The liquidity flood is about to end

Inflation, wow. For a long time now I've read about it, seen the price of commodities (most of all) increase on paper but have not really felt any effect in terms of my personal budget. I have to admit, I don't really keep an eye on where every penny is going and the slow increase in price of consumer goods and services have not really made much of a difference. Even the fast rate at which the prices have been increasing over the past few years have not really been that noticeable in my wallet, and I expect this to be the case for most other people as well. The problem is that we are so bad at appreciating an increase over time, no matter if its linear or exponential. Unless the price jumps noticeably from one day to another, most of us wont really notice it. And even then I expect many people will just shrug it off and make up some excuse for why the price has increased so much.

How long can this go on? I think we are at a tipping point. Depending on what country you are from and where you live, the effects will vary. For people who are already living on a strained budget, the rising prices have most definitely already been felt. But for people that have a high income, the spending can just be shifted slightly from unnecessary purchases to essential and necessary ones. From my perspective this has mostly been the case. In my country, the discretionary income is so high for a majority of people that the threshold for prices on life essential goods have not yet been reached, and might even have a long way to go.

For example, for someone earning 25 000 in my currency each month probably has about 7 000-10 000 in discretionary income, meaning after having payed their taxes and normal expenses. That leaves a lot of room for an increase in price before it really starts to hurt. Sure, you might have to save for 3 months instead of 2 before you can buy yourself a new flat screen TV or some other toy that you've always wanted but still. Even those with a lower income of say 17 000 probably have 3 000-5 000 left each month due to lower spending habits. So, in these cases it can go on for a while still. 

For those who are not as fortunate it is beginning to really be a problem. Since as most of you should know by now, it is the essential goods that are increasing in price. Utilities, transportation and most of all food are precisely the things that are rising in price the most, and they are the things we need the most in order to maintain our standard of living at best and survive at worst. The other "stuff" is actually decreasing in price, partly because people are directing their income away from that "stuff" and towards the more essential things.

Conditions are fragile right now. I don't think we have a lot of time left before it really starts to come down on us. The poorer are getting poorer, the middle class is getting drained, even the upper class will be hit hard. Relatively speaking they are the ones that have the potential to be hit the hardest. Their lifestyle has made them take things like food and shelter for granted unlike others that have had to fight for it. But ultimately they too will have to face the same issues, but for the most part with much less preparation and less experience.

With this being said, I would like to give a little heads up to anyone that has invested in any type of stocks, bonds or even precious metals and other commodities. In June, the FED have announced (unofficially I think) that their QE 2 will be ending, and that they will take a break from further QE (probably until they will have no choice but to continue). The 4 billion dollars of thin-air money that they have been injecting the market with each day will come to an end. To make a simple and probably somewhat inaccurate parable, it would be like having your allowance/salary cut with 4 billion dollars a day from one day to another. The market will have to make due with a lot less liquidity and the result is highly predictable. The artificially created high numbers we have seen will come crashing down. It should be noted that this is from a somewhat short term perspective, and that precious metals are still one of the safest bets.

As usual, it is up to you what you do with this information, but it would be prudent to keep an eye open.

A grim outlook

During the lengthy time since my last post my view of the future has grown increasingly cynical. Aside from the continued ignorance and carelessness from the masses, we are hit with more disturbing images such as those released by wiki-leaks. My attention has also been directed to look deeper into the matters of our current state of the world and what I have found is truly troublesome.

My disappointment with the mass media coverage of important matters was strengthened by their inability to uncover the truth of the events occurring in the wars that are being waged by the US. The horrible images that most of us by now has seen and that have widely been broadcasted led me to the documentary The War You Don't See. I found it disturbing (but not all that surprising) that governments all over the world are both directly and indirectly censuring and steering the mass media in order to suit their political agenda. Directly by either discrediting reporters that have a challenging view and or releaving them from their job. Indirectly by embedding them and in doing so having full control over the information that they plan on presenting to the world.

It turns out that the treachery runs even deeper. Before I go into that however I will spend some time discussing my view on conspiracy theory. Over the years I have been reading a lot of articles and gone through a lot of information, some of which at the time has seemed outrageous and was labeled by many as conspiracy theories. Without knowing exactly how it happened or when, a phobia of sorts has emerged in regards to conspiracy theories. As soon as something is labeled conspiracy theory, it is regarded with something close to disgust and the information is quickly dismissed and until a while back I was not much different. I could sometimes be fascinated by them but never took them seriously. What I am about to talk about is widely considered conspiracy theory. When looking at the information at hand, there was a lot that did not make sense and that is where the information that follows filled in some of the blanks.

As described earlier, the mass media is gaged by the politicians. Behind the politicians however there is another force that is governing. Most people are probably aware of the close ties that corporations and banks have with the government. In the US it is truly appalling, where politicians campaigns are financed heavily by different interest groups and this behavior puts these politicians under these interest groups thumb in a varying degree. This is only a small part of it however.

As people who are informed about the process of how money is created know, money is borrowed into existence. This is done by the central bank. In the US its called the Federal Reserve Bank or FED. What most people don't appreciate is that the FED is not a governmental entity but rather a private bank. A bank that is in turn funded and owned by other banks, such as JP Morgan. So when all the money that is printed by  the FED goes out to the big banks in the form of stimulus or bailouts, they are in fact putting money into their own pockets. So far it can all be substantiated and could almost be considered common knowledge, or at least should be common knowledge. Behind the banks that are financing the FED there are a number of powerful and wealthy people and families. This is where the conspiracy comes in. Less corroborated information, rumors and speculation. Some say these people own more than half of the worlds wealth, that they have been profiting greatly from every war since before world war I and that for this reason they have also had a hand in creating them. Some say that they meet secretly to plan how to best continue controlling the worlds resources. Some say that they have enough power to appoint politicians and remove those that stand in their way. Facts mingled with rumors and speculation creates what many call conspiracy theories, and what is being uncovered is of the nature that hard proof is hard to come by and even dangerous to posses and spread.

In the times that we live in today, I believe it is important to be critical. Critical of the information that we find, but also critical of the information that we are being fed from sources that we normally would consider being trustworthy. The motive for spreading this information is not to create fear, panic or other destructive behavior. It is easy to feel that there is nothing that can be done about any of this, but the truth is that there is. In a variety of ways. Just by being informed you can make choices in the future based on this knowledge. You can opt out of the hamsterwheel that we are living in and choose to put your faith elsewhere. You can spread the information to your friends and beyond. You are not meant to do everything alone, that is why a community is so much stronger.

A thought provoking and mindblowing documentary about this can be find atleast in part and on youtube and is called Zeitgesit. A movement that has devoted time and money into uncovering the truth behind the economy and the world. It is up to you to choose what to believe and what to do with the knowledge that you  come to possess.

In the list with links most of the information from all my posts can be found, a great tool for those that want deeper knowledge into any of the topics that are being brought up in the posts.

More and more signs

Since my last post, more and more signs are emerging, pointing to the harsh future that we are heading for. Currency wars are waging, countries like Russia and China have already begun experimenting with limiting of exports. Europe is in trouble with Ireland and Greece as the most prominent and immediate examples of countries that are so far gone that a default on their loans and its consequences are near. USA has begun its second round of quantitative easing, proving that the people in power are ever more clueless than before. This QE2 has stirred up a lot of insecurity and dismay from countries all over the world.

The response from governmental entities or the media are still shining with their absence and we are no way near a solution to our problems. On the contrary, the issues are stacking up and the situation becomes increasingly unstable. It wont take much now to push the situation over the edge, plunging us into unknown territory.

I have never had much hope that the situation will be resolved, and at this point even less. I had however hoped that there would be more of those that managed to opened their eyes, before it is too late. As pointed out by Chris Martenson, the International Energy Agency has for the first time pointed out that peak oil is happening and has in fact already happened. Somehow though, media such as the New York Times managed to repress the harsh facts of the IEA article and instead present an article themselves that looked more like the script for a press conference by an oil company rather than an investigative article from a respected (not any more) news paper. So its pretty clear that no matter however overwhelming the evidence of the coming crisis exists out there, not even when coming from governmental entities, it will never reach the public through politics or media.

Every day I think of new implications of what it means to be among the very few of those that have bothered to take this seriously and prepare. I see a future where, society finally realizes what is going on, they are going to blame politicians and who ever else that feels comfortable to blame and say that information of this did not exist, when it is in fact their own fault that they were to careless to find out more about it themselves. I see a future where relatives and friends will be in need of a piece of the provisions that I have carefully conserved, and how can I deny them? Provisions that would have lasted me and my closest for years would end up running out in mere months. I imagine how insecure the world will be when the law of the jungle and a situation of "every man for himself," "survival of the fittest" and "kill or be killed" arises. How I will have to fight for and protect what I have or possibly die trying. It makes me wonder, is there any point to it all?

What is the role of politics?

Politics have become such a loaded subject, or maybe it always has been. I often find it ridiculous how much weight and importance people put in politics and what impact a change in political leadership will have on their lives. The impact of politics probably differs a lot between countries, but it is still in my opinion and experience that what you do personally has more to do with how your life turns out than any political decisions. Blaming the government for all your problems solves nothing, especially if you are not prepared to do anything about it anyway.

When it comes to how we ended up in the economical and environmental mess that we are in right now has little to do with political affiliation and more to do with the attitude and culture that has evolved over the last decades, mostly in the western world. The data that could have predicted these events have been around for a long time but have been ignored and shoved aside by people who has seen it as a threat to their interests. The way that our consumer habits have led to greed and have become grossly unsustainable has led us to our current state. One of my favorite descriptions of our irresponsible way of living comes from US President Jimmy Carter in a speech in 1979.

He describes how "too many of us now tend to worship self indulgence and consumption. Human identity is no longer defined by what one does, but what what one owns". "This is not a message of happiness or reassurance, but it is the truth, and it is a warning". The oil production in the USA had reached its peak in the early 70s and Americans were now dependent on foreign oil. Could it really have been so hard to foresee that the rest of the world would eventually reach a peak as well? But people don't want politicians that ask them to make sacrifices, they want politicians that come up with solutions so that we don't have to make sacrifices. Even if you only end up postponing the inevitable and making it so much worse for the ones who have to clean up the mess in the end. For too far too long we have given into greed, without the slightest thought of the consequences it has in a world where the resources are not limitless. This greed can be seen in businesses all around the world where CEO's have gone from earning 30 times as much as the average worker in the 70s to about 500 times today, it can be seen in the reality shows where kids are spoiled beyond belief and it can be seen in the real-estate market where people have been lured into buying properties way beyond what they can afford.

It does not matter what political affiliations that you adhere to, the issues that Jimmy Carter is talking about concerns everyone, and not only in the USA. It does not really matter what political views that got us into this mess, since none of them seems to have been able to prevent it from happening. Instead we need to look at ourselves. It is the hardest thing to do, accepting responsibility for our actions instead of blaming someone else and accepting that we are the ones who need to work out a way to get out of it.

Things are going in the wrong direction all over the world, but USA is the strongest example of where things have really gone to the extreme and are not recovering. As a world superpower, the consequence is that most other counties are about to go the same way. As a European with a rather good insight into American ways, it is easy to make the comparison. It is horrifying to see the nut-jobs and shamefully ignorant people that are occupying the media in both politics and celebrity. It paints a picture of Americans as a phony, petty and and ignorant people, regardless if that is true or not. People like Sarah Palin, Christine O'donnell, George Bush among others are the type of politicians that act crazy, scream the loudest and gets the most attention, with the result that people think that every politician is just as crazy or at the least misrepresenting their party, even if that is not the case. TV shows like Jersey Shore are promoting ignorance and stupidity and as a consequence, more and more people consider it okay to act that way. It is foolish to deny that this type of behavior does not infect other minds and in time spreads like a disease. In my home country I have already seen the emergence of such TV shows and heard the type of comments that people (young impressionable in particular) have to say about it, and similar shows also exist in the country I am currently living in (Romania).

It is up to all of us to educate ourselves, the ones around us and extend the knowledge as far as possible regardless of our political standpoint. At this point, it is probably best to leave politics out of the discussion all together since it only serves to separate and polarize us at this point instead of bringing us together as a community.

The basis for assumptions

To get an accurate picture of what the reality looks like is hard or probably impossible. But to get as close as possible it is important that the information you gather is based on facts. It's not always easy to know what is fact, and to make it even harder, things that are fact today may not be facts tomorrow if new information arises. So how do we know what information to trust or what sources that are reliable?

It is my opinion that the information that we base our reality upon is many times controlled by our emotions and values. When we choose what "facts" that seem right to us, when we interpret the information and when we put it together with what we already know, most people do this by following their emotions and their values. If information clashes too strongly with those emotions and values, it might be easier to rely on other information. This is something that probably happens to all of us, although some people have probably learned how to keep their emotions out of it a lot better than others.

Being critical is very important, but also very hard. Especially if the thing that you should be critical against comes from somewhere or someone that you respect, admire or have positive feelings towards. When you review information from trusted sources, you should always ask yourself whether the information seems to be plausible, even if it is factually substantiated.

To make sure that you are not being led by someone else's agenda, or blinded by your commitment or emotions in regards to your own agenda, it is important to obtain information from various sources and various media. Being open minded to others opinions and other peoples version of something is another vital part of keeping yourself free from bias.

It is easy to state the things that gets you closer to an accurate picture of reality:

- Keeping your emotions at bay

- Choosing information that is based on facts

- Being critical

- Obtaining information from various sources

- Being open minded to other versions of "the truth"

However, it is not always that we remember to do this. A part of a strong community is the willingness to ask questions while listening to others opinions and making choices thereafter.

I love debate, or rather, I love intelligent debate. What I mean with that is that it often is very counter productive to be debating someone that is highly emotional, angry and upset, non factual and not open to new information. Such an individual has usually made up his mind even before the debate starts and is unlikely to change or compromise on it, regardless of how compelling your arguments against it are.

Debate is what keeps us true to our words and true to each other. I am always open to other peoples opinions and welcome new information that will bring me closer to the accurate picture of reality.