Money Printing, Termites and the Doom Loop
What It Means For Your Cash
My housekeeper called to tell me that termites were eating my house!
More specifically that the guest cottage at my home in the African bush was being eaten by termites.
The cottage is a beautiful little place about 300m from my main home and I love it to bits. It was the first place I transformed when I took on this project and it is a sanctuary within a sanctuary for me. Bottom line I did not want it being eaten by termites LOL.
I dashed up to see what was going on and lo and behold termites had been chomping away at the inside of the wooden frame and now that there was practically nothing left on the inside the truth had been revealed! I could put my finger right through it, the varnish that was the only thing left.
Fortunately we caught it in time before they had chomped through the rest of the cottage and left me with a pile of bricks and a broken heart.
TERMITES ARE IN YOUR MONEY!
These termites reminded me of the money printing being done by our governments.
CLICK HERE to watch the video on this topic.
Our currencies are being devalued because governments are printing money to pay for their spiralling debt.
Right now, the US Government has unprecedented debt.
Yep... the US government is in a $33 trillion debt hole.
🤢 $33 Trillion Debt 🤢
That’s bigger than the size of our entire economy.
From 2008–2021, this out-of-control debt was manageable. That’s because interest rates were close to zero. So the interest the taxpayer paid on that mountain of debt wasn’t a big deal.
But that all changed…
Since 2022, the Federal Reserve has hiked interest rates 11 times and most countries around the world did the same. In the USA and UK - these interest rate hikes have resulted in interest rates over 5% – the highest level in two decades. And in developing countries like South Africa it now sits at over 8%.
It’s a huge problem for our governments and therefore a HUGE problem for us.
Let me put this in perspective…
Imagine you had a $100,000 balance on your credit card. And every month, you only made the minimum payment because you were paying close to 0% in interest.
And you’ve maxed out your card because you thought - hey I can manage this!
But what do you think would happen to you if your credit card company jacked up your rate from 0% to 5% virtually overnight?
That’s exactly what’s happening with governments right now. They can’t afford the interest on their debt.
SO WHAT CAN GOVERNMENTS DO?
A lot of the problem could be solved with some serious belt-tightening. The exact same strategy individuals must use to break free from the debt habit.
BUT.. Imagine a politician running a campaign with this promise:
Elect me and I'll increase your tax, cut spending and reduce your benefits.
I don’t think that’s going to happen.
So instead they do the “easy” and lazy thing. Print more money.
If there’s one thing governments know how to do, it’s printing money.
BUT when governments print more money the value of the currency decreases and so inflation increases.
It’s not a complex relationship to understand. Economists called this a “doom loop.”
WHAT CAN YOU DO?
Firstly - Get Out Of Consumer Debt
Just because politicians don’t want to do what needs to be done doesn’t mean you can’t tighten your belt! Get out of consumer debt! Bottom line. Having consumer debt makes you vulnerable. Take back control of your life.
Secondly - Get Your Cash Working!
In a high inflationary environment your cash is reducing in value every day!
You must NOT have your cash sitting around in cash. Despite increased interest rates that can make savings accounts seem a bit more exciting than the long period of low interest rates - your cash must not sit in cash.
Yes, you need to have a cash safety net and an emergency fund which will be in some form of interest bearing account, and you’ll have your day to day necessity spend in cash BUT for all your other money…
Cash is not king.
Cash sitting in cash is making you poorer each and every day.
Get the cash converted into assets. Being invested in a range of different asset classes is the only way for you to maintain (and grow) your buying power.
To create wealth you MUST maintain the value of your hard-earned money and get it growing.
A simple portfolio made up of equitie, real estate and some fixed income assets, is what is required to get your money beating inflation.
Don't let the financial equivalent of those termites eat away at the very foundation of your wellbeing.
