time is a good feeling. So you're the fun for at least two of those and and Thunder Tiger for the second layer taker. I'm sorry it was good Always a pleasure stacey thank you everybody have a great weekend and and send us your recommendations for what we can call stacy. Black Friday with those This episode of the indicator was produced produced by Jared Marcel. Nadia Lewis our fact checker and interim Patty hearst our editor and indicator is a production of.

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