Prospects For 2010 Economy

Wow!  Everything’s great.  The recession is over, things are getting back to normal and I’m going to start buying stuff that I don’t need again, with my credit card of course.  Okay, I’m KIDDING!!!

The National Debt

As an example of simple economics, I want to take a look at one country’s economy.  Let’s say Zimbabwe (formerly Rhodesia)……………….no?  Oh, you don’t care about other countries? Well, okay, how about the U.S.?  Good.

FACTS: It took over two HUNDRED years for the national debt to reach $1 trillion. The national debt is what YOU and I owe other countries because of the spending that OTHER PEOPLE have done……………….on our behalf of course! (I’m being sarcastic in case you didn’t spot it).

Then it took a mere TEN years to DOUBLE to two $ 2 trillion.

In the first nine months of 2009 an further ONE TRILLION DOLLARS was added to the deficit.

Math

It doesn’t take a genius to figure-out that getting into debt, whether as a nation or as an individual is NOT A GOOD THING TO DO.  Nor does it take a genius to figure out that there will be CONSEQUENCES to getting into debt.

You should ask yourself this question: “where is the money that the country’s leaders come from?”.  Here is the answer:

1. Taxation: this is a small source of “income” and is getting smaller all the time, as businesses go bust and individuals lose their jobs

2. Borrowing: this is a larger source of income and relies on other countries (like China) to produce goods that other countries want (like the U.S.) in exchange for dollars.

3. Print it: this is known as inflation.  Printing money with nothing to back it (precious metals, other minerals, manufacturing capability etc.) is a way of getting money without working for it.  What happens si that money currently in circulation is worth LESS because there is more supply, in effect diluting it’s purchasing power.

Deflation

We just reaching the end of the deflationary period that I’ve been writing about during 2009.  Companies have been lowering prices (such as Safeway) drastically to be able to compete with the likes of Kroger and WalMart.  This cannot continue for very much longer.

Now that 2010 is upon is, you’ll start seeing runaway inflation.  This MUST happen; it’s simply unavoidable.

You must learn to make money or provide for yourself and your family some other way.  You may WANT a Yacht a mansion and a sports-car, but you NEED water, food and shelter (in that order).

For your own sake, study what’s going on in the world and LEARN new skills. It may be the difference between survival and living on the street.  I’m SERIOUS.  If you don’t want to live in a tent-city and hope somebody else will give you food, start learning how to make your living some other way.  Do it NOW!

Luke.

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