Most of you readers have never heard of the “interurban lines,” which dotted the country in the early 1900’s. These were high-speed ’trolley’ lines, but which had heavy cars, and ran very fast. They connected, as their very name tells, urban areas. Towns linked by railroads pulled by steam locomotives were not a convenient way to travel between nearby towns, as schedules were often widely spaced. So, some smart people thought up the interurban system, and at one time, one could go from New York to Chicago on these various lines. I rode the Hagerstown and Frederick when I was a kid and can still remember my Mom and Dad getting on this huge car with me. By the 1920’s, the automobile was severely cutting into the profitability of these lines, and most of them are long gone. Being a railroad nut, have ridden and photographed a lot of them. The state of Iowa, just as an example, had a lot of them, such as the Ft. Dodge, Des Moines and Southern, Cedar Rapids and Iowa City, Waterloo, Cedar Falls and Northern, etc. These fast, silent, connecting electric lines were really in vogue for a while. It was possible to go from Chicago to Milwaukee at 95 miles an hour on the Chicago, North Shore and Milwaukee, and I did it. One can still go from Chicago to South Bend, Indiana at 95 miles an hour on the Chicago, South Shore, and South Bend. I won’t bore you with this trivia, but investing in interurban lines was a poor investment. It cost a lot of dollars to build track, power stations, overhead wire, passenger stations, print schedules, etc, and the profitability of these lines was far shorter than it took to get them paid for out of profits. A bad investment.
In Albania, hundreds of thousands of citizens invested their life’s savings in the Gjallica Investment Fund, a sort of Albanian Social Security. Albania’s 3.2 million people are considered among Europe’s poorest, and when in February of 1997, the fund shut its doors and announced that it wasn’t going to pay, thousands rioted. It did no good, because the bubble had burst, and it was discovered that the fund had invested poorly and, was broke.
Speaking of bubbles, the Dutch bulb bubble trouble cost thousands their life savings also. In the 1620’s Tulip bulbs became popular, and their popularity fed on itself. By 1635, an unusual bulb could fetch as much as a fancy house on a canal in Amsterdam. The market became flooded with tulip growers, and just when the supply was adequate, the demand slacked. Growers were stuck with bulbs, which were not selling, and stores were stuck with them. Prices plummeted, and the normal supply and demand rules took place. Those who had invested in tulips early, made a fortune, and those who invested late, lost their investment. Such things have happened like this continually, throughout history.
Remember the Hula Hoop? It became a frenzy, just like yo-yos when I was a kid. Philippine guys were going around the schools, doing their fancy tricks with yo-yos and us kids bought millions of them. Then yo-yos died. Had someone invested in yo-yos early, they would have done just fine, and the same with Hula Hoops.
In Florida, Henry Flagler built his rail line, huge hotels, and even ran his line clear to Key Largo over concrete bridges he built. These bridges now carry US 1. The Florida land boom was of historic proportions, but it became a bubble when a couple of hurricanes blew a lot of stuff away, and many land purchasers discovered that they had bought land which was swamp, or even under water. Many lost millions in Florida during the 1920’s, and prices didn’t recover till long after WW II ended.
Bubbles are beautiful things. Soap bubbles have myriad colors, and glisten in the sunlight when kids blow them. Remember BUB Bubble Gum? It was the rage when I was a kid, and we used to blow bubbles a foot across. That didn’t last too long either, and I haven’t heard of anything but Fleer’s for many years, if that is even still in existence. When TV first came out after the war, I saw a football game at a wealthy friend’s house in 1946. In 1948, I bought a 7″ Hallicrafters TV set for $169.65, and was the hit of the neighborhood. “Hey guys, Stott has a real TV set. Let’s go see it.” Now it is old hat, and huge, brilliant color TV pictures are so common, that practically everyone has one. Seen a black and white TV of late? It was big stuff 60 years ago.
There are continual bad investments, which are indulged in by thousands every day. New cars are a classic. Buy one and drive it around the block, and it is now a used car, worth maybe $10,000 less. New cars are a terrible investment. Why people buy them is something I cannot understand. Out of the 67 cars I have owned, only 6 of them were bought new, and 5 of them were Mercedes. I could afford them, so I did it, but all were bad investments. That’s why people buy new cars, I am sure. Because they can afford them, regardless of their being a bad investment. Plus the so-called ’prestige’ of owning a new bucket of bolts. Not me. Maybe when I was younger, I needed that, but now, the newest of my four Mercedes, is a 1985. No more bad investments in cars for me.
Then there are bad investments in pieces of paper with ink on them, like stocks and currencies. The Mexican Peso, at one time equaled one dollar, and was traded equally in the US and Canada as well as Mexico. Sitting on my front porch in Silverton, in 1976, Art Francisco my next door neighbor, long deceased, was a financial planner. He had just told his clients to change their dollars into Mexican Pesos. I screamed at the top of my voice, “YOU DID WHAT?” By 1988, the peso was 20,000 to the dollar, and his clients, at his instructions, had made an extremely bad investment. Had you invested in euros when they first came out at 88 cents to the dollar, you would have done well, but had you kept them, it would have been a bad investment. What is there to do? The NASDAQ was fine, until it got to 5,000, and had you gotten out then, you would be fine. It went to 1100, and now I guess is about 2100. Had you bought a share of Microsoft in the beginning, it might be worth many tens of thousands of bucks now, I hear. Had you bought Coeur d Alene Mines (CDE) at $2.88 a year ago, you would have done well. There are hundreds of “investments” which one can make, and usually it is a gamble. All investments are a gamble, because you are attempting to foretell the future, and there is no such thing as a crystal ball which tells you what will happen tomorrow, next week, or next year.
But I do have a prediction, and you can take it or leave it. I know for a fact that the used to be almighty dollar, is crumbling like a fresh coffee cake. Officially, there is a $9 trillion debt, but if you count the unfunded promises, it is over $30 trillion. Now let’s talk about numbers. If you deposited one million dollars in a bank every day, starting when Jesus walked the earth, you would still not have a trillion dollars. The government’s debt is increasing by $2.5 billion per day, 7 days a week. How can it ever be paid? It can’t, other than what every single nation has done since the invention of the printing press, and that is destroy their own currency, and bankrupting the citizenry simultaneously, by attempting to print their way out of the debts they have so irresponsibly created. History does repeat itself. And today, 99% of the populace saves surplus assets in dollars. Ugh. My prediction is that silver will be about double its present price by the end of the year. I may be wrong, but I don’t think so. The ETF is coming, and they will have to buy 129 million ounces of silver to do it. Where will it come from? That purchase alone might make silver double, because there isn’t much out there. Time will tell. Protect yourself.