Remembering Interest Rates

Debt Disparities Economy Ideas and Issues

            Little Rock      There’s no question the wringing of hands and banging of heads about inflation is the real deal.  Sudden spikes in prices of food, gas, and utilities hurts low-and-moderate income families severely.  Make no mistake, I’m not voting for inflation, but at the same time, it’s hard not to put some things in perspective as we walk down memory lane.

Americans of a certain age, let’s say for example my age, can remember when interest rates were astronomic.  We’re whispering to ourselves behind closed doors and around kitchen tables, a funny sort of humble brag about the crying and gnashing of teeth at a prime rate of 5.5% pressing on 6%, when we remember when…

Mi compenara casually noted a time in the 1970s when she was paying over 10% on a mortgage in Memphis, turning to me and saying early one morning, “if they’re whining about 6%, they haven’t seen anything yet!”  I can’t lie, because I can’t remember what I paid on my first mortgage.  I was so ecstatic that the Arkansas Highway Department, as part of the Wilbur Mills I-630 relocation, was giving me the down payment on a house on Schiller Street in central Little Rock, and that I had gotten a bank owned by the father of one of early organizers to lend me the rest of the $25,000 or so that the house cost, despite the fact that I was making less than $4000 per year, that I can’t honestly remember what the interest rate was, other than the fact that it wasn’t pretty, and that I didn’t care.  It was better than rent, even though I was only paying $150 per month on Hanger Hill.  I do fully remember paying 9 3/8 % on my 30-year mortgage on Burgundy Street in New Orleans in 1989 until I paid it off in 2008.  My sister-in-law remembered paying 14%.  I’m paying a 2020 mortgage on a fishing camp at less than 3%, and the bank is probably praying every day that I’ll miss a payment!  If fool’s luck locked in the low rates before these days, my loan got cheaper for me and dearer for them.  Same for student loans incidentally.

Interest rates were so high in the 1970s that we didn’t need to pretend to follow the stock market.  Savings accounts paid off.  Being a founding incorporator and board member of the Tides Foundation, I watched Drummond Pike create the operating funds on the float between getting donor deposits and making the grants simply by taking advantage of high interest rates.  We would buy certificates of deposit and make money.  It’s been so long that the rates have been low that I had to stop and think for a minute about what they called those things!

I’m not saying those were the good ol’ days or anything stupid like that, even though inequality was way, way less.  I’m just saying, despite it being painful now, we’ll live through this somehow, as we always do, like it or not, it could be worse.