Comment: Inflation

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Inflation

You requested thoughts from where I live. Ok, I have two separate "worlds" I live in.

My small town was built on manufacturing but resides in the middle of farmland. Because farming is doing great, our state is doing well and all unemployment and business incentives (public and private) are shunned. Since mfg is in the crapper, our town has incredibly high unemployment and as you can guess we get no help. Jobs and companies are gone. People are now working for 1/4th of their 2008 wages and others are commuting 50-60 miles round trip. Houses are sitting empty or selling for $14-40k for what went for $80-100k previously.

My other 'world' is a startup venture. I'm trying to fund a business based on new solar technology but as you can guess, no midwest investors see the need. To them, biofuels and ethanol (plus coal and nuke) will solve all those pesky non-existent energy problems that people talk about on the news. East and west coast investors have zero interest in funding someone not nearby. This makes it extremely tough to even get connected and when a meeting does take place, their terms are abhorrent. Last year, I dropped my goals and re-wrote the business plan to a shoestring startup layout. From a dozen meetings, my best offer was 80% board membership, 75% CONTROLLING, non-dilutable stock and the CEO slot in return for $140k initial funds. This for a plan with over $1B annual revenue. Talk about sharks.

With the first situation in place, I'm now commuting 44 miles each way to support an unemployed and uninsured spouse and 20% of our 6 kids' family needs. There's no $ left to start things in the garage. I believe this scenario comes into play with most of the advancements ready to go commercial. It's a truly gory game out there and it's all due to inflation.

Inflation only matters to a person relative to what they purchase. If you buy food, power, gasoline, phone and insurance with 90% of your take-home, you really don't care about things like housing inflation or other stuff.

The problem comes in when inflation is passed on to you in those products from another type of product. This hidden inflation hurts much more because it's almost unchecked. Case of ethanol. Pushing ethanol actually raises prices (through taxes) because it's more expensive than traditional gasoline. That part people argue about. Some people also realize that it displaces farmland, causing a shortage and price increase there. Others realize that it uses up a chunk of the grown corn which feeds most US beef and that causes inflation there. As beef prices rise, it pulls all other meats with it and those pull other foods along. So, as foods rise, the wages should rise but can't. This causes unemployment and higher taxes (indirectly though). The whole system is connected.

The only real thing that can monitor this process is the quantity of money chasing the quantity of goods to be sold. If this money fails to flow to workers in equal proportions, the game is over. Inequality will perpetually increase and everything fails eventually.

However, knowing this gives us an edge because we ultimately have the power to decide who we work for and what we get paid. The collective "we" just hasn't learned how to accomplish that yet. That, is the only problem we should be working to fix. The actual solutions for how to do it are easy: They include organized and focused boycotts, independent economies (like what's available via Bitcoin), self-sustainability and even privately accountable social aid programs. So it's not the solutions that we need. It's getting enough people behind one to make it work. After that, the snowball will gather both mass and speed as it rolls down the mountain.