Why Your Grandparents' Money Advice No Longer Works

"The best time to plant a tree was 20 years ago. The second best time is now." - Chinese Proverb

A Familiar Story 

I was born in 1975. Let's pretend my grandparents put $10,000 into an envelope for me to open on my 50th birthday, which is next month. That would have been incredibly thoughtful—and maybe I would frame those bills as a tribute to them and their generosity. However, if that cash just sat in a safe, untouched, it would only buy today what about $1,700 could have purchased in 1975. To match the purchasing power of $10,000 in 1975, you'd need roughly $60,000 now. What happened?!?

My grandparents were shaped by the Great Depression and embodied thrift and careful saving. They taught me those habits, but never could have imagined that diligent saving alone wouldn't suffice to build financial security. Their money would quietly erode—not through a market crash or theft, but via a subtle force tied to our culture's obsession with the now.

When governments prioritizes "now" over "later," central banks enable their actions by creating money without restraint. The result is monetary inflation which ultimately punishes savers and rewards debtors. This explains why your parents bought homes on one income while dual-earner families today struggle, and why traditional saving no longer preserves wealth. 

Understanding this empowers you to navigate this new reality, giving you a better chance of protecting your legacy.

What This Is Really About: Connecting Personal Habits to Economic Forces

You'll recall from the earlier articles that time preference is simply how much we value something today versus tomorrow. High time preference is impulsive—grabbing the quick win, like a fast-food dinner on the go. Low time preference is patient, like my wife investing two days in sourdough bread for great flavor, health, and family ritual.

But this principle is so much bigger than food or personal spending habits. Time preference goes to the very heart of our monetary policy. We now have a system that rewards high time preference. 

For millennia, money like gold embodied low time preference. Gold is what is considered hard money. Gold is scarce, hard to produce, and preserves value over time. Saving a gold coin allowed a family to store the value of their labor until a time in the future when they wanted or needed to exchange that value for something else. The unique characteristics of hard money, like gold, allowed people to align saving with success.

The Turning Point: A Weekend That Rewrote the Rules

On a weekend in August 1971 at Camp David, President Nixon gathered his advisors in secrecy to confront a brewing crisis. The Vietnam War coupled with trade imbalances had strained the system, leading other nations to question whether the U.S. could back its dollars with gold reserves under the 1944 Bretton Woods agreement. In what some consider to be a devastating monetary policy error, Nixon announced the end of dollar-gold convertibility — a "temporary" fix that became permanent, unleashing fiat money without limits. This is peak high time preference decision making.

The fallout was swift and profound. By 1980, inflation had skyrocketed to 14%. When the U.S. severed our money’s connection to gold and began printing new dollars, we began watering down the value of existing dollars — and since that consequential decision the money printing has only increased. This is monetary inflation, and while some would argue otherwise, it is the true source of all inflation. When a government can print money at will, everything becomes more expensive, not because goods and services have become more valuable, but because there are more dollars in the system, making each one worth less.

 Consider how this affects the average person. If the money you save is being devalued continuously, what incentive do you have to save? Rather, this system incentivizes borrowing money to buy something now and paying it back over time with dollars that continue to become worth less and less. 

A Recent Example

We’ve recently seen this ‘watering down’ of our dollars play out in possibly the most extreme example in history. From March 4, 2020, through March 3, 2021, post-COVID stimulus efforts resulted in the Federal Reserve increasing its assets from $4.2 trillion to $7.6 trillion, an incredible one-year jump of $3.3 trillion (or 78%). This represents the most dramatic expansion in Federal Reserve history. 

By mid-year 2020, purchases were moved to a steady pace of $80 billion per month in Treasury securities and $40 billion per month of agency Mortgage Backed Securities to provide additional policy accommodation. This means the Fed was creating approximately $120 billion in new money each month through asset purchases alone. 

To put it clearly, the Federal Reserve was buying assets from banks and other financial institutions. They do this by ‘creating’ digital dollars out of thin air. That’s why dollars are now considered easy money — they're easy to produce. The banks receive the new dollars which they can then use to lend to individuals, families, small businesses and large corporations. Once these loans are complete the money then enters the economy in the form of purchases made with those loans. Cars and houses are bought. Remodeling jobs are undertaken. Businesses buy new goods and offer new services. More inventory is purchased. Research and development is funded. The uses of the cash generated by the loans is endless, but the point is that previously nonexistent money has moved from the Federal Reserve into the existing money supply, thereby increasing the supply of dollars in circulation — and in this case, dramatically. 

This money supply expansion was unprecedented. There was a 26.9% rate of year-over-year growth in the dollar supply in February 2021 which easily exceeds the rates of growth during either the quantitative easing programs of 2008-15 or the inflation of the 1970s and 1980s. This $5 trillion in COVID relief effort increased the money supply by 27% and did so very quickly.

As of March 2021, COVID costs totaled $5.2 trillion. When all was said and done, money printing totaled $13 trillion: $5.2 for COVID + $4.5 for quantitative easing + $3 for infrastructure. 

To put this in perspective, while Nixon's 1971 decision removed the gold standard's constraints on money creation, the COVID response demonstrated just how dramatically those constraints had been eliminated. In a single year, the Federal Reserve expanded its balance sheet by 78%—creating more new money than had been created in the entire previous decade combined.

Can you guess what happened next? Inflation peaked at a staggering 9.1% in June 2022 amid post-COVID stimulus—a classic high time preference "fix" for immediate economic pain. While it's cooled to about 2.4% as of May 2025, the damage lingers. 

Today, governments print money to fund deficits and spur growth with regularity, but there is a sinister aspect to this which I alluded to earlier — money printing, quantitative easing, bailouts, and interest rate manipulation distorts incentives. By that I mean, more and more businesses are compelled to chase short-term profits over long-term innovation. For example, they may cut R&D to boost quarterly earnings, effectively robbing from their own future for the sake of now. Many families do the same, borrowing today for tomorrow’s unsustainable lifestyle. Individuals feel pressured to spend rather than save because they almost intuitively know their cash will buy less tomorrow.

This is what high time preference monetary policy looks like, and these are its affects. In order to tame the price increases caused by monetary inflation the Fed must act on the economy once again. Beginning in March 2022, the Federal Reserve hiked interest rates at the fastest pace in over 40 years, as inflation surged to the highest since the 1980s. The rapid timeline reveals another of the Federal Reserve's miscalculations. Inflation exceeded the Fed’s 2% target for 12 months before they began to raise rates. Initially, the Fed believed inflation was “transitory," meaning short-lived, a word you may remember from that era. And now, nearly 3.5 years later we still have elevated interest rates, and are only recently seeing inflation come under control.

But the damage is done. Its important to realize that getting inflation under control does not mean prices are coming down. Rather it means they are not going up as quickly as they were previously. We know experientially that groceries are far more expensive now than just three years ago. Today the housing market has stalled as mortgage rates are too high to make sense for many who wish to buy or sell. Vehicle purchases have slowed. The price of dining out has increased at every level from fast food to fine dining. And all of this can be traced back to that private meeting over a seemingly ordinary weekend in August of 1971. 

This high time preference system creates a deceptive illusion of progress. Wages might inch up 3-4% annually, but when housing, education, or groceries surge 6-8%, families are left treading water—or worse, falling behind.

Reclaiming the Long View

Yet here's the hope: Awareness is your first defense. A low time preference lifestyle is a mindset that counters this system. By valuing tomorrow, you can make choices that preserve and grow what matters, fostering the discipline that can build lasting wealth and family bonds.

At Sequoia Advisor Group, we strive guide clients to see time differently, aligning resources with enduring goals. Start small: Reflect on one area where "now" might be costing your future—perhaps a spending habit or saving approach—and consider how patience could change it.

The future remains uncertain, but your approach doesn't have to be. Like that $10,000 envelope, true confidence comes from understanding the forces at play and choosing the long game. As the proverb reminds us, the second-best time to plant a tree is now. If this resonates, share it with a loved one and ask: "What's one shift we could make today for tomorrow's harvest?" Reach out—let's chat about how these insights fit your story. In our next piece, we'll explore building resilience in uncertain times.