America’s Middle Class Will Pay the Price
We’re in a rush this morning. No time to write a short message. We’ll have to send you a long one.
First, here’s Business Insider with a news update:
Meanwhile, a dear reader in Canada, Luke K., sees inflation in action:
That’s a shocker! We didn’t even know they had swimming pools in Canada.
Another dear reader, Patricia M., wonders what to do:
You’re right. There’s not going to be any positive outcome for the masses. The game is rigged against them.
The feds (representing the entire elite of the U.S.) cannot expect to get much more from them in taxes. And their savings are not enough to cover the deficits.
Now, as we told you yesterday, its Inflate AND Die… meaning, the feds have no choice. They have to print money.
And this means the masses will pay – via consumer price inflation.
But let’s try to be helpful. What should a normal person do to protect himself and increase his wealth?
The quick answer: The normal person, in a normal time, should do the normal thing.
But this is no normal time. It’s a freaky… weird… and head-scratching time. And a very dangerous time.
But we still have to start with the basics.
The trouble with the average Joe is that he has only his time to sell. And the trouble with his time is that even in normal times, it may not be worth very much. It depends on what he does with it.
The average wage is about $25 an hour. So, if he works 40 hours, he makes $1,000 per week. If he does that for a full year, after taxes, he ends up with about $40,000. That’s not going to take him very far…
If he is a skilled professional, on the other hand – an accountant, dentist, surgeon, lawyer, engineer, or architect – he should do better. He might net out (after fixed office costs, insurance, and fees) $100 an hour. This would give him $200,000 a year… which might then be reduced to, say, $150,000 after taxes.
The trouble with time is that it is not scalable. Each hour clicks by exactly like the hour before it. And the hourly worker – no matter how skilled – cannot make more of it.
So, selling his time, the average Joe cannot increase his earnings easily.
He has to take some of his earnings and put them into something that is scalable…
Too Little, Too Late
Investing, for example.
He might, for example, buy a rundown house… fix it up on weekends… and rent it out. The house might go up in price, while he is collecting a decent rent. Then, he might be able to borrow against the equity in order to buy another house.
That is classic scaling. It works as long as he doesn’t get stuck with too much debt… and empty houses.
This approach also has the advantage of offering some protection against inflation. Typically, people try to escape inflation by buying real estate – something solid that won’t lose value. This pushes up property prices.
Plus, the landlord can raise rents to try to keep up with his rising costs.
But the poor renter is squeezed. He struggles to keep his wages in line with price increases. But he falls behind… the salary adjustments don’t come fast enough. They’re too little and too late.
Inflation makes time less valuable! Not only because the average wage-earner can’t keep up… but also because it destroys capital – which is what gives value to time.
In a healthy economy, people save… and invest their money to try to earn more money. They start businesses and hire workers. Wages go up.
An air of Sha… na… na… Live for today takes hold.
And then it turns grim… and the masses are robbed.
We’ll be back tomorrow with more helpful comments!
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