RIDING IT OUT

I had been talking to someone who lives in Florida. She was telling what it was like to go through two hurricanes. In the first one, they sought a safer clime inland. She lived on the eastern coast of Florida in Hobe Sound. She said that a lot of other people had the same idea and the congestion was unbearable. She vowed that her and her husband would ride out the next hurricane.

Sure enough, the next hurricane came and they rode out. Riding out a hurricane means that you batten down the hatches, as much as possible and you wait until the storm passes. You know, at some point the storm will leave your area. It is a matter of being patient. When the storm finally passes, then you can access the damage. This is something that you cannot do while the storm is raging.

Hurricanes are something that are beyond our control. A hurricane is considered to be an act of God. In a similar way, we have no control over the economy. The economy is bigger than any one of us. It requires the attribute of omniscience to understand all the ramifications involved in an economy. The government clearly lacks omniscience, no matter how godlike it claims to be. They still cannot turn stones into bread.

REO Speedwagon did a song called Riding the Storm Out. This is good advice in regard to our present economic situation. Prices are rising on a daily basis with no end in sight. We know that at some point, they must tail off. If they do not then hyper inflation will cause a complete collapse of the economy that will take years to recover from. The reasons for this period of price instability are many and some are very complex.

Essentially, it is a law of supply and demand issue. The reason for the present maladjustment between supply and demand is increased worldwide demand and the lack of present supply capacities to meet that increased demand. Any type of crop failures will contribute to a lack of supply. These are things that will correct themselves overtime. What cannot be corrected by the market and by supply and demand is government intervention in the marketplace.

For the economically challenged, they will blame business for price gouging. The government even passes laws against gouging. Any gouging will be short lived and is an exception and not a rule. Governmental policies always gets a free pass from these people. This is because they are not bright enough to see that the governmental policies leads to crisis after crisis. The government implements a policy that fails and then implements another that fails and then the blame is invariably shifted to the business world. If only businessmen were not so greedy for obscene profits, we would all pay lower prices.

Businesses are subject to the law of supply and demand. Government policies are not subject to the same policies. Government possesses the legal monopoly of coercion. One governmental policy that has failed is the constant lowering of interest rates. This has encouraged people to borrow money at below market rates. This gives the borrowers a false sense of security. This forces the prices of the underlying assets to rise. Now someone can afford a bigger house than they need because the interest rate is lower. It leads to a situation of too much money chasing too few goods.

Government regulation of the oil industry has forced prices upward. Environmental regulations make the refineries have to change to different blends during the spring and summer. This causes the price of gas to rise. Of course, the government gets a free pass when it comes to a gallon of gas. Each gallon of gas has Federal and States taxes built into it. Since the consumer only sees the price of a gallon of gas, he falsely assumes that all the money is going to the oil companies. He does not see the check from the oil companies to the government agencies. This is the way the government would have it. Like Satan, the government seeks to hide in the shadows and have the dupes blame businesses for the rise in prices.

When something is beyond your control, the only thing you can do is control what you can. With rising prices, living frugally becomes all the more essential. Those who live frugally as a matter of course are not as affected by rising prices as those who are spendthrifts. The self-disciplined and self-governed have great advantages over others no matter the economic climate. They are not deep in debt.

This is another thing that you can control, your amount of debt. The wisest thing to do with debt is to pay it off. No ifs or buts about it. Once paid off, you will have more money available to handle the extra money necessary to offset rising prices. This is essential in riding the price rise storm out.