Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
financialsense.com / MATTHEW KERKHOFF / 02/02/2016
Question – What do you do when you really need someone to spend money?
Answer – You tell them they’ll lose it if they don’t.
Spending is the lifeblood of an economy. At a social level many people frown on consumerism and materialism, but the fact is that economies function based on the transmission of goods and services from producers to consumers.
The reason spending is so integral to an economy is because every dollar (euro, yen, yuan) spent represents another person’s income; reduce spending, and you reduce aggregate levels of income. Reduce spending enough, and the whole system can gradually come to a stop.
That’s why central banks have, for years, combated periods of slow economic growth by enticing consumers, businesses and governments to spend. Historically, they have achieved this by lowering interest rates. This has the effect of simultaneously reducing the cost of money, and also the burden of existing debt.
The chart below shows the 10-year Treasury rate over the last three decades. The trend toward lower interest rates is very evident, and this represents a massive tailwind from an economic perspective. Through all the ups and downs of the last three decades, all the booms and busts, the overarching trajectory for interest rates has been down, resulting in a long-term simulative effect.
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Thanks to BrotherJohnF