ON my first birthday, in 1947, my grandmother gave me a $100 savings bond. I didn't find out about it until almost 40 years later. After she died, my uncle found it among her papers and mailed it to me. When I read his note and looked at the old certificate, I was touched. Today’s dollar
and tomorrow’sLord knows, I'm not the sentimental type, but the warm feeling I get -- occasionally pulling that old certificate out of the filing cabinet, thinking about Ma and putting it back -- is far more valuable than the savings bond itself. Its spending power probably peaked on the day it matured back in the 1950s.
Ma Flanagan raised seven kids during the Great Depression on what her husband earned as a newspaperman turned federal worker. She knew the value of a dollar. By the time I received her gift, it had plummeted. Now, that bond is worth far more to me as a keepsake than it could ever be if I cashed it.
After a half-century of inflation, $100 won't buy dinner for two and a bottle of wine at a good Honolulu restaurant. Back in '47 it would pay tuition, books and fees for a semester of college. But now, the trend is reversing.
In Honolulu and Tokyo, economists predict $100 will buy more next year than today. We're programmed to "buy now or pay more later," but now we've hit deflation, "save now and pay less later." Old assumptions die hard. Learning what deflation means for Hawaii will be crucial for our economic survival.
John Flanagan is editor and publisher of the Star-Bulletin.
To reach him call 525-8612, fax to 523-8509, send
e-mail to publisher@starbulletin.com or write to
P.O. Box 3080, Honolulu, Hawaii 96802.