Deflation now but some day inflation. Big inflation.

We are still in the throes of deflation but deflation never lasts forever.  At some point the inflation will come.  It must come.  And when it does come, it will come big.  How big?  I think Addison Wiggins has done a good job of explaining the potential in his free online slide presentation which is presented in a narrated video style format.

Addison Wiggins is someone that I have read and listened to for years.  He "gets" most of the problems that the US and the world is facing today.  I have subscribed to his free email, "The Daily Reckoning", I have read his book, "Empire of Debt" and I went to the public showing of his moving "IOUSA".  He is an excellent resource and his information helps fill in many pieces of the big jigsaw of understanding.

Smart people will take advantage of the free history training provided by his recent video.  Yes, it's a bit long winded.  Yes, it's really a sales tool for things mentioned at the end of the video (paid subscriptions to his recurring publications).  He also provides "suggestions" as to particular financial services which can save you from bad times.  As smart and perhaps as well intentioned as he is, let's face it, he's gone to all this trouble in order to sell you something.  His ability to pay his mortgage, feed himself, etc. depends on selling you these things and so he must sell them.  One of the advantages of being an uncompensated blogger (see any ads on my blog??) is that I can say whatever I want to say whenever I want to.  Nobody owns my words but me and I lose nothing for telling the plain truth as I see it.

My advice is to invest the time (30-40 minutes) it takes to watch his video but to just cut it off when Addison begins to talk about how to protect yourself because all of his suggestions are really just the sales pitch.  Your goal is to learn something without swallowing the sales hook.  I'm not saying that his suggestions must turn out badly and in fact some of the basic advice makes sense.  For example his first suggestion is to "make sure you live and work in someplace safe".   Well, that's pretty basic advice.  Have you noticed that even State Farm Insurance Company is now telling you exactly that in their latest commercials? 

Addison does expand on this to explain what safety is; he suggests you avoid states that have made significant unkeepable promises.  If I had to summarize his position it would be that broken promises (especially those made by trusted government agencies) will be the fuel of civil disobedience.  I agree with this.  As part of his sales hook he will share his research of where to move to avoid some of this.  The only problem is that I wonder if there are such places.  Even states which are touted to be better off then others (i.e. Texas vs. California for example) may have hidden, off balance sheet problems which would only surface after things get bad elsewhere.  One look at Rick Perry's insincere, elitist, smiling face tells me that things are not as rosy in TX as they appear.  He's just another disingenuous stuffed shirt looking to cash in on the ignorance of the people.

Addison's next suggestion is to move your money out of harm's way.  Sounds great, huh? Addison suggests moving money into overseas asset storage or into "underground banking" suggesting that risk free investing is possible.  His testimonials focus on people touting their "investment" gains as if a bank is a way of investing as opposed to just being a way to store (save) what you earned. Since I'm not trying to sell you anything it's easy for me to say: all of these are red flags for me.  Where will your money be safer in a crisis: in your hands or in the hands of a stranger?  Ummm, I'll bet on myself, thank you.  I'm pretty sure I won't rip myself off when the $hit hits the fan and I'm also sure that if all the bad things happen that are pointed out in Addison's video that the US will not be the only place in major trouble.  The whole world will be in trouble and there will be no safe havens.  But hey, it's hard for Addison to make money selling floor safes, food vaults and submachine guns which are probably the best way to ride out a global financial meltdown.

I could go on but out of respect for Addison I will say, just ignore the 2nd half of the video and learn what you can from the first half.  As you consider his video, consider these things as well:

• The US is at the top of the debt Ponzi.  Our position there will tumble for sure over time but we will be the last to get hit.  Europe will collapse, China (what a real estate bubble!) will collapse, Japan (debt:GDP 200+:1!) will collapse and South America will collapse before we do.  Why?  Because they have our debt notes and we have the physical goods that we traded for them.  That is not going to change any time soon.  Our government has already shown that when foreigners try to bring their dollar savings back into the states to buy assets like oil companies or sea ports, the US government steps in and blocks the sale in the name of national security.  We will only see more of this protectionism.
• Any "profits" you make on any of his suggestions will be taken by the government in the form of taxes and inflation.  The best way to protect your stored labor (i.e. your savings) is to store it in universal money (gold and silver bullion coins) in your own secure, hidden facility.  It's just too easy to do this to consider other risk strategies that will all be monitored and probably criminalized by government as it fights to retain its current level of power and consumption by sucking the life out of the citizens (who it considers to be its property as a rancher would consider its livestock).  That's right, the government believes that it owns you and that you can be "monetized" in any way that it likes.  This is not so obvious perhaps right now but when the crap hits the fan the masses will finally figure it out.  While we were sleeping and allowing government to grow out of proportion, it stopped being useful flesh in the body and instead became an aggressive cancer which is now intertwined into everything such that it cannot be easily extricated without killing the patient.
• The US military is ridiculously over funded.  Back in WW2, tiny little Germany in cahoots with tiny little Japan were considered a real threat for taking over the world.  When the American people begin to figure out that the America Dream was exactly that, a credit induced illusion, then the appetite for war as a mechanism for staying on top will likely increase.  While many in the world wallow around in knee deep mud in order to scrape a living from the Earth (and are grateful for it), Americans have been taught that our lives and labor are worth more than other people's.  It's a nice illusion if you are on the right side of it but when the illusion can no longer be perpetuated using fake money there is a better than even chance that it will be backed up by military force.  The option to "Go Roman" on the world has been left wide open as a means for retaining US global dominance.  The US military will one day be faced with two choices: either pay for your own existence somehow (i.e. conquest and plundering) or be downsized massively because Americans cannot afford to pay the cost of our own military.  I can't say which route will be taken.  Right now I see it as a coin toss in terms of odds.
• No matter what you do, learn from history as it tends to repeat itself or at least to rhyme with the past.  People today are the same as people back in Roman times or at any other time in recorded history.  If the herd reacted a certain way before then the odds are high that similar stimulus will result in a similar reaction in the future.  Never forget that while the people of the world have already proven that we can produce enough goods in order to satisfy the living needs of everyone currently alive, they have only put in the effort to do so because they were promised things which they can mathematically never receive.  As long as money continues to be the motivation for production and as long as the money supply continues to be fraudulent we will always be at risk that the producers of the world will simply stop producing (something like a global strike if you will) and that the store shelves can become empty in a matter of 3-4 days.  This can happen.  It has happened.  It will likely happen again.  Make sure you have your own stock of canned and dry goods today while prices are cheap and people are not killing each other in order to get that last can of beans on the shelf.  You can put up with almost anything if you have food to eat and bullets to protect yourself from those who didn't have the brains or the sense to stock up like you did.

If all of the above just sounds too "gloomy" to be true then you are probably in denial as Addison's video (and many of my past writings) predicted would happen.  The Kubler-Ross grief cycle will not be denied.  It took me a couple of years to get though it to the point where I can see and think with clarity.  Most people will get a crash course in it over the coming years and it could occur much sooner.  Look at what is happening in the world:

• Greek sovereign debt is now universally agreed to be worth only 50% of face value.  IMO that is still way too high.  It will lose 90% or more before the house of cards has finished collapsing.  Some financial authorities are trying to claim that the 50% default is not a default but the US credit ratings agencies which are trying to rebuild their massively ruined reputations are calling bull$hit on this obvious attempt to sweep default under the rug.
• Spain, Portugal, Italy are now on deck and they will want their 50% off sale too.  This is 100% guaranteed because they cannot pay back 100% of the debt.  In fact they will not be able to pay back any of it.  High unemployment will guarantee inability to repay.  All of it will eventually default as the Eurozone effectively breaks up.
• Chinese real estate bubble is rolling over with gusto.  Expect big civil unrest as a lot of not-so-humble Chinese suckers finally realize they have been played.
• The middle east is in shambles with obvious chaos, riots, mass public murder by the authorities shooting into demonstrating crowds, despots being dragged into the streets and executed, you name it.  The aftermath of the serial takedowns of US-installed government puppets in the middle east is going to be a big deal and it will likely be more anti-US than ever before because it is clear that the US has been meddling in everyone's business over there for decades.  As Ron Paul likes to remind us, the accepted CIA term for what happens after the meddling eventually falls apart is known as "Blow Back".  Idiots who did not listen to Ron Paul will be feeling the effects of middle east blow back for decades to come.
• The Canadian housing bubble is going to roll over big time and so will the Aussie housing bubble. 

These bubbles were driven by profits from exporting commodities to China which itself was building a huge housing bubble.  Canada and Australia will follow Bubble-China over the cliff.  The chart at left shows how big the Canadian housing bubble is in aggregate.  Clearly, averages can be misleading because it combines sky high property values in Toronto with lower prices in other areas but at the end of the day the only real thing to care about is that it was all funded by banks.  When the debt goes bad, and it will because it must, the Canadian (and Australian) banks will be saddled with tons of bad debt that they have already determined will be dumped onto the back of the government (i.e. the taxpayers).  The whole world is one big debt Ponzi.  There are no "safe" places.  There is only self-reliance and reliance on family and friends which is, after all, how it was always meant to be before government took over using the corrupt tools of fiat currency and fractional reserve lending.