COVID-19 Inflation


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“Money is like manure of very little use except to be spread.”

This quote, with minor alterations is attributed to many people including Thronton Wilder, J. Paul Getty, Winston Churchill, JRD Tata and Francis Bacon.

Since Bacon lived about 400 years earlier than the rest, he probably deserves the  credit, but Wilder added, “Money is like manure; it’s not worth a thing unless it’s spread around encouraging young things to grow.”  Getty’s modification is also useful: Money is like manure. “You have to spread it around or it smells.”

Governments are spreading a lot of money around right now, so the question is, will the trillions in handouts, grants and loans help things grow or will it smell?

Will the government handouts create inflation or deflation?

The definition of inflation is “a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.”

Unless commerce gets itself running again quickly, it’s possible that we’ll see a lot of money chasing fewer and fewer products and services.

There are so many forces at play that no one knows how this will all turn out, but there’s a few expectations we can be pretty sure of.

Expectation #1: There should be inflation.

inflation

1923 50 trillion mark banknote

For guidance, let’s look at the German currency after WWI as it was relatively stable at about 90 marks per dollar during the first half of 1921.

The German government had eliminated the gold standard for its currency, but had to pay reparations for their part in WWI in gold or foreign currency.

When the first reparation payment was made in June 1921, it started an increasingly rapid devaluation of the mark, which fell in value to approximately 330 marks per dollar.

In the first half of 1922, the mark stabilized at about 320 marks per dollar.  This grew into hyperinflation, the mark falling to 7,400 marks per US dollar by December 1922. The cost-of-living index was 41 in June 1922 and 685 in December, a nearly 17-fold increase.

By fall of 1922, Germany found itself unable to make reparations payments and its strategy to pay war reparations by mass printing bank notes to buy foreign currency caused the inflation of the paper mark to increase to the point that the mark was by fall of 1922 practically worthless.

A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923.

By November 1923, the US dollar was worth 4,210,500,000,000 German marks.

The COVID-19 pandemic is a catastrophic economic event as is Germany’s loss in WWI.   Government spending to solve the problem leads to inflation, because governments cannot make money.  At best governments take money from one place and move it to another.   If there is no place to get money, its creation of money without production, will lead to inflation.

However, especially since this is an election year in the USA, inflation may be artificially kept down.

Expectation #2:  The world’s massive debt and taxes will  increase.

The Business Insider article “US debt and deficit will reach WWII levels” (1)  says” Publicly held debt in the US will reach $20.61 trillion by October, the Committee for a Responsible Federal Budget projected on Monday, just surpassing the US’s nominal GDP of $20.58 trillion.

The debt-to-GDP ratio will pass the previous record of 106% set in World War II by 2023, the committee added.

The US deficit will also swell to historic highs amid widespread spending on coronavirus relief.  The CRFB estimates the budget shortfall will nearly quadruple to $3.8 trillion from $984 billion in 2020.

The debt and deficit forecasts are likely conservative, the committee cautioned, as the government is poised to spend more on economic stimulus, and cheap borrowing costs could drive more Americans to take out loans.

inflation

The CNSNews.com, a politically conservative American news and commentary website founded in 1997, had an interesting commentary entitled, “Government Can’t Keep Acting Like Money Grows on Trees” (2).

Help of Last, Not First, Resort

The first wrong premise is a misunderstanding of the government’s role in a crisis. The government can and should help people in times of national emergency. However, it cannot do everything.

The federal government should be the provider of last, not first, resort. According to the Catholic principle of subsidiarity, the most local body should be first to respond to problems. Afterward, larger social units can get involved. Intermediary bodies like the family, community, associations, and churches are the normal means by which people help each other in times of crisis. They are also the least expensive as services are often given freely.

Unfortunately, these intermediary bodies are in a state of great decadence.

Throwing Money at the Problem

The second wrong premise is that throwing money at the problem will make it go away.

Engineering a Painless Crisis

The final flawed premise of those dealing with the coronavirus is their assumption that all measures must be painless. The crisis must not cause people undue suffering. To reduce the hardships, the government must try to satisfy all needs, for everyone, and at all times. Failure to do so will have political consequences.

The comment that “the most local body should be first to respond to problems” should remind us that the first place we should look for help is to ourselves.   Charity begins at home and actions that lead to a self directed, self financed, fulfilling lifestyle in good times and bad are the foundations of inner peace and happiness.

The economic recovery from the pandemic will not be painless, nor should we expect the government to fix this for us.  The time to start planning to succeed in the recovery should be now.   The place to look for the most help should be at home and within.

An article at telegram.com, a local news source in Worcester County Massachusetts for 150 years, “Government giving away trillions and nobody’s asking ‘How are we going to pay for it?’”

Even without a crisis, the question “How are we going to pay for it?” is typically unasked when it comes to the bloated military budget and the military-industrial complex, American imperialist wars, the drone program, the CIA, NSA, ICE, prisons and detention centers, both public and private, and other aspects of the coercive apparatus of the state. We also do not ask “How are we going to pay for it?” when it comes to the billions of corporate welfare dollars and other forms of “wealthfare” the US regularly doles out to the affluent. Likewise when the Republicans cut taxes on the wealthy, when Trump runs trillion dollar budget deficits, or when the Republicans balloon our national debt to over $23 trillion or about $70,000 in debt for each American.

Taxes will have to be increased, but do not expect equality.  As always a few will become richer in the recovery (you want to be part of this group) and the majority poorer.

An article from courthousenews.com “Unlimited Claims Feature in Covid-19 Bailout Will Help, You Guessed It, Millionaires” shows how the process has already begun.

Those making $1 million or more stand to benefit most from tax changes Congress adopted as part of the $2.2 trillion coronavirus-response package, according to the findings of a nonpartisan congressional report made public Tuesday.

The Joint Committee on Taxation had studied a feature of the CARES Act passed in March that allows the owners of what are known as pass-through businesses to claim as much as they want in excess business losses.

Without the cap, the nonpartisan congressional body found that nearly 82% of the benefit will go toward people making more than $1 million.  Those 43,000 households would see an average tax liability reduction of $1.6 million, according to the analysis, which also found that more than 97% of the benefit overall will go to people who bring in more than $100,000.

Expectation #3: Interest rates will become bifurcated.

What will happen to interest rates?  The huge and growing government debt is only sustainable with low interest rates.  Yet the demand for liquidity creates upwards rate pressure.  For example the home rental business at AIRBNB is suffering as the coronavirus pandemic freezes global travel, so the company has been forced to borrow.

The company just issued a billion dollar bond that gives away equity at a low price, plus borrowed another $1 billion.  The second billion dollar loan is for five years, with an interest rate of 750 basis points over the Libor benchmark, which means the current rate is about 8.5%.  However the debt was sold at a discount so the loan’s current real rate is around 12%.

What a disparity.  The current yield for  a five year US Treasury is 0.42%.  The AIRBNB five year loan rate is 12%.  I do not yet see how spreads of this magnitude will work their way through the market.   T he US government simply cannot afford to offer a 12% yield.  Investors simply cannot be told not to invest in commerce that pays about 25 times as much return as government debt.

Of course we already see the disparity that can exist.  Credit card interest rates (according to bankrate.com) already run over 17% and up to 29.99%.

Look to take advantage of low rates is you borrow and high rates is you invest!

These are a few of the outside forces to continually monitor; inflation, interest rates and taxation.

No one knows where the government, the economy or society will go, but knowing were they could go, gives us places to keep watch so we can react and adapt in this unpredictable and fluid situation.  Please understand, the outside forces are out of control and beyond our control.  The resulting recession or depression will not be painless for the majority.

We as individuals do not have to be among those who suffer.  There is a lot we can do to have a self directed, self financed, fulfilling lifestyle in good times and bad.

We can be among those who have inner peace, happiness and prosperity so we can lead our family, our friends and neighbors into better places.

I have described many of the steps that can help positively lead us through the pandemic and economic disaster in my report “Live Anywhere-Earn Everywhere”.  See details below.

Stay well. Be positive. Disaster like money, when spread around, becomes the fertilizer that encourages new things to grow and you can be part of those things.

Gary

Surviving the Siren’s Song

Live Anywhere – Earn Everywhere

How to Gain Extra Freedom – While Almost Everyone Loses Theirs.

Mythology tells us that Sirens are beautiful, creatures, femmes fatales.  They lure us with enchanting, seductive songs into treacherous, always-shifting currents and shoals ready to rip the guts of our foundation from us.

siren

The last century of technology, from steams engines to quantum computers, is our Siren.  The song has brought us unbelievable freedom.

Yet the same technology that strips away the restraints created by time and space also provides tools for those who wish to bind us in other ways.

For example, technology used to track COVID-19 will increase government use of mass surveillance.

The nations use smartphones to track us. They  even receiving support from private tech companies, like Google and Apple, who would normally oppose such invasion of our privacy.

After all who would dare not help ease the pandemic?

The problem is, once a government gets its hand on such power, it rarely lets go.   The world will slide into permanently increased surveillance.

Although the current tracking efforts may appear entirely legitimate, many pose a risk to our rights to privacy and freedom of expression.  Imagine, big brother knowing where we are, where we have been, and who we have been in touch with, even what we have said.

Another Siren is the modern technology that allows goods to speed goods and people along in a global economy.   So to does it allow the bad to enter as we can now see so well.

The COVID-19 pandemic has proven this point!

Yet we should expect the world to get better.

We should and live and earn based on that this positive expectation.

However we should also live a lifestyle that prepares us for the bad times as well as good.

For example my family really used technology to make our businesses mobile and flexible.  At age 73, I work here in Florida reaching clients globally.  I can also work at our North Carolina farm or anywhere I have access to the internet.  I have been able to work every day right even having COVID-19.

gary scott

I can hike into the woods at our farm and be working if I should desire.

My webmaster lives thousands of miles away yet we easily run the business together.

My son, an attorney in England, was trapped in the Czech Republic when the airlines shut down.  He has been able to continue his normal work from a small rural town near Vienna.  His productivity has not been diminished at all.  It may have even improved.

My daughter who lives in England is working on a project in India.   The inability for her to travel has not stopped her.

Another daughter who runs a dance/drama/singing school for children saw her classes shut down but was quickly doing lessons for the kids via Zoom.

I explain how to live and earn this way in a comprehensive report I have written entitled “Live Anywhere-Earn Everywhere”.

We have created a lifestyle… so if the world goes really sideways… we will survive and prosper anyway.  We do not give up anything much.  We can enjoy the good parts of the new economy, as we protect ourselves from what can be bad.

This lifestyle is shaped by what we do, how we do it and where we live.

The COVID-19 pandemic will create innumerable new opportunities.  Many of them offer enormous income potential and they even work well (in some cases better) in disaster scenarios.

In my family’s example, we use technology to have virtual, global businesses. We use the internet.

Where we do it is from is places where we can also have a backup business that will thrive, without government interference, in troubled times.

Let me provide two simple, concrete example.  North Carolina and ginseng.  Florida and loquat.

Ginseng is a great health root.  The demand is growing especially in China.  At times good dried Ginseng sells for $1,000 a pound!  This is an incredible and easy crop to grow.   The less care you give it, the more valuable it can become.  Yet if everything goes south, the health qualities make it an excellent barter item.  Once you know what to do with ginseng, it’s easy to grow in your back yard in northern parts of the world.

Even better, one of the best kept secrets is that ginseng and 125 other medicinal crops, that are currently unsustainable, can be grown on land in North Carolina and a couple of dozen other states that is extraordinarily cheap, yet are especially uncrowded safe and healthy.

goldenseal ginseng

Ginseng we grew in our former North Carolina back yard.  I know about growing ginseng through experience and explain why and how in the report “Live Anywhere-Earn Everywhere”.

Loquats are another example of an easy to grow crop that help promote natural health.

loquats

Here I am by one of the many loquat trees at our Florida farm.

Loquats are a great fruit for making jam and such, but the loquat leaf has amazing medicinal qualities.  Its is a registered medicine in China and due to its anti viral and respiratory system enhancing qualities has an especially  growing demand right now.   The images below from Amazon.com show that the leaves sell for about a dollar per leaf!

I have many trees on the farm but started growing loquat seedlings last year.

loquat

I have been drinking a lot of home made loquat leaf tea during the pandemic.

The report “Live Anywere-Earn Everywhere” shows specific places that reduce your living expenses, easily increases your income, makes you smarter, healthier and provides tax benefits as well. 

Learn about these specific places in our “Live Anywhere – Earn Everywhere Report”.  More important learn what makes these places special and seven freedom producing steps that you can use to find other similar spots of opportunity.

Here are some of the experiences this report shares:

The report includes a tax and career plan broken into four age groups, before you finish school, from age 25 to 50 – age 50-to 65 and what to do when you reach the age where tradition wants you to re-tire.  (Another clue-you do not need to retire and probably should not).

Lowering taxes is vital now as the massive government spending during the COVID-19 pandemic will eventually lead to increased taxation.

The report is very specific because it is about what Merri and I, our children and even my sister and thousands of our readers have done and are doing.

“Live Anywhere – Earn Everywhere” focuses on a system that takes advantage of living in Smalltown USA, but earning globally.

  • Learn about the magic of the north facing slope.   This is where Merri and I live almost half of our time.  North facing mountain land is some of the least expensive in the world but has hidden values that the report reveals.  There is a lot of this land and a lot of hidden value that you can tap.   When we bought our Blue Ridge farm (252 acres) I mentioned this to my Swiss banking friend.  “That’s bigger than the entire village where I live!” was his response.  Smalltown USA offers a last chance at having a lot of space.  By living in two Smalltown places there are enormous tax advantages as well.  One step in the system saves Merri and me over $28,345 in taxes a year.

The report shows how to buy cheap north facing slopes and create an income producing tiny home for $29,000 or less.

If you lack the $29,000 to invest, a start up using tents is even less.  These are tipis we put up at our farm before we built our first tiny home.  Learn how they can create tens of thousands of dollars in income for you.

Fwd: gary-scott-tipis

  • See ways that small businesses like Tipi rentals can create BIG tax savings as well as extra income.  For more than 30 years Merri and I have enjoyed a strong six figure income, some years more, in the millions.  Yet there have been very few years when we had to pay federal income tax.  The report lays out a three structure program and how it is used when you are in school (up to age 30), then from 25 to 50, 50 to 70  and beyond 70.   Learn why Chapter C corporations and pensions can be better than the normally recommended Chapter S.  See how new mileage log rules gives you a possible opportunity to increase your tax deductions using IRS Form 4562.  Using a two-vehicle strategy you can gain $12,976 in new deductions even if you do not have to drive one mile further or spend one additional penny on your car.
  • See how a greenhouse can help you eat better and be healthier, plus provide income and a tax deduction and be funded by a government grant.

gary-scott-farming

Our North Carolina greenhouse.

gary scott greenhouse

Our Florida greenhouse.

  • There are similar benefits from having a second home office defined in IRS publication 463 and IRS publication 587, even if your desk is a dining room table.  The report also shows how your dining room table can become an actual income producer as its creates a huge tax deduction at the same time, not to mention a great place to eat, work and lay out plans for a brighter, safer more lucrative and enjoyable future.
  • Living in this environment is also healthier, economically as well as physically.  You’ll see in the report how researchers at Harvard found an amazing correlation between living in conditions found on north facing slopes, longevity and mental health.  The researchers were quite surprised by this strong correlation that also extended into mental health.  In addition to feeling better, reducing stress and having more Joie de Vivre the places outlined in “Live Anywhere-Earn Everywhere” can help you avoid hospitals, high cost disease management (aka health care) and BIG pharma while providing an investment opportunity in three plants that have some of the fastest growing demand in natural health care.  These three plants are just one of seven business opportunities that can create multiple streams of income.
  • How changes in cell phone and internet technology eliminated the need to be in one place.   An old law that creates new opportunity for small business in small towns is available to everyone.
  • Use the specific search and purchase guide.  Construction plans are included that show how to generate first tier income that leads to five, second tier avenues of earnings.
  • How to pay off old debt and avoid new debt by avoiding spurts and embracing value. 
  • Learn seven skills that will always have value.  See how to turn First Aid, medicinal plants, hospitality, food, trees, alternate energy and writing to sell into everlasting, low stress wealth.

merrily farms

This pond we developed at our farm gave us great pleasure but also helped create a safe, healthy food supply and created a tax deduction as well as it helped us develop a trout raising business.

trout

We sold these trout at a local butcher shop.

I am offering a 50% COVID-19 discount, but my guarantee remains the same.

This may be the most important report I have written in 50 years.  The information is certainly the most urgent.  Do not delay.  The risks are upon us right now and you’ll understand how the final steps of the alliance are taking place as you read the current news.

To take any risk out of gaining this urgent information with my full satisfaction or money back guarantee.  If you are not totally happy, simply let me know.  I guarantee you can ask for a full refund any time within 60 days and I’ll refund your payment in full, no questions asked.

You can keep the report as my thanks for ordering it.

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Our COVID-19 special offer gives a 50% discount on our $39.99 “Live Anywhere-Earn Everywhere” report until Monday  April 20, 2020.

 

(1)  www.businessinsider.com/us-debt-deficit-reach-wwii-levels-coronavirus-economy-government-watchdog-2020-4

(2) www.cnsnews.com/commentary/john-horvat-ii/government-cant-keep-acting-money-grows-trees

(3) www.telegram.com/news/20200413/government-giving-away-trillions-and-nobodys-asking-how-are-we-going-to-pay-for-it

(4) www.courthousenews.com/unlimited-claims-feature-in-covid-19-bailout-will-help-you-guessed-it-millionaires/