It’s all in your head
An article recently appeared on MSN Moneywise looking into the question of why so many millionaires don’t feel rich:
The article dismisses it as psychology. Rich is a state of mind. It’s all in your head.
I, Finster, beg to disagree.
A million bucks just ain’t what it used to be. Inflation has eroded the value of a million dollars just the same as it has a single dollar. A hour of the time of a skilled tradesman, for example a plumber, electrician, carpenter or mason, typically once ran about ten dollars. Now it’s about a hundred or more. A luxury car used to be ten thousand, now it’s a hundred. A million used to be enough to buy multiple homes, now in many locales it doesn’t even buy one. According to the Federal Reserve Bank of Minneapolis, $100 in 2025 has the same purchasing power as just $12.05 did in 1970 … … and that’s based on watered down government inflation statistics. As recently as 2009, a million dollars could buy 1500 units of the S&P 500. Now it buys less than 150. In 1968, it could buy 28,571 troy ounces of gold. Now it doesn’t even buy 250.
The gold, meanwhile, buys just as much as it did a century ago. If you were a millionaire in gold in 1925, and had the same amount of gold today, you still feel as rich as you did then.
It’s not all in your head. The dollar has lost so much value, you now have to be a millionaire just to aspire to the middle class.
True, but we live vastly better lives now than a “Millionaire” of 100 years ago.
Meantime the World, even America is looking at the Japanese “K” car.
https://www.carscoops.com/2025/12/trump-saw-these-really-cute-cars-in-japan-and-now-wants-them-on-us-roads/
Talk round the campfire is the British PM is about to face a challenge VERY soon. It is said they might call a general election as soon as next year.
Mike
In general, sure. On the inflation front, not so much. A hundred years ago a millionaire was truly rich. Even by government inflation statistics, $1M in 1925 was the equivalent of $38.6M in 2025. In terms of gold, more like $200M (gold was $20.67 an ounce). I don’t have any 1925 survey data, but am pretty confident if you asked, few millionaires would say they didn’t feel rich.
For average Americans, sixty years would be a less flattering comparison. Living standards have been flat to down. Sure, we have snazzier toys, but in the sixties, it was normal for a couple to own a home, a car, and raise a family, on just one income. Both have to work today for similar material returns. When people have to work twice as many hours for the same stuff, that’s a 50% haircut in living standards.
Things turned down in the seventies, but recovered in the eighties and nineties. By 2000 living standards were good. Most of the stuff of the sixties but with better tech. The federal budget was nearly balanced. Since then though it’s been all downhill. In 2000, a million could buy the “American Dream”, but today it takes five:
The 2025 “American Dream” Now Costs More Than $5 Million
I like to distinguish between the effects of technology and of government. No question technology has greatly improved living standards, but government, with its wars, meddling, regulation and inflation, has done the opposite.
Question:- Would a Japanese “K” car sell in America?
https://www.youtube.com/watch?v=gMgyrPt_KvA&t=235s
Am thinking, you know all those DNC sh1th0les New York/LA etc…..?
Cheers
Mike
>I don’t have any 1925 survey data, but am pretty confident if you asked, few millionaires would say they didn’t feel rich.
Millionaires were very rare during the Roaring 20s so no millionaire of that era could realistically say he didn’t feel rich. Only when comparing himself to a Rockefeller, Carnegie, Vanderbilt, or Morgan could a millionaire somehow feel that he was not rich.
I remember reading, perhaps in the original edition of The Intelligent Investor, about a scenario involving a widow with small children and $100,000. It was said that such a widow would easily be able to provide for herself and her children with that endowment. Simply investing that $100,000 in U.S. government bonds would yield approximately 5% per annum or $5,000 a year.
How much is $5,000 a year during the 1920s? Compare it against Henry Ford’s Five-Dollar Day which was started in 1914. A factory worker earning $5 per day would gross $1,300 a year if he worked five days a week for all 52 weeks of the year.
The $5,000 per year of interest earned by the $100,000 of principal invested in U.S. government bonds is nearly four times the standard of living offered by a person working on an assembly line at the Ford Motor Company. I’m fairly confident that inflation was not running rampant during the 1920s (speculative excesses on Wall Street aside) so I don’t think much adjustment for inflation since 1914 is necessary.
The point being: Even $100,000 was a lot of money in the 1920s and it could afford a person a solidly middle class or upper middle class lifestyle without ever having to work or worry about loss of capital. A person with ten times that money is in the upper class and could likely afford a very fine house with a proper butler, head maid, chauffeur, and other lower level servants.
I don’t recall what year it was, but my grandparents paid around $5000 for their house. Just down the street from here, now it would be closer to $150,000, and this is affordable small town flyover country.
On the downside, our 1925 millionaire wouldn’t have email, an iPhone or Netflix. But with the lifetime security, very fine house with the proper butler, maid, chauffeur, etc, most of us probably wouldn’t miss them much.