No, not that left behind. I’m talking about getting left behind financially. Kuppy reposted a blog post by Erik Renander called Bad is Good. It talks about the eerie similarities between the inflation in France in the late 1780’s and what we’re seeing now.
He takes excerpts from a book, Fiat Money Inflation in France by Andrew Dickson White, and contrasts some of his points to our current situation. I read the book numerous years ago when I read multiple books trying to determine what has happened in the past during great inflations. It is a fairly short and easy read that I would recommend to anyone trying to understand the mindset of societies in the grips of over indebtedness and inflation. Everyone is familiar with Weimar Germany, but this book does a great job of describing similar conditions in France over 100 years prior to the great inflation in Weimar. Amazingly, this came less than 70 years after France endured John Law and the Mississippi Bubble fiat currency debacle. If you study history you’ll find this happening over and over again.
The article does a great job of contrasting what was being said then and what we’re experiencing now. The similarities are alarming to say the least. The resistance to money printing at first. The gradual cries for more money printing when nothing “bad” happens initially. How inflation starts to change the culture and how the culture turns in on itself as the disease progresses. The obsession with trading and speculation. Bitcoin and crypto are the obvious parallels here. The total corruption of the political class. And that all leads to the getting left behind part.
Our society is starting to sense, with a growing unease, that life is getting harder for working class people and for young people especially. People are sensing that something is wrong with the money and the fact that asset prices just keep soaring while they’re getting squeezed. History rhymes but doesn’t necessarily repeat so one needs to be careful about making assumptions about the future. But, it seems to me that we’re just beginning the phase where more and more people are going to catch onto the idea that if you ever want to get ahead in this economy you’ll need to lever up and take more risk. This goes against people’s natural aversion to loss and the idea of levering up into what is clearly an asset bubble is frightening.
Nevertheless, as time goes on and the wealth disparity increases between those who were prudent, who saved, invested conservatively, and waited for the inevitable pullback, and those who took on leverage and speculated aggressively becomes larger, it will cause more division and more tension. This isn’t just speculation; our culture is already developing terms for it: FOMO and YOLO. These inclinations are spreading and they are not healthy.
Jay Powell is already hinting at cutting rates at a time when inflation is still clearly not under control. It feels like the rampant speculation is just beneath the surface and getting ready to roar again as soon as he blinks. At the same time, we know from previous historical examples, that there will be terrifying pullbacks in asset prices as the instability accelerates. The question everyone wants an answer to is what the individual should do to protect himself or herself.
There are no good answers. While we’ve seen this movie before, we truly are in uncharted waters given that this time the entire world finds itself in a predicament where in the past it was individual countries. Every individual’s situation is unique. What will work for one person may not necessarily work for the next. The only suggestion that I have to offer is to educate yourself. The dice have been cast and there is no turning back. The vast majority of people are totally unaware, and most of those that have some inkling of what is happening would rather ignore it and hope for the best rather than do the hard work of educating themselves and taking precautionary measures. I certainly sympathize with them, but sympathy won’t help them. They need to take action. Otherwise…
“The question will naturally be asked, On whom did this vast depreciation mainly fall at last? When this currency had sunk to about one three-hundredth part of its nominal value and, after that, to nothing, in whose hands was the bulk of it? The answer is simple.
Financiers and men of large means were shrewd enough to put as much of their property as possible into objects of permanent value. The working classes had no such foresight or skill or means. On them finally came the great crushing weight of the loss. After the first collapse came up the cries of the starving.“
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