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Page added on January 26, 2017
Are You Ready For An Inflationary Depression?
We are heading into a new depression. It is not coming. It is already here but we are only in the beginning so it may not be easy for many people to see just yet. Once it is easy to see it will be too late for any meaningful actions to mitigate the effects. Just as you must prepare for a tornado ahead of time, you must prepare for economic conditions early.
We have 20 trillion in debt, over 200 trillion in unfunded liabilities and over a quadrillion in derivatives held by the banks. Our GDP is only about 17 trillion a year and world GDP is only about 60 trillion. It does not take a math wiz to realize that even if we are not paying any interest at all on this massive debt, there is no way to ever pay it all back short of some type of default.
That is what depressions do. They wipe out all of the misallocation of resources and bad debt and provide a reset for the economy. These resets can be relatively easy or they can be very destructive depending on the amount of misallocation that is present in the system. The amount of debt, brought on by decades of unrestricted credit creation, is the largest in history. That means we are in for a very bad ride in the near future.
Much of the money that people think they have is really only made up of digits in some computer somewhere. The banking industry has already taken this money for its own use. To eliminate the need to ever give it back to the rightful owners they must destroy these digits. That is what the new bail-ins are all about. They can at some point just wipe all of those digits out of existence and say tough luck suckers.
The depression of the 1930’s was a deflationary one in nature. People lost their jobs, prices fell and cash was king. People holding bonds did very well. In an inflationary depression, prices rise, people will get paid in increasingly worthless paper and bonds will collapse. Banks will enact bail-ins to stay solvent and people will go broke while holding piles of cash.
In the end the inflationary depression will end with the currency collapsing and people losing everything they have that is not fully owned. Eventually we will see deflation as prices fall due to the destruction of the monetary system. At this point most people will be financially devastated. Those that make it to this point with their wealth in tact will be the new wealthy class.
So how can a person survive something like this? You simply need to focus on the needs of your family over this period of time. If you can provide the needs of your family regardless of the prices at the time, you will make it through the worst of times, This means you need a plan to provide these items to your family whether prices are rising or falling. If you have a years supply of food, it does not matter what the current price is, you will have the means to feed them.
If your home is paid for, your car is paid for and you have a supply of energy or a way to produce it yourself, it will not matter to you how fast prices are changing or how much money you bring home every week. You will be able to live outside of the rapidly changing economy. The rapid changes that will destroy others will only provide you a glancing blow.
Those that survive on credit will be devastated as their access to credit is cut off and they become unable to continue making payments on their possessions. They will be devastated even if they still have a paying job. For those that expect to survive on their savings and pensions, they will find those accounts empty following any bail-ins.
Where you live will also play a major role in how well you survive the depression. What do you think will happen when those dependent multi generational families lose their welfare and food stamps following the breakdown of the credit system and prices rise faster than benefits? The ability to produce some items yourself will also depend on your location and the ability to stay safe.
The whole of the production and distribution system depends on 30 day credit. When the credit system ceases to function, goods will stop being produced and transported. This will lead to high prices and few goods to buy. So even if you have a bag full of money you may not be able to buy what you want at some point.
Just like a tornado that tears through a community, a depression can leave the people without the resources they need unless they have them hidden away safely for future use following the event. This is why having resources, real physical goods, put away now will allow you to thrive when the system fails. When the system resets, you will not get a second chance to do it right. You only have one shot and that requires you to finalize your preparations now while you still can make a difference.
The whole point of preparing for this type of upheaval is to maintain a standard of living that you find acceptable. Lack of preparation in this type of event will likely find you living much poorer than you would like. If you are successful in maintaining your standard of living and preserving your wealth throughout this event you will have won the battle and set yourself up for a better future when things stabilize.
8 Comments on "Are You Ready For An Inflationary Depression?"
Hello on Thu, 26th Jan 2017 6:40 am
Nothing goes on forever, everybody should know that.
But the question that really matters is, for how long will it still go on?
Davy on Thu, 26th Jan 2017 7:33 am
Clog, maybe your Euroland is not the bowl of cherries you are so convinced of. Maybe instead of being so sure that the US is coming apart maybe you should look in the mirror.lol.
“Trump’s Expected Ambassador To EU Says “Short The Euro, Collapse May Come In 12 To 18 Months”
http://tinyurl.com/hglal7r
Cloggie on Thu, 26th Jan 2017 7:40 am
Ted Malloch who?
The main difference between you and me is the different valuation of economic depressions or financial collapse. These events are bad news for the public, but the relevance for the geopolitical standing is minute.
America went through a severe depression during the entire thirties, yet five years later they were on top of the world.
Germany had an even worse time between 1918-1933, yet in 1942 they had overrun most of Europe and a large part of European Russia.
Crisis in general have a mobilizing effect and nothing is more effective in getting rid of the old European guard of Washington vassals that a solid financial crisis.
Bring it on.
Davy on Thu, 26th Jan 2017 8:17 am
“The main difference between you and me is the different valuation of economic depressions or financial collapse. These events are bad news for the public, but the relevance for the geopolitical standing is minute.”
The difference between you and me is you treat the economy as more or less a constant. You see an economic cycle that will remain within historic ranges that you have been habituated to. This constant and reasonably stable cycle will be for the foreseeable future ensuring that all your macro dreams see reality. Anyone who would consider economic instability as minute “relevance” in relation to the current complex and interconnected geopolitical reality has his outcome already determined.
I am not sure where things are going other than not the status quo. My point has been that an economy ending event and or process is quite possible and increasingly likely. This may or may not be a “classic collapse”. I believe the range of outcomes are large but minutely relevant is not one of them.LOL.
Cloggie on Thu, 26th Jan 2017 8:31 am
I believe the range of outcomes are large but minutely relevant is not one of them.LOL.
Gave you real life examples of USA-1945 and Germany-1939, but you ignore them.
A financial collapse, Greece write large, with very large parties (banks, governments) defaulting is likely, I prepare for that event (not peak oil any more). The Big Reset.
http://www.thebigresetblog.com/
http://usawatchdog.com/
The list is endless.
Davy on Thu, 26th Jan 2017 8:43 am
Clog, you are giving me adapted embellished history. You have a difficult time leaving the 20th century and acknowledging we are now in a different normal. It is not even a new normal that was 08. We now have in addition a Trump card in all this. I don’t think you understand what a “BIG Reset” means at all. It apparently means what you want it to mean and that is something manageable for you and your dreams. I am saying you have no choice but to entertain much worse than has occurred or you are willing to accept. I am hopeful our coming decline is reasonable to fit a manageable decline per economic history. Life could give a shit about what is manageable and reasonable for humans. You care and I care but life could give a shit. I think it is just part of the techno optimism that once you let go a little your positions fall apart. You have to remain confident that the global economy or an adapted one will survive so you and your dreams survive.
GregT on Thu, 26th Jan 2017 11:00 am
“America went through a severe depression during the entire thirties, yet five years later they were on top of the world.”
If anybody should have a solid understanding as to the cause of that depression, and the outcome, it should be you cloggie.
joe on Thu, 26th Jan 2017 2:09 pm
I just watched a Palestinian man outline the likely outcome if Trump moves the US embassy from Tel Aviv to Jerusalem. He asked the Israeli Ambassador what Netanyahu will do with Palestinians in a one state solution, and muslims demand full and equal rights with Jews, ie sharing of money and resources etc. Clog and others think Trump is trying to relive the 80s. Regan never considered the extreme moves of the Trump admin. The British are fast tracking article 50. Once the UK stops footing the bill for the EU and
Ireland /Romania has to make up the difference then its curtains for the Euro. The only alternative is a full EU constitution and referendums all over Europe. Turkey is litterally going rogue and NATO is poised to be made useless not by Trump but by Brussels dreams of an EU army. They wont even shore up the Mediterranean sea, yet Europeans (now minorities in much of Europe) are asked to believe Donald Tusk will keep them safe from ISIS.
Europeans see with their eyes as their countries Orientalise and hijabs are common even in the smallest villages now. Thats not normal affairs. This has happened because the political classes have been asleep and had it easy. Hard tough choices have not been taken. If Cloggie was a real European and a true defender of European people he would recognise that there is no European people, that there is Poles and Germans and French and Dutch and Spanish and Greek and Gypsies and Romanians and Albanians and Serbs and Croats. Trying to create some mono culture and also graft a muslim large minority with Oriental outlook is a dangerous idea and using muslims as a cats paw to cow the nationalists has caused exactly the opposite of what they thought. Prussia built Germany by the isolate/crisis/solution policies of blood and iron. That worked on Germans because Germans however disperate, were Germans. All the EU has really achieved is dominance of German industry via the Euro acting as a barrier to competition from other EU nations and the mass migration of every useless lazy person from Kandahar to Timbuktu (LITERALLY) coming to Europe working illegally and registering as a ‘student’ for the next 20 years untill they get residency due to years of living and spawing another generation of useless people. Its a situation way worse than Mexicans and a scandal far beyond anything Americans would ever put up with. Cloggie has lots of information but little wisdom.