
Fasten your seatbelts…this is going to be a rocky ride and one many of us will not enjoy.
The unfolding economic picture is anything but pretty. We are staring down the barrel of inflation of anything solid and deflation of everything paper.
The bills are arriving to an unprepared public for years of poor policy decisions by public servants and central bankers. These bills are long overdue, actually. For thirty years our public servants have created and legislated the belief that you can have ?something for nothing.” This is a completely erroneous concept. Nature says you cannot consume more than you produce. To do so will result in your demise. The ?something for nothing? belief is now fully indoctrinated in most industrialized nations and is a core belief of those in charge and the people who elect them.
The public has been taught that they can believe in the tooth fairy and Santa Claus…that they can get something for nothing…and that the government will solve problems by simply writing a law and/or changing the laws of nature. In battles between nature and man you can only count on one thing: Nature will prevail.
It’s time to pay the piper
Inflation is a fact and the policies needed to address it are not being considered. Therefore, it is going to skyrocket. This will in turn create a wave of panicked policy responses by unwise public servants who are being counseled by economists who are ignorant of reality.
I’ve touched on the hot issue of biofuels before. They are at the root of the world famine we are now seeing the beginnings of. Biofuels are causing this crazy food inflation. The government has no intention of rescinding the subsidies and mandates that are currently in place. Shortages of wheat are now easing slightly but corn, rice and soybeans are going up at an alarming rate.
Municipal bankruptcies are just beginning. The city of Birmingham Alabama is teetering on the brink of bankruptcy. Expect some federal government bailouts here. You should also expect various taxes to rise sharply. Chicago just raised their sales tax to 10.5% and this is the highest municipal sales taxes in the nation.
So, to sum up:
Incomes are nose-diving from purchasing power losses across the board — individual, corporate, state, municipal and federal. Massive bailouts of states and municipalities will start to occur over the next year. Your taxes will go up to pay for these extravagant spending commitments. Also expect more bailouts of banks, brokers, and homeowners.
This all signals one thing: More credit creation to rescue irresponsible people from their own risky behavior. Everybody is going to be the victim and no one wants to take the responsibility. Responsibility is for those who live their lives without getting into these situations and who are going to have to ultimately pay for those that do. This is where these lovely entitlement mentalities bring us. Here we are back to the ?something for nothing? mentality.
So, shortages of just about everything are ahead for us. Combine this with incremental demand growth around the world, decreasing supply of everything, and increasing gluts of paper fiat currencies looking for safety from the printing press.
Time to start putting aside whatever you can afford in nonperishables and buckle up. Alas, most Americans seem sound asleep and it’s likely that the wake-up alarm is going to be a rude one. This is not going to be pretty.