Bolster your own skills and capabilities and try not to put yourself in a position where you must rely on the government. From Charles Hugh Smith at oftwominds.com:
If things unravel, these risk-reduction strategies quickly shift from “nice to have” to “essential.” But by then, it will be too late to put them in place.
I would summarize the economic flow of recent events as:
2020-21: massive stimulus and pandemic restrictions build up household savings and generate a stock market “meme stock” bubble.
mid-2021-22: “Revenge Spending” splurging generates massive spike in consumption, profiteering and inflation.
2023: Renewed bubbles in housing and stocks, a classic “rebound / echo” bubble. Splurging wanes as savings and credit are tapped out, and higher interest rates finally start affecting behavior.
2024: Forced frugality as jobs are slashed, profits fall, inflation stays sticky, credit dries up, businesses close, Federal Reserve stimulus wanes and soaring government borrowing costs crimps government spending.
I’ve often discussed that the economy and society are cyclical. Nothing stays on the same trajectory forever.
History shows that when prices rise sharply, they rarely return to their previous levels as participants quickly habituate to the higher costs. Taxes, fees, rents, etc. rarely decline. Owners will keep prices high until they go broke rather than lower prices, as their own costs are also sticky.
So what’s the best way to reduce the risks of forced frugality manifesting as recession / depression that affects us?
