Jason Rines (iThinkBig)

Stagflation and the Limits of Growth

I ran numbers in June 2007, the economy will shed 20% in the short and mid-term as it readjusts back to a Save and Invest economy.

As many have figured out recently, there is no job creation to cushion the downward spiral. This is deflation we are in, not stagflation although the excess liquidity, market crash and oil shocks do feel a lot like the 1970's (right now, this will get far worse).

Devaluing our dollar as monetary policy is a well documented remedy over hundreds of years (if not thousands going back to Romans who added other metals to there silver and gold coins) to avert public debt defaults. -20 GDP in June of 2007 was calculated, downward over a four year span. Market crash already happened in March, historically real fiscal pain felt 3 years afterward (similar: 1929 crash, 1987 black Tuesday, pain felt in 1933 and 1990). This deflation equations calculated then in June of 2007 was obviously before the massive oil shock which we have just started reeling from.

Depression by 2011 but agree with other posters, we will recover quickly. The gridlock in Washington and bad governments on ruinous fiscal policy paths take time to slow down the momentum and reverse course. Let's hope the fiscal house of cards doesn't collapse completely, but that now depends to me on energy and job creation policy. In-between, much money can be purchasing deflated assets and holding them over a five year span but I suggest waiting until at least December of this year to deploy such a strategy. Have cash on hand, bullion and 30 days food and water supply.

Me and business partner buying a place 50 miles from any major metro in October, first time in my life I was concerned to insulate my families risk in such a physical way. But America will go on. I am staying, much rebuilding will need to be done financially and politically. Very tempting to not leave the country, but this nation is home and some must defend it or we will see an emerging world order dominated by the Middle East and Russia. Not something I want to see...