Episode-1732- What Would The End of Inflation Look Like
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I want to start out by saying I am not saying this is going to happen. I am just proposing that it could and it is interesting to take a look at the half sister of inflation from time to time. See the reality is most people especially preppers fear inflation to such a degree they don’t tend to comprehend two things.
One – Controlled inflation is absolutely essential to the economy we have, based on current management practices. – Note that necessary does not mean “good”.
Two – That a deflationary economy is not “good” just because you feel that inflation or to much inflation is “bad”.
Our current society has been programmed just like a computer to think in binary terms. Ones and Zeros are the only inputs and outcomes. If Democrats are bad, republicans must be good. If you don’t like coke you must like Pepsi. If you are not religious you must be an atheist. If you don’t want a war you must be unpatriotic.
As you can begin to see with any level of critical thinking, this system is very useful to those in charge. With such programming in place people are easily stratified into two camps of the false dichotomy. The reasons for this are clear enough.
Yet it is important to comprehend that even those of use who now see the matrix, are often still controlled by residual effects of it. This is often the case when the majority of the dichotomy has what congress calls a “bipartisan agreement” that something is in fact bad. You see while the left and right wings of the dichotomy vulture are divided on most issues, the wings do meet at the back.
Almost everyone agrees for instance that the world is round, terrorism is bad, freedom is better than slavery, just to name a few. Another one is inflation, almost everyone with half a brain agrees that too much inflation is bad, because well it is.
When a society has been so perfectly trained to see only ones and zeroes and the vast majority finally agree on something, the other side tends not to be examined, today we are going however to do just that.
Join Me Today To Discuss…
- Why it could happen
- The shear current volume of money and debt
- Level to negative population growth in the developed world
- Expansion of what we call “the developed world”
- The irony that growth outside of “the developed world” doesn’t matter
- The coming labor demand reductions
- A return by many to common sense, saving and lasting value
- The success of deflationary currencies, like Bitcoin
- The good of deflation
- It rewards savers
- Deflation favors productive individuals
- Deflation lowers the entry level of major purchases
- Deflation favors local trade and community interaction
- Deflation is an anti monopoly system
- Deflation basically pays you interest to simply hold money
- The bad of deflation
- Immediate loss of jobs, specifically necessary ones
- Investors leveraging debt loose – don’t cheer, most companies run on debt
- The ability to borrow money declines and the cost goes up
- Innovation can be stifled especially if it isn’t planned deflation
- The elephant in the room, unfunded liabilities, like SSI
- Our economy is simply not designed to run on deflation
- The final reality
- This is a more likely scenario then run away inflation
- It is harder to fight than inflation, because it is about real production
- Every person in debt will suffer greatly in a deflation economy
- In the end it is an opportunity to take power from the elites
- Sadly the average person won’t be able to comprehend it
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“Every person in debt will suffer greatly in a deflation economy”
Yep. and since most (I would say 75-85+%) of people in the west are in lots of debt this is the most important point of your talk today Jack.
The terrible consecuence from deflation when a large portion of the population is servicing dept with a government check (deserved or not is inconsequential) that is likely to be reduced or discontinued (think food stamps and other aid) will result in violence.
From Nicole Foss of The Automatic Earth – yes, the same Mrs. Foss interviewed by Jack.
Not to mention the Consumer Price Index lie where it isn’t going up (or the earned Soc Sec, Military retirements and VA Compensation) because inflation happens except when inconvenient for the Govt.
@Jack – I just wanted to say this episode was excellent. You talked about a number of side effects to deflation that I have never considered. Thanks man!
Great episode. I’m 39 years old and just got out of debt (all but my mortgage). Ready to start saving big time for retirement. But where do you go to get a return without risk of losing half of your money? This seems like a shitty time to be a small-time, dollar-cost-averaging type of investor. With what I’ve learned over the past few years about the risks to our economy, just blindly putting money into mutual funds every month doesn’t seem like the way to go.
After listening to this I had a true epiphany. I am a cpa with lots of older clients who saved all their lives and planned to retire on the investment return. They have been going nuts trying to find YIELD, buying stuff that is almost guaranteed to give them loss of principal.
I now tell them to leave some of it in the bank and not worry about the interest rate so much. That money is increasing in value every year as deflation occurs! The true return on their savings is much greater than the stated interest rate!
Great episode, I never thought hyper-inflation was possible cause our current inflation model was caused by debt purchases not cash purchases and when borrowing is restricted due to more stringent loan standards and poor income levels, mild to hyperinflation would be near impossible.
As far as resetting our currency values, why not look at a more global picture. With the Yen, Yuan, Euro, and Ruble all losing confidence, all the global elite have to do is to is to devalue to the american dollar, lose it’s currency of choice status and create a global currency for the good of all, as suggested by them. I’m sure the IMF and SDR’s would be willing to oblige.
Remember, they take baby steps and before ya know it, you’re that frog in the pot.
This probably the most important podcast you’ve ever done Jack. Thanks.
I’ll go further and say 99% we are headed for a deflationary depression. Get out of ALL debt now folks IMO.
To restate something:
w/ Inflation – Time
Things bought outright become MORE expensive over time (food, clothing..)
Things bought with credit (housing) become LESS expensive over time
w/ Deflation – Time
Things bought outright become LESS expensive over time
Things bought with credit become MORE expensive over time (So a house is ‘less expensive’ when you buy it, but the payments become BIGGER relative to income, over time)
‘expensive’ is ‘relative to income’
Jack may have mentioned this, but wages will FALL in a deflationary economy. IME wages never rise as fast as inflation and I’d speculate they’ll fall FASTER than overall price deflation.
Take a look at ‘The Seneca Cliff’ for more info on this.
There’s kind of a simple explanation for this: companies can control what they pay their employees, but they can’t control what the market will pay for their product.
The ‘What To Do’ portion of this is the same regardless of the future we end up in:
0 – Make a ton of $ NOW (unless we get another inflationary boom, its easier to make money TODAY than it will be in the future)
1 – Get rid of debt NOW
2 – Save a crap load of money NOW
For those of you wanting to buy property, there is going to be a TON available as the boomers start selling off their stuff to downsize/retire. At bargain prices, as too many of them try to sell at the same time and/or die (in my area at least, heirs have houses on the market the day after the will is read).
But IMO (REALLY IMO) you’re going to be better off being able to buy something outright.
Guessing here, but I tend to believe the future will be MORE chaotic than the present. More chaos = more risk = higher interest rates = higher hurdles for borrowing.