“Your silver has become dross, your best wine mixed with water.”
These words were written over 2700 years ago, but if you happened to see
Bloomberg’s graph of FRED (Federal Reserve Economic Data) last week, you might
think they were written yesterday but for the language of King James.
If your Early Modern English is a bit rusty, “dross” means impure,
inferior. It is the scum that forms on the surface of molten metal. It is a
powerful image of a debased currency as the fingerprint of a corrupt society.
The author goes on to say, “Your princes are rebels and companions of
thieves.” The debasement of a currency, when properly “managed,”
is indeed theft.
Why is it theft? Empires are built on conjured money borrowed from future
generations. When that debt becomes unsustainable, inflation makes it easier
for the empire builders to service the debt. Meanwhile, on Main Street, wages
do not keep pace with an inflated money supply, and over time, first to
maintain an expected lifestyle, then to service growing personal debt, people
give up real wealth assets. They sell property, mortgage homes, and go farther
Real wealth over time is then transferred from the productive class to the
parasitic class, and almost in lock step with the inflation of the money
The Bloomberg chart tracks the Fed’s balance sheet reserves: gold, legal
tender notes, as the “real wealth” percentage of total assets, and
compares it to the purchasing power of the consumer dollar based on the value
of a buck in 1967. The graphs both look like double black diamond ski slopes,
or the warning signs on the mountain saying, “Trucks Use Lower
Unfortunately, there is no “Runaway Truck Lane” for the consumer.
Seven bucks for a gallon of milk. Six bucks for half a bag of tortilla chips
(and a half bag of air). The seed packets that used to contain 100 seeds now
hold 20, and they are more expensive. A burger and fries for two people will
tear up a $20 bill. “And he who earns wages does so to put them into a bag
This comes at an unfortunate time for an aging generation rapidly joining
the ranks of people living on fixed incomes, dependent on Social Security and
volatile retirement accounts subject to the vagaries of the stock market, and
now targeted by the parasitic political class for increased taxation.
What to do? Tracey and I have asked people how they get by. The answers may
surprise you, or make you uncomfortable.
When you’re raising kids on two incomes and living paycheck to paycheck, or
you’re considering the very real possibility that your lifespan may outlast your
retirement account, the sooner you wake up to basic math, the better. Many
Americans, like frogs in the pot slowly brought to boil, did not wake up in
time to prevent scalding. US household debt is at record levels to the tune of
$16.5 trillion, or almost $100K for each household.
So, if you’re noticing that the water is getting uncomfortably warm, this is
what people are doing to turn down the heat. The biggest challenge seems to be
psychological. You have to realize that the lifestyle you ordered is no longer
Equally important, we end the addiction to pursuing the things we think we
want and develop the habit of wanting the things we have.
“I used to take things to the thrift store and then buy more stuff to
replace them,” said one acquaintance. “Now I’m selling stuff on Ebay
and learning to repurpose things.”
“We spend more time shopping,” said someone else. “We don’t
dare go into Walmart without a list. If we stick to the list, it can cut the
cost of that trip in half.”
Tracey and I comparison shop online. There are still deals to be found,
sales, overstocks, clearance, mark downs, coupons. When I was confronted by 5
brands of half bags of chips for $6, an extra minute or two located the $3 half
bag. It was on the top shelf, hard to see, hard to reach, but it was there.
We also like curbside pickup. It saves time, and it saves money. You get
exactly what’s on your list, and you’re not tempted to fill up the grocery cart
with what we called “pogey bait” in the Corps.
“We shop the perimeter of the grocery store. We have to plan meals
better and cook at home more often, but it’s a lot healthier and we feel
better. During the pandemic we noticed how much more money we had in the bank
account simply because we couldn’t eat out.”
My brother knows how to stretch a dollar farther than anyone I know. As an
engineer who knows how to fix just about anything, he has a strong aversion to
buying anything new when so much quality has been discarded. “People don’t
know how to repair anything, and when it breaks, they give it or throw it away
and buy something new. A lot of times a single component or tweak is all it
takes to get it working again.”
He rarely eats out. On his days off he prepares meals for the week to take
to work. He paid cash for the last vehicle he bought…
Ironically, you could take away half of the mean wealth of Americans and we
would still be wealthier than most of the rest of the world. We might have only
a dozen brands of breakfast cereal on the cereal aisle instead of fifty. We
might have to carpool more often in a smaller vehicle or take the bus from time
to time. There would be considerably less “buy now” clicking on the
internet. There would be wailing and gnashing of teeth and great mental and
emotional anguish, even though in material terms we would still be wealthier
than parts of the world where people live longer than we do, have less crime,
less infant mortality.
Perhaps, with a bit of belt tightening, we would become less spiritually and
morally bankrupt along with our improving finances. The die has been cast,
financially. There is no political solution. If we tighten those belts now,
determine to address the addictions that have created that $16.5 trillion debt,
we will be much better off, in fact we may not even notice when that choice is
forced upon us.