Perhaps you have been too busy being concerned with the ongoing inflation problem here in the USA (hopefully you didn’t really believe Biden when he said it was temporary almost two years ago) and haven’t noticed the financial and government meltdown going on across the pond in the UK.
Financial experts have been warning us that we are headed for a serious problem for many years (at least as far back as the financial disaster of 2008). Many people may not be paying attention to these issues as they are busy with their own lives and quite used to a cycle of booms and busts. I’m sure many of us are used to careers where we continue to advance and earn more over time. We may not really have any concerns until we start to look at retirement when we won’t have an ongoing (and growing) income.
From my perspective, the world financial troubles are finally coming to bite individuals (in the arse) and cause us pain. If a bit of high inflation was all there was to be concerned about then we could probably blow this off again. After all, so far, inflation isn’t really any worse than it was back in the early 1980s.
Experts have been misleading a huge portion of the population by phrasing the cause of inflation as being rising prices or as a bank CEO recently stated “people have too much money so they are spending it – simple supply and demand”. The idea that we have too much demand (money) and thus businesses are raising prices in response is very misleading. As well as blaming all the problems on the war in the Ukraine is misleading. Smokescreens and gross incompetence!
Is the titanic actually about to hit the iceberg?
Photo from RawPixel.com
My advice is to not listen to the people currently in power. The current central bankers aren’t likely to give you a straight answer. So we look to people like former governor of the Bank of England, Lord Mervyn King, who said “(in) the last couple of years the amount of money in the economy has grown very rapidly and at a pace that was bound to lead to higher inflation.” No poop Sherlock! Perhaps I shouldn’t be so hard on everyone as the misinformation has been overwhelming so some of these fundamental concepts may not be understood by most citizens. Mr. King also stated, “what we need is a government that will actually tell us honestly there is a reduction in our national standard of living… all of us are going to have to share the burden, we can’t just put all of it on our children and grandchildren”. Well we have been putting it on our children, at the very least as far back as August 1971 when Nixon took the USA off the gold standard and the value of the USA dollar became a fictional promise based on the strength of the USA economy.
What nobody bothered to tell you was that Nixon took that step because the USA couldn’t pay it’s bills.
Fast forward a bit and what Mr. King is saying (in polite careful wording) is that what is going to hit us in the next few years will be worse than the disaster of the “Great Financial Crash” of 2008. Mr. King says “there isn’t enough money there among the rich to get it back” (he is talking about higher taxes) and says there will have to be “significantly higher taxes on the average person” and cuts in social services.
Printing more money, like was done in 2009, isn’t an option now. Our problems have been created by the massive printing of money of the past 23 years. The Federal Reserve printed about $3.3 trillion in 2020 alone, about 20% of all the Dollars then in circulation. Printing money is addicting. It’s the easy answer governments turn too as the collapse looms. Put off the problems until tomorrow. Well guess what, tomorrow isn’t very far away now.
Because the USA dollar is the international reserve currency we won’t have the severe problems nations around the world will have before us. But it’s likely the USA dollar won’t remain the international reserve currency for much longer. Then here in the USA we will really feel the problems the other nations will be feeling in the next few months. This is shaping up to be a brutal winter for a lot of the world.
When there are not enough people or things to tax, governments have to borrow; when there are no lenders, cuts must be made.
Okay, that’s a lot of doom and gloom. We’ve had too much doom and gloom already for the past three years. So what should we as individuals do about it? My thoughts are that we need to do a few things:
First we need to adopt a mental attitude that life isn’t going to be as nice as it has been.
Second we have to stop expecting handouts from the government (we need to rescue ourselves, the government isn’t going to rescue us, the government was a major factor in creating this problem).
Grow gardens, we need to supplement the traditional food industry production.
Shift some of your wealth into hard assets like silver and gold that will retain value in times like this.
Watch England. The British Empire has been declining for about a hundred years now. Our time has come. The big question is just how fast and how bad will this be? There will be winners and losers. Try to position yourself to be a winner, or at least not a big loser.