[tasty_freeze]

You have a distorted picture. I moved to the bay area in 85, stayed 20 years, then left. If you moved there and were already well established, sure, real estate would have been more affordable then than now. But as a young engineer, things were still pretty expensive.

My starting salary as a BSEE working for a minicomputer company was $30,000. Two weeks after arriving they had layoffs. They were nice to the new hires and said we'll keep you on for a bit, but you should start looking for new jobs, plus there is a 10% pay cut, so $27K/year ($65.3K in 2020 dollars).

My shared apartment was off Maude and Mathilda was nothing special. It was 700 sq ft and was $750/month, which works out to $1800/month in 2020 dollars. Palo Alto, Los Altos Hills, and Atherton were all expensive addresses, even then.

[OkGoDoIt]

Now that is perspective I’d like to hear more about, considering how much my peers whine about how things would’ve been better if they moved to the bay area long ago and it’s all crappy nowadays. That’s not nearly as much change as I would’ve expected in inflation-adjusted dollars. I do wonder how typical your case is though. I would love to hear more data points from others in similar situations.

With all the old rent controlled apartment in San Francisco, it certainly feels like people who moved here a decade or two ago are locked into to paying basically nothing by modern standards. I personally know a couple people who still live with their exes because their rent-controlled apartment is too good a deal to give up.

[shuckles]

San Francisco rent control is below inflation, so it gets cheaper every year you stay.

[nitrogen]

If you stay in downtown SF in a "YIMBY"/new construction building, there's no rent control and the prices are astronomical. $3900ish for the cheapest studio in some buildings.

[shuckles]

What does the location or construction date have anything to do with YIMBYism? In fact, YIMBYs probably believe that San Francisco's least desirable neighborhoods shouldn't be where all housing growth occurs.

[ghaff]

I started as a product manager (with engineering degrees and an MBA) for a minicomputer company at almost exactly the same time getting paid $42K as I recall. This was one of the Route 128 companies. But, based on some recruiting conversations I had over time, the Bay Area salaries weren't really a lot higher and housing was more expensive. That's one reason I never moved out West. I think I was paying similar in rent initially but it was a bigger 2BR townhouse.

Housing has gotten relatively more expensive but it hasn't been cheap in much of the Bay Area for a very long time and tech salaries didn't used to be anything special.

[anonAndOn]

Sure 280 was known as the Billionaire's Highway and 101 was the Millionaire's Highway even back in the late 80's but there were still lots of affordable tract homes in the south bay. Nobody knew the industrial park across from Vallco Fashion Park would become the mothership for the world's most valuable company.

[lliamander]

> $27K/year ($65.3K in 2020 dollars)

Side bar: that is a breathtaking amount of inflation in just 35 years.

Even if wages kept up with inflation, the impact this would have on cash savings is just devastating.

[ChrisLomont]

> that is a breathtaking amount of inflation in just 35 years.

That's under 3% inflation which is a not breathtaking. The Fed targets 2%, which helps avoid deflationary spirals and helps both stability and lowers unemployment, two of their mandates.

>Even if wages kept up with inflation,

Wages have surpassed inflation in just about every income bracket for the past 100 years. And when you factor in total remuneration, returns to workers are even higher. Here's 50+ years of data [1]

>the impact this would have on cash savings is just devastating.

No one in their right mind holds cash savings for 35 years. It's a ludicrously long time to simply hold your savings in a cash pile.

[1] https://fas.org/sgp/crs/misc/R44705.pdf

[lliamander]

> That's under 3% inflation which is a not breathtaking.

Perhaps it is better to say that I am caught off-guard by the power of compound interest.

> The Fed targets 2%, which helps avoid deflationary spirals and helps both stability and lowers unemployment, two of their mandates.

I am generally skeptical of the Fed, but that's an entirely different discussion, so I'll just nod my head and move along.

> Wages have surpassed inflation in just about every income bracket for the past 100 years. And when you factor in total remuneration, returns to workers are even higher. Here's 50+ years of data [1]

That is good to see, thanks!

> No one in their right mind holds cash savings for 35 years. It's a ludicrously long time to simply hold your savings in a cash pile.

True, but people do usually place their money in a savings account. And while in theory the interest from the savings account should exceed inflation, it seems to me the mere fact of inflation means that people who have primarily cash savings are needlessly penalized.

But while it is absurd to store you money in a coffee can in the shed for 30+ years, I'm not sure it should be.

[ChrisLomont]

>but people do usually place their money in a savings account.

No, they don't. Some people have some money in saving accounts, but the VAST majority of people's savings are in houses and in retirement plans, which are not cash holdings. Only a very small amount of people have the majority of their savings only in cash for periods long enough that compound inflation kills the savings.

As to things like the Fed, and inflation:

Every single country in the world has chosen to use central banking due to the lessons learned over the past few hundred years, and especially during the Great Depression, that having a politically independent central bank target low inflation results in the most stable, predicable economy. It gives decent ability to balance shocks, lower unemployment, make business smooth and predictable, and avoid deflationary spirals, which are devastating. Compared the period right before the world started understanding how this can work, there is no question that volatility and destructive cycles are now vastly better.

I get the idea that you have not ever studied economics, especially monetary policy, but just like you probably have not studied quantum physics or brain surgery or ancient Egyptian hieroglyphics, just know that mankind has put tremendous effort into all of these and has learned some very useful things.

So - given that centuries of good thinkers following centuries and hundreds of countries of evidence have come to the conclusion that low inflation and central banking are wise, and not the product of conspiracy Illuminati nonsense, then you should adjust your beliefs that this is wise, in the same way you'd understand medicine, physics, math, etc., are all studied and the experts do indeed understand them vastly better than the general populace.

Thus, since there will be targeted inflation of around 2%, it is dumb to assume one should simply save all their money as cash. Invest it in broad index funds, or something similar.

>I am caught off-guard by the power of compound interest.

All the more reason to not hold cash, which has zero reason to grow, and has a very solid reason to shrink in buying power, and invest in productive assets with savings. The compound growth of productive assets then works for you, not against you.

>But while it is absurd to store you money in a coffee can in the shed for 30+ years, I'm not sure it should be.

It is absurd given the rest of the evidence around us.

[lliamander]

> I get the idea that you have not ever studied economics, especially monetary policy

That is one hell of a presumption. Did I offend you?

> but just like you probably have not studied quantum physics or brain surgery or ancient Egyptian hieroglyphics, just know that mankind has put tremendous effort into all of these and has learned some very useful things.

This is a complete non-sequitor. It's physics envy and posturing nonsense. The successes of physics and medicine have no bearing on whether mainstream economics is a complete crock. In the soft sciences like economics, the expert doesn't necessarily bring more to the table than the reasonably well-read layman. I'm not saying there is no value in studying these subjects, but the collective "expert opinion" is not in anyway "science".

Maybe you should study some philosophy?

[ChrisLomont]

>That is one hell of a presumption. Did I offend you?

I'm not offended. You've stated how surprised you are about several thing that someone having studied such things would have seen. I didn't mean to offend - but to point out that if you have not studied them, it's not unreasonable to assume those who have worked on them for a lifetime have some knowledge about them you may not.

Did you study them?

>This is a complete non-sequitor. It's physics envy and posturing nonsense.

No, it's putting some context. If you've studied some complex field in depth, you know how detailed and useful the knowledge is, and that it's generally opaque to those who have not put the time in.

>The successes of physics and medicine have no bearing on whether mainstream economics is a complete crock.

Yes, they do, since all rely on the same processes to weed out error over time.

>In the soft sciences like economics, the expert doesn't necessarily bring more to the table than the reasonably well-read layman.

Wow. Ok, now I am sure you have not studied them at any academic or professional level, and I see why you're so mad and believe such fringe things about money. Having met enough people like you that are sure you or people like you bring as much to an econ discussion as experts despite what you've written here is the epitome of Dunning Krueger. And that I did mean directly. I never understand why people that know a lot about some area of knowledge assume they are expert level proficient in others without putting equivalent time in.

Have a nice day.

[ambicapter]

> Wages have surpassed inflation in just about every income bracket for the past 100 years. And when you factor in total remuneration, returns to workers are even higher. Here's 50+ years of data [1]

> [1] https://fas.org/sgp/crs/misc/R44705.pdf

This document is 47 pages long. Can you cite the page or section you're referring to?

[ChrisLomont]

Lots of pages show the data in various ways. The chart Fig 5 on page 7 is pretty clear for household income. Table 2 page 34 shows every quintile becoming richer over time. Lots of the content also explains forces affecting this.

There's plenty of such studies from the Fed and from CBO, among others.

[Cherian]

Would you be open to doing an interview? If yes, how do I reach out?