The reason why economists (the ones
you see on mainstream news at least) cannot or do not explain money properly is
because of at least 3 possibilities.
1) They don’t understand the economy
and money mechanics, even if they have a degree in economics. Business schools
these days are a joke (ask any entrepreneur who has gone to one who you know to
be an objective thinker). They teach the “Establishment” version of business
theory that is not applicable to the real world. webcam girls
2) They are using “talking points”
that are approved by the news editorial board and are not allowed to say what
they really think. In mainstream news, if you do not follow government approved
propaganda, you will be restricted from government press conferences or be
placed on a list to be harassed. Ask independent reporters about this one.
3) They assume that you understand
certain keywords that might be second nature to them, but is “greek” to anyone
else.
So here’s the breakdown: The US
government is so deep in debt with so many outstanding “loans” it owes its
creditors, that it knows that time is running out for it to “pay off” said debt
before its largest creditors “cash in” their debt and demand something tangible
like gold, mineral rights, eminent domain, (more) toll roads, etc. The only way
that the US government to do this is by devaluing it’s currency. I know that
you understand that this is going on already, so the following is the meat of
the answer: When there is a limited amount of money in an economy, everything
finds its equilibrium quickly. Some money will be saved and the rest of the
money will float around based on supply and demand. In other words, you pay
what you “believe” that something is worth. You determine this based on how
much money you have and how much you feel is a fair profit for the person
selling something. Usually a fair net profit is 8-15% for most vendors. If you
know that their overhead is not going up, you know that you shouldn’t have to
pay more. But suddenly the prices start rising on everything. Why? In this case
it’s not because of supply and demand. It’s because the Federal Reserve is
printing the market with a currency that is not backed by anything. In other
words, it’s not worth the paper it’s printed on. But they can print as much as
they want. Compare this to gold, silver, and even copper. To dig these things
out of the ground and then convert them to coins is slow and is not inexpensive
to do. So it’s next to impossible to flood the economy with precious metal
coins. Now imagine that there is $10 trillion in the economy spread out around
everyone. What would happen if the Federal Reserve suddenly added $1 trillion
(by having the government spend it)? Suddenly this 10% increase in the total
supply of money makes every $1 in your pocket to be worth 10% less, especially
since all commodities are traded in US Dollars. This is a sneaky way for the US
to default on its debt slowly rather than all at once. The ones hit the hardest
are the poor and the middle classes. It is effectively a “stealth tax” since
the government gets to spend as much as it needs and as soon as it gets it,
while the interest you are receiving in the bank is probably 1% or less for
Dollars. So it’s like you are paying a 9% tax. So what does this mean for the
future? The money printing cannot stop (since there is no possible way for a
positive GDP in the USA for the foreseeable future), and the longer you hold
Dollars, or something with no intrinsic (REAL) value, it will continue to lose
purchasing power and buy less…much faster than it has historically.
So what do you or your relatives do? Tell them
to put their savings in a stable currency like the Swiss Franc. Or tell them to
sell any property over a 3 bedroom and reinvest in smaller places that they can
rent out since nobody will be looking to buy houses, especially as the Baby
Boomers retire, glutting the market will family size homes as they retreat to
their retirement condos. The US housing market is nearing its bottom as far as
price however. It will not go up, but it cannot fall much further than maybe
10-15% due to what I described above. But I know that there are several people
who were waiting to sell their house when prices go back up. WHEN that finally
happens, the value of the money will probably be worth 50% less, meaning that
the $3 that buys 1 gallon (4 liters) of gas now only buys 2 liters of gas one
year from now.So if they are waiting around for things to “get better”, they are making a huge mistake. Several very bad things (especially for the middle class and below) need to happen first before this is possible. This will hit people who are retired the hardest with wage-earners slightly less. If they trade goods and services independently and do not hold an inventory, they will be shielded. If they are going to rent their property to a tenant, make sure that they limit the contract to 6 months so as to adjust it for inflation. Please note that this does not consider capital controls. This is the wild card and it’s too complicated to go into here. I may post a note about it in my profile later. I’ll later add this to my notes as well. If you still have questions privately, just send me a PM and I’ll add to my notes accordingly in general terms since several people have asked me the same question after Bangko Central announced that $2 billion write-down (loss) after having to purchase Dollars to artificially suppress the Peso. That’s good for you in the long term, however, since it means that your Peso savings will be able to buy more.
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