Bad economy? Remember the Revolutionary War?

Worried about our economy? Polls are showing that it's the #1 concern right now, so you're not alone. Of course if you think it's bad now, it's a good thing you weren't around during the Revolutionary War.

I'm no historian, but last week I tackled the voluminous biography of Alexander Hamilton by Ron Chernow. It has been fascinating to learn about the life of this founding father. It has struck me as I read that many of the issues we face today are no different in principle than when the country was formed- state powers, taxation, economy, size of the federal government, etc.

As far as the economy during this period, it was bad and getting worse. The continental congress printed money after the colonies declared independence from Britain, but this currency, known as continentals, was soon worthless. People had to barter for goods and services or continue to use a foreign currency. It didn't help that during the war, Britain counterfeited continentals and ensured the rampant inflation. (more about colonial currency)

The weak central government was completely at the mercy of the states for revenue and had no money to pay the military. This undermined morale and greatly concerned General Washington. After the war ended, the congress narrowly avoided a military uprising by paying the soldiers with land from upstate New York.

Okay, enough of my book report. It just gives us some perspective to understand this piece of history, especially as we consider the current economic situation. In light of this and a good dose of optimism, I tend to think things aren't as bad as reported on the news. Cycles are an inherent part of economies and markets. It's a healthy thing.

Most of the articles I'm reading lately proclaim that the local real estate market isn't getting worse, it's just smaller. Much of the research shows that while there are, in fact, fewer homes selling, the values have continued to appreciate.

It's important to understand the market but yet not be paralyzed with fear. Otherwise, like Alexander Hamilton, you may miss out on purchasing some bargain real estate in Manhattan. :)

-Peter

www.NashvilleCityHomes.com