The Debt and Quantitative Easing

Posted by Nathan Jefferson
Jul 16 2013

The Problem:

If you haven’t heard, our national debt (for those readers in the US) is stuck at $16,699,396,000,000.00. It has been sitting at that level for almost 60 days now. No we didn’t stop borrowing money, we have borrowed many billions of additional dollars over this period but the treasury is playing different games and books are being cooked. Pretty soon the game will be up, although it might be weeks, months or even years. I, like many others, never thought the game could go on as long as it already has – so who knows how much longer they can keep it going.

How does this and the ever foretold, but never carried out, end of quantitative easing affect the average person? Negatively.

The financial problems we face are going to be a problem for everyone, except maybe the top 1% of the top 1%. They are connected and get knowledge prior to everyone else. So they get to profit by front running everyone else, making money off of(read: stealing) everyone elses losses.  But I digress…

How will it affect the average person? Rise in interest rates? Inflation? Deflation? Recession? D-d-depression? The answer is simple; yes.

Will we see hyperinflation? I doubt it, as do most economists. Even the vast majority of doom and gloom – perma bear economist don’t see hyperinflation. Though high inflation or stagflation just might be part of the plan.

But no one (except for that .01% who are changing the rules of the game) will know for sure when and how it will play out.

 

The solution:

Get out of debt. Interest rates will rise even more, but don’t buy into the ‘buy now when rates are low’ pitch. There is too much pressure on prices when rates go up; so prices come down. Think about it: when most people buy a house or a car, do they look at the cost or the monthly payment?  (answer: people have been conditioned to look at the payment!)

You also don’t know if you will have enough to make your already necessary payments. Or if you’ll have a job. Or if you’ll be able to afford gas to get to work. Or. Or. Or.

Get out of debt, it makes you more flexible in your future decision making. And don’t try to bet on hyperinflation. That is something you shouldn’t want to happen, and even if it does you won’t really be able to pay off your mortgage for ‘next to nothing’ because you will need that cool $10 mill to buy gas, or pay the tax man! (You really think that if you were to benefit from hyperinflation the IRS wouldn’t come and tag you for some huge assessment? Just Google IRS scandal, and that is in relatively normal times!)

If you need help I highly suggest Dave Ramsey’s book!

Next, work towards self sufficiency and save as much as you can. Grow a garden, start an orchard, cut any non-necessary services and expenses (lawn mowing? House cleaning? Smoking/drinking? Car wash? Anything you can live without…). The less you are paying for or depending on others for the better. Our supply chain is too stretched and fragile, you won’t have much warning when random things become hard or even impossible to find. (although I just read Twinkies are back on the shelf…)

Lastly, get in shape, get healthy. Our healthcare system is a huge behemoth and is already about to topple and I believe it will be one of the first casualties in the next wave down. Lose weight, exercise, eat right. If you are on daily medications do everything in your power to limit your need. Almost all ailments can be reduced if you get into good shape. From diabetes to blood pressure to depression, eating right and exercising can help dramatically.

There are a million other things you can do, but these three are the most important. Heck everyone should be working towards these three anyway!

One Response

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