Prudential came out with its annual survey on women and financial issues (“Financial Experience and Behaviors Among Women“) that tells us some interesting things about financial attitudes not just about women, but about the U.S. in general.
One important change is what women are increasingly involved in making financial decisions in the family. Gone are the days when Father Knows Best. Vast sociological trends have occurred in the U.S. which have required women to work. That has led to a high divorce rate (50%), a high birthrate to unmarried women (41% of births), and a greater amount of single-mother households(24%). Whatever you think the reasons for these trends, it has been occurring since the 1970s.
It has been my thesis that among the reasons for this trend, aside from the sociological aspects of women gaining more status and independence as individuals, is price inflation, and that has stemmed from the monetary policies of the Fed which have led to a massive devaluation of the dollar for the past 40 years. Again, aside from the sociological reasons, women were required to work to help support their families in order to keep up the standards of living enjoyed by their parents when traditionally only the father worked.
I understand that this is an idealized view of the world and that I am generalizing, but the price inflation numbers at least bear this out. According to several sources (e.g., DollarTimes, US Inflation Calculator): “$1.00 in 1970 had the same buying power as $5.81 in 2011″ or up about 485%. Yet for the 50 year period of 1920 to 1970, prices increased only 94% where $1 in 1920 took $1.94 in 1970. So there has been a vast deterioration in the value of the dollar in the past 40 years.
Inflation has impacts on families, generally it impoverishes them by destroying the value of the currency. Another way to look at is that since the founding of the Fed in 1913, the dollar has depreciated by 2,192%, or what costs $1 today would cost only 4¢ in 1913.
Again I am not blaming every ill in society on inflation, but I think it has had a significant impact on society and families.
So today, women are participating in the economy, making money, and making important financial decisions. And like most people who didn’t go through a depression before, they got a severe shock in our re/depression:
These events change our behavior. And at the present we’ve learned that there is no free lunch. We’ve got to take care of ourselves and I don’t mean for that to sound trite. I think several generations of Americans believed that “things would work out” and there was always the Nanny State to take care of us if things went paws up. We have discovered that isn’t the case.
So here’s to women for their financial acumen. And here’s hoping they especially understand that the free market is the engine that will deliver us prosperity.