Now this is destined for the 3rd World

No way this ever sees the light of day in the US... well, unless the recession gets so bad we're forced to wear these to survive the looming ice age.

I'm still wearing mine inside-out.

You know those error shirts, that get sent to third world countries?...

Doesn't this look like one of them?

Anyone believe this really happened?

Inflation Will Set You Free

You know what, I keep waiting for some indication that things are bottoming, and possibly starting to turn around. I watch unemployment, waiting for a flat number instead of a growing one. I watch median home prices, at least hoping the pace of decline slows. Charge-offs, delinquencies, consumer confidence, retail sales, anything, just looking for some glimmer of hope. But, still nothing.

The main problem is that people are scared. They are worried about losing their jobs, or at least worried that their spouse or parents or friends will. This puts a huge depression on spending, and has inflated the value of the dollar (AKA, deflation). If you want an example of this, think of that $90 sweater you saw around Christmas time for $45... You liked the sweater, but would just rather have your $45 more. That is because those dollars are worth a lot more to you than they have in years. Well, everyone is in the same boat, and spending on discretionary goods has slowed to a trickle (though, a great time to buy some crap if you are sitting on some cash - wifey got a $450 blazer yesterday for $90 bucks - badass).

Anyways, the good news is that the general economic principles of life are still working. This is basic supply and demand. Prices are dropping because people are not willing to supply their dollars. At the same time, we are willing to take less dollars for the same goods and services. Goods are getting cheaper, people are taking less pay for the same jobs (or are willing to forgo a bonus or raise given the shittiness of the economy). And people are finally starting to make smarter decisions. Credit Card companies are scrambling, trying to figure out how to keep people spending, and yet also paying their bills. Talk about a high-wire act.

But here's the thing, what caused a lot of this mess was the housing bubble. Houses became overvalued due to cheap credit markets, people overextended themselves, and more and more people are actually upsidedown on their house. And as the dollar gets stronger and stronger, the value of houses will continue to fall. People will continue to tighten their wallets. No spending, no growth, no jobs, no fun...

Believe it or not, there is a way out. And it's not that complicated, and we're already moving in the right direction. Free money... for everyone!... Ok, not free, but cheaper money. Inflation. Inflation through bailouts - giving massive cash to the banks and auto industries that have failed on their own. Believe it or not, Bank of American lent over $100 billion in Q4 - the credit markets are tight no more! Then you have Obama allowing for Bush's tax cuts to stay in place, and throw in another $900 billion or so in a new stimulus package (all without a raise in taxes, mind you) and you have the magic recipe for hyper-inflation.

Oh, I know, we've all been told that inflation is bad and it's very scary. And, yes, it is. But it's way better than deflation, and it will also mean that a lot of people won't be upsidedown on their houses anymore (yes, when money goes down in value, your mortgage stays the same, so a house is a supersweet inflationary environment investment)...

So, some final thoughts:
1- We hear a lot of bitching from Republicans about the crazy spending spree. Don't listen to them, they lost. Obama is hiring "management consultants" to cut frivolous spending. That's the best approach to the problem I've ever heard. Not the liberal, open-wallet policy we were warned about.

2- "We're protecting the tax-payers" blah blah blah.. that's bs. Your taxes are superlow compared to US history and the rest of the world. Pay your fair share and shut up. I'm sick of driving on a stopped dead beltway because people don't want to pay their fair share. And I'm sick of worrying about falling into the Patomac when I drive over it. Infrastucture, Education and Science are INVESTMENTS that we will all benefit from. Quit giving me this private enterprise BS when we have proof it doesn't work.

3- Buy gold - it's not too late.

4- Don't buy stocks yet. You can buy index ETFs, but if you are buying single stocks, you are gambling. I don't care how solid you think a company is, they can all fall. Don't get me wrong, though, it's a fantastic time to invest in equities if you are young and don't need the money for a while. In 20 years, the S&P will definitely be worth more than it is now. So buy it cheap, just don't get mad if the sale prices keep getting cheaper and cheaper. Dollar cost averaging, right?

5- Things will get worse for another year.

Have a nice day.