Putting the economy in perspective

 

I'm getting, not merely irritated, but actually alarmed by the number of people (particularly journalists) who are prattling along about how US consumers are spending as much as last year, and that therefore there's no need to worry about a recession, blah, blah, blah ad nauseam.

The reality is very simple.  Sure, the dollar amount spent is about the same in most areas:  but the quantity and/or quality of goods and/or services those dollars are buying is a lot less than it was in earlier years.  Things are more expensive, and their quality is often less than it was in the past.  Where I could buy a self-propelled Honda lawnmower for plus-or-minus $400 two years ago, the identical model, from the same store, is today almost $900.  Where I could buy an expensive replacement part for my vehicle two years ago for $950 (dealer price), today it's almost $1,500.  Those are just two examples.  I'm sure my readers can supply many more from their own experience.  In short:  if I bought ten widgets last year for $100 apiece, and this year I bought four widgets for $250 apiece, I've spent $1,000 in each of those years - but I've got less than half as much for my money.

In other words, the actual dollar amount spent is no longer an accurate measure of the state of the economy.  It's buying a lot less than it used to, and the jobs that were supported by that quantity of goods sold - making them, importing them, selling them, servicing them, etc. - are no longer available in the same numbers.  When I take my vehicle in for a routine oil-change, I sometimes have to wait two to three times as long as I used to, because the dealership has half the number of mechanics on staff as it used to have.  They tell me they'd like more, and that they're offering high salaries in an effort to attract more, but in private chats with a couple of the managers, they're making it clear they can't afford to hire more, because the dealership's turnover (in terms of number of vehicles sold at a decent profit) has dropped, so it can't pay for them any longer.  Again, that's just one example of what I'm sure many of us are seeing.

There's another factor.  As Ernest Hemingway had one of his characters explain:

“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”

A lot of us have experienced things getting worse over the past few years and decades, but on a "little by little" sort of basis.  All of a sudden, things are happening faster, and there are more problems coming to light.  One literally can't read a newspaper from one day to the next without some new item of financial nastiness catching one's eye.  We - or, rather, our economy - is/are moving from "gradually" to "suddenly" on a steepening downhill trajectory.  One can't blame President Trump for that;  he inherited the mess that President Autopen Biden left behind - but people, particularly on the left, are trying to blame that on Trump, because it's always easier to point fingers at others instead of accepting part of the blame ourselves.  For decades we've voted for politicians - of both parties - who've gleefully voted us money the country did not have, in order to gain our votes in future.  Now that bill is coming due.

Rudyard Kipling warned us of "The Gods of the Copybook Headings".  (I make a point of re-reading that poem at least once a year, and frequently more often, because it's so darned true!  I highly recommend that you do the same.)  Well, his warnings are coming true in our economy as we watch it unfold.  DiveMedic summed it up well last weekend.

The system is insolvent. There isn’t enough money in the world to cover the debts created by that system. Currently, Social Security owes everyone about $75 trillion more than we have to pay - an amount that is double what our national debt already is - in other words our national debt isn’t $34 trillion, it’s more like $107 trillion. If you total all of the money in the world: every nation, every currency, every ounce of gold, it comes up to $134 trillion.

In other words, we are on the cusp of owing more money than actually exists. Even the official national debt of $34 trillion wouldn’t be eliminated if the government confiscated every 401k, IRA, 457 plan, and all other retirement accounts. The retirement accounts of US citizens are only worth about $31 trillion.

We are about to see a collapse of the US economy, and with it, the world economy. It’s inevitable.

There's more at the link.  Go read it all.  It's worth your time.

Too many of us are trying to fool ourselves (and each other) that this is just another one of those periodic scares, that there's really nothing to worry about.  I hope and pray that's right . . . but I fear that it's not.  Therefore, I'm buying more reserve supplies to help my wife and I eat at night during harder times, and (even though I'm still facing significant medical expenses) we're reducing our debt load to an irreducible minimum, so that we're not caught short when things go smash.  We've spoken about that often enough, so I won't repeat it here.

I highly recommend that you do likewise, dear readers.  This is not a comfortable time.

Peter