Guest Post by Ron Paul
Bloomberg News recently solicited advice from Argentinians who lived through that country’s high inflation on how Americans should cope with rising inflation. The Argentinians suggested Americans spend their paychecks as fast as possible to avoid future price increases. They also suggested taking out loans that can be paid back later in devalued currency.
These strategies may make sense for individuals. However, encouraging debt and discouraging savings is disastrous for the country. Relying on debt and spending one’s paycheck immediately encourages people to seek instant gratification instead of planning for the future. This depletes both economic and moral capital.
November’s 9.6 percent increase in the producer price index, combined with the consumer price index’s increase to levels not seen since the early 1980s, shows why fears of inflation have become the public’s number one concern. Even the Federal Reserve has acknowledged that inflation is not just “transitory.”
The Fed recently announced it is accelerating the timetable to reduce its monthly purchases of Treasury and mortgage-backed securities. The Fed also announced it is planning three interest rate increases next year. However, the Fed plans to increase rates by no more than one percent. So even if the Fed does follow through on its promise to hike rates, it will do little if anything to combat rising prices. If the Fed allowed interest rates to rise to anything approaching market levels, it would make the federal government’s debt servicing costs unsustainable. This puts tremendous pressure on the Fed to maintain low rates.
The biggest victims of the Federal Reserve’s erosion of the dollar are lower- and middle-class Americans whose paychecks do not keep pace with the Fed-caused price increases. Yet many progressives still cling to the fallacy that average workers somehow benefit from continued dollar devaluation.
Progressives are even pushing the Fed to increase its money printing and regulatory activities to fight climate change and racism. Federal Reserve Chairman Jerome Powell has embraced this “woke” monetary policy. President Biden’s reappointment of Powell and nomination of current Fed board member Lael Brainard (who is seen as more committed to a woke Fed than Powell) for vice chairman suggests the Fed will double down on this toxic mixture of cultural Marxism and so-called modern monetary theory.
Recent polls show Americans expect continued large price increases. This indicates we may be on the verge of what Ludwig von Mises called a “crack-up boom.” A crack-up boom occurs when the general population realizes that constant currency depreciation is a feature, not a bug, of central banking. This leads people to seek alternatives to government-issued currency and to factor rising prices into their plans. The crack-up boom will likely extend overseas as more countries reject the dollar’s world reserve currency status. This rejection will be driven by a combination of concern over America’s growing debt and resentment of America’s hyper-interventionist foreign policy.
Crack-up booms have historically facilitated the growth of authoritarian political movements. However, this is not inevitable. If those of us who know the truth spread the ideas of liberty to enough people, we may be able to move through the crack-up boom to a rebirth of liberty, peace, and prosperity. Steps in this direction include convincing Congress to cut spending, legalize competing currencies, and end the Fed.
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“The Argentinians suggested Americans spend their paychecks as fast as possible to avoid future price increases. They also suggested taking out loans that can be paid back later in devalued currency.”
“Relying on debt and spending one’s paycheck immediately encourages people to seek instant gratification instead of planning for the future.”
I like Ron Paul and even voted for him. To me the above quotes seem inconsistent. As long as your buying items that can be used in the future that IS planning for the future.
What the Argentinians suggest makes a lot of sense and if you look in the past its not only the Argentinians that have done this and came out ahead.
As far as the rest of the article regarding the FR what the FR says and does are always two different realities.
Of course I haven’t even delved into what the parasites of this world have planned which is a whole different animal.
Which part of “first by inflation, then by deflation” do you not understand?
And they won’t ring a bell before the switchover.
Look at Venezuela, Nigeria, Argentina, and tell me where the deflation is. They have been in an inflationary environment for years. We’re experiencing the total destruction of the currency. When it’s over they’ll force us into a digital currency where they control what we can and how much we buy.
You mean because those 3 countries you mention are in total control of their own fiscal policies?
And more in general, you seem to HODL to the belief that the rules won’t be changed midstream [in the US], if it suits TPTB.
Good luck with that stance!
“You mean because those 3 countries you mention are in total control of their own fiscal policies?” Are you saying they are not in control? If not, who is? “to the belief that the rules won’t be changed midstream [in the US], if it suits TPTB.” That’s exactly what I’m saying. I’ll refer you to my first comment about the “parasites.” Typically the argument is since we’re the reserve currency it can’t or won’t happen here. TPTB are concentrating on the total destruction of the USA, including it’s currency. Good luck!
These strategies may make sense for individuals. However, encouraging debt and discouraging savings is disastrous for the country.
Exactly.
I am an individual.
This problem has been percolating my entire life.
It is not my problem.
My well-being is my problem.
Not the well-being of your government.
The Argentinians suggested Americans spend their paychecks as fast as possible to avoid future price increases. They also suggested taking out loans that can be paid back later in devalued currency.
All excess funds after immediate bills are paid are used to purchase PM, fuel and food stock.
What can be purchased on credit, and low interest credit advances with 12 and 18 month horizons are taken as available and used for the same above items.
Worst case scenario is they are paid back with devalued dollars.
Best case is they are not paid back at all; they are unsecured.
“What can be purchased on credit, and low interest credit advances with 12 and 18 month horizons are taken as available and used for the same above items.” That’s exactly what I did. I’m far ahead and have the assets to pay the card off at anytime, if I have to. I’m hoping to roll it over to another low interest loan when the time comes. What’s weird is when I go to pay the minimum payment I get a pop up message from the bank saying my account has been paid off and nothing is due, although I can still see the balance. I’m thinking they are trying to trick me into missing or being late on the payment so the interest reverts from the low rate to the normal rate.
When companies announce that they are raising prices 20 to 25 percent in the new year (which they’re doing) how can it be more obvious.
What’s sweet is the 0% for 18 month offers for a 2% transfer fee.
That’s 2% for 18 months (or 1.3% annualized -ish).
Roll it onto another card if the horizon stretches out.
Pay it down with devalued dollars if not.
But the window is closing based on the offers I’ve been getting.
And if the system collapses, your credit score is the least of your worries.
At that point, formally contest all unsecured charges and make them prove you owe the debt.
That process is currently running almost 3 years out in my jurisdiction. YMMV.
Play the game.
You are absolutely correct in everything you say. My credit score did take a hit (it’s still in the good range though) when I went on my spending spree, Me’h. I couldn’t have said it better myself, “Play the game.”
I have been entertaining this option as I have a similar offer good to exercise it until about Jan 6th or so. The only thing holding me back is if the essentially cut off the money supply to “regular folks” (via bank closures or limits on withdrawals such as in Greece or a number of other scenarios) so that we suddenly find ourselves without the currency to pay the loan back (our hard assets will be useful personally but no in the fiat system) then what type of legal leverage are we setting ourselves up for? For example, will “they” be able to use the legal debit owed to force some type of compliance (such as the jab?) at the end of a gun? What are your thoughts?
Boy, I sure have to get better at typing and proof reading my own comments before submitting!
“…that we suddenly find ourselves without the currency to pay the loan back…” This is exactly what they did during the Great Depression in the 30’s. So it could and may happen again.
I disagree.
Credit used for this should be the most disparaged.
That would be credit cards.
This is wholly unsecured debt.
Meaning there is no collateral they can seize without a court order of payment.
It is also the most difficult debt to sell.
Each credit transaction is an individual contract, and must be proven individually.
Contesting the debt forces it out of default and into contested debt.
That’s where the fun begins.
But before you play, ensure that you own no assets.
Initiate multiple corporations, in multiple jurisdictions (very educational).
Transfer assets into corporate ownership.
Now you have nothing to take.
And an asset search will confirm this.
Courts can award monetary relief, but it is up to the receiver to collect it.
You still can’t get blood from a stone.
Can’t they seize your ownership of the corporation? Your equity, shares, basis, etc?
I think you’d do better to do the reverse. Start those corporations, get them into debt, and legally transfer assets out of the corporation, into your possession. For example, the corporation owes you money for your work or contracts, but it does not have any. So it transfers a car to you, or tools, or what not, in lieu of back pay.
You can loan your corporation money at an adequate interest rate, compounded, and you get first dibs as the lender before ownership gets any.
That way, they can go after the corporation, but the veil will protect your personal assets. Corporation can go bankrupt.
You don’t ‘own’ a corporation.
It is a legal entity, with it’s own rights.
And you don’t have to formally own shares in a corporation to exercise control over it.
You can be completely abstracted from corporations you start (that’s the idea).
The idea of ‘ownership’ of assets is so last century.
When you own assets, they can be taken from you to satisfy legal judgement.
If you drive my car or live in my house, they can’t take it from you because it’s not yours.
Now replace ‘my’ above with a corporation in South Dakota (very stingy on corporate information).
Assets also come with liability.
Someone slips on the porch of your house and busts their head, you are liable.
But not if you rent the house from a corporation located in Panama.
Do what you will, but ‘ownership’ of anything is a loosing game.
Control of assets with complete legal abstraction is the goal.
I think what you are suggesting is a common tactic used by the mafia.
Set up corporations and load them up with debt, skim that off, and let the corporation slide into default or bankruptcy.
Was also pretty common during the last housing bubble.
So it’s not a new idea to seasoned DAs.
If you can pull that off without getting caught, more power to you.
Congress cut spending, legalize competing currencies, end the Federal Reserve…….
Perhaps we should add 2 unicorns for all citizens, legal or otherwise and an ice cream allotment of 100 pounds per year per citizen. And maybe a 1 millon dollar stimmie check. I am seeing the North end of a Southbound elephant here.
I feel like we’ve been in the crack-up boom for some time. When the govt started sending free money to everyone last year, I noticed a lot of stuff vanished off the shelves. Appliances were hard to find in Jan-Feb, when they’re usually on sale and not moving. Even floor models were selling out at box stores. I had to wait weeks to get a new freezer, gave up, and found a similar one nearby which was unboxed, but good to go. Used cars are suddenly worth more than they were 2 years ago. My buddy’s ford with the damage to the right rear is still worth more than he paid for it a few years ago. It’s nuts. I’m wondering how crypto will figure into it. The traditional analysis probably has a blind spot in that area. I don’t have much trust for digital clownbux, but I know a lot of other people do, and I wonder how that will affect the economy. For instance, if a lot of people flee fiat for crypto, do we see the same movement in goods and services?
Used cars are suddenly worth more than they were 2 years ago.
No, they’re not worth more.
They’re worth less because they’re 2 years older.
But the dollars you trade for them are worth much less (because they’ve printed so many).
Things are not worth more, the money is worth less.
This will become clear when the dollar returns to the intrinsic value of paper.
How many sheets of paper would you take for your used car?