You hear about the Dollar losing value all the time. It’s depressing I know, but what are we actually talking about in terms of a decline? We need a sense of proportion to make the effects of this insane Federal Reserve Devaluation of the Dollar policy come alive for us.
In the last year the Dollar has slipped 7.7% against the Euro
In the last year the Dollar has slipped 5.9% against the Japanese Yen
In the past year Oil Prices have doubled
In the past year Gold is up 44%
If you got a Certificate of Deposit for one year for $10,000, here in Pennsylvania, you would get an interest rate around 3.27%
Milk Prices up 26%
Egg prices up 40%
Pasta prices up 30%
Fruits and Vegetables up 20%
Wait about 6 months and see what happens to the price of EVERYTHING as this tidal wave of inflation works its way through the economy in earnest. People will not be spending on anything but the essentials and that means unemployment will be spiking soon as employers cut back on labor costs, as their orders shrink. Rising unemployment coupled with sharply rising prices for commodities and a currency that has already lost about 8% against the Euro this year. This is going to be a disaster for our country and its going to change who we are and its going to increasingly destabilize a very dangerous world.
Even if you save money in the bank, you know, where it’s safe, you might get 3.27% interest. Compare that with our currency being devalued by 8% per year compared to the Euro and the doubling of oil costs and the increases in food costs. How much of a raise do you think you will need from the boss to break even in this economic environment? Do you think you have a chance of getting such a raise even if you worked up the courage to ask for it? Is the boss saying that people are just lucky to have a job yet? He will.
As our beloved Federal Reserve has done a hatchet job on the world’s reserve currency, ours, more and more people are concluding that you just don’t want to be in the dollar anymore. The place to invest in is China; and the currency to be vested in is the Euro. Our monetary policy has become such a fiasco that investors are saying that commodities are less of a risk then the United States Dollar. What’s wrong with this picture? Even if you did it all right and saved a nice chunk for yourself you are seeing it lose value, big time, in the face of skyrocketing necessities such as gas, heating oil and food. Check out this link: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLr71mSZqOLI#
Now the credit card companies are beginning to roll back the spending limits of people’s credit cards and not allowing the balance transfers that once they did. You can’t blame them really because they just don’t want to lend money to anyone in an economy like this. Who can blame them? All this time charging 19% on outstanding balances and having the responsible people pay that so they can fleece the irresponsible and now they are suddenly shy about letting anyone and his dog have a platinum card with an outrageous credit limit. Check out this link on how your credit score may be dropping without your knowledge: URL: http://www.msnbc.msn.com/id/25419005/
Given the decline in Real Estate the banks are becoming increasingly reluctant to make home equity loans for people who want to go that way. This is probably a good thing in terms of basic financial discipline for the typical homeowner but so many people are addicted to being able to tap that vanishing equity to put out fires in their personal finances. Overnight that option may simply dry up and blow away if this economy continues to deteriorate.
How long is this going to go on? In this time of craziness and with everyone tightening their belts is it possible to not have another crisis in the financial industry? Oil is going through the roof and there is no end in sight. What will our economy look like with $7.00 a gallon gas? Remember, oil and the dollar have this weird relationship: as the dollar drops the oil prices go up and if it goes on long enough there may be no stopping it. Think of it as a sort of economic “China Syndrome” that will destroy the dollar if allowed to melt down like this.
This is a grim time. This is a time to reorder your priorities in advance of the coming economic tsunami that will redefine life in America for generations if not forever. We are about to go through the ringer. It’s just not possible to avoid that conclusion if you honestly face the facts of the economy today. It’s time to save your money, get out of debt, and prepare for all the mistakes our government will be making in the years to come; cloaked in nonsense about “helping” us. This whole mess started with the mortgage crisis and the rising foreclosure rate, what do you think our present circumstances to say nothing of the economic times in 6 months are going to do to the mortgage default rate?
Just like the people in the 1930’s we may see our economy go into the toilet for a long time. Our great grand parents discovered that they still had God, their families, each other. They still had the will to make it better, and they did. May the same be said of us. As Franklin Roosevelt said in the depression; “Our problems are limited, thank God, to only material things.” This is the attitude to cultivate today because the times are going to be abruptly tougher, in the years to come, than at any time since the great depression. It may well top the depression as the worst economic event to engulf our country. It’s going to take everything we’ve got to fix it, folks, but for the sake of future generations we need to get our house in order, come what may.
6 Of what use is money in the hand of a fool,
since he has no desire to get wisdom?