Thursday, March 10, 2011


I've written a bunch about how the US economic leadership (Congress, FED, and Treasury) have interests that are absolutely opposed to the values and interests of the average citizen in the US.  One of the first blog posts I created highlighted Ben Bernanke's 2002 speech where he described that deflation was Public Enemy #1 and that the Fed would not tolerate the economic slippage resulting from inflation's scary brother.  In other posts I covered how the FED needs inflation to keep the game going and any hint of deflation creates shudders of fear.  Recently, I reviewed how deflation really wasn't as terrible for the common man in Japan despite what we hear from the Fed in the article titled TURNING JAPANESE

In the last several years, we've seen budget deficits and spending like we've never known and many are beginning to think that the Fed's efforts can only result in one thing, runaway inflation.  We've read how Japanese citizens deal with deflation, let's take a few moments and review what regular folks do in inflation ravaged countries like Venezuela.

Please read the reuters story below;

The graphic pasted here from the article demonstrates just how bad the inflation rate in the country has been.

So, what are the tricks for dealing with inflation for the regular person?
  • Because gas is heavily subsidized and is almost free - Venezuelans buy cars.  Instead of depreciating, their value increases as the car gets older!
  • Essentially people borrow and buy appreciating goods like gold or cars
  • They take extra jobs - I guess fat and lazy Amerikans won't do so well to keep up with inflation.
In the reading of the article it is very clear that a person must be very active in keeping up with their finances and financial situation to keep close to the same lifestyle over time.  These guys are putting money to work (or just spending it) immediately because they know that their money will be worth less in must a month or two.

Am I sold that this is our future?  No, I still believe that despite all of his work, Bernanke will fall seriously short and learn that his hubris has done nothing but create a more serious collapse.  However, one of us will be correct and it is important to understand the strategies for dealing with both outcomes.