The Wealthy Witch of Wall Street: Past and Present Penny-Pinching

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The Wealthy Witch of Wall Street: Past and Present Penny-Pinching
Will the public sector be forced to become as "tight-fisted" as Hetty Green?

By Bob Stokes
Fri, 28 Oct 2011 16:30:00 ET

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You don't know about "tight-fisted" until you know about Hetty Green. She was the richest woman in the country around the turn of the last century.

A lady with a shrewd reputation, Green was often seen walking around lower Manhattan in the same old black dress. Thus her nickname, "The Witch of Wall Steet."

Stories of her frugality are legendary: she traveled in an old carriage, bought broken cookies in bulk because they were less expensive, and reportedly spent half a night looking for a lost two cent stamp.

But the most extreme example of her pathological stinginess relates to her son. Read this excerpt from a 2004 Forbes article about Green:

"Her peers had mansions on Fifth Avenue; she lived in rented flats in Hoboken and Brooklyn. For lunch she ate oatmeal warmed over the radiator in her office. When her son, Ned, injured his leg sledding, Hetty economized on treatment. The leg later was cut off."

The same article says that when she died in 1916, Green was worth $1.7 billion in today's dollars.

Most of us wouldn't take penny-pinching to her extreme even in tough economic times. Yet many households in recent years have needed to cut back. And now a new frugality may be emerging even in the free-spending public sector:

"Social mood is propelling the emergence of a new conservatism with respect to government spending...To get its candidates elected last year, the Republican Party had to release a Pledge to America, one element of which is to 'cancel all future TARP payments.' As a result, the 2010 midterm elections 'effectively blocked [President Obama] from adding any stimulus spending.' (Atlanta Journal-Constitution 11/8)...Municipalities are cutting spending in response to unbalanced budgets...A liberal U.S. President has just suggested a cut in Social Security spending."

Elliott Wave Theorist, July 2011

In that same issue, Robert Prechter also mentions that even the Fed has become more conservative. And in the latest Theorist, he writes:

"On September 21, 2011, despite worry that the economic recovery is faltering, the Fed declined to announce additional quantitative easing...

"On October 11, 2011 President Obama’s half-a-trillion-dollar 'jobs bill' got blocked in the Senate. Until now, Congressional spending for expensive boondoggles was as common as fleas...Now, it seems, such programs have become somewhat unpalatable.

"These are momentous events. How did they happen?"

Prechter goes on to say that Fed Chairman Ben Bernanke will be unable to fulfill a famous promise he made nine years ago.

Is the "new public sector frugality" and sudden Federal Reserve conservatism part of a larger deflationary trend?

Read the recently published October Elliott Wave Theorist and find out why Prechter said, "The U.S. Federal Reserve is under more pressure than at any point in three decades..." You can start reading our flagship Financial Forecast Service risk-free in moments as you follow this link>>

Tags: Ben Bernanke, Robert Prechter, central banks, deflation, history, monetary policy, stimulus package, Troubled Asset Relief Program (TARP), U.S. Federal Reserve (the Fed), Wall Street

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