The Betrayal of the Savers

There is just no stopping this beast that is eating through savings and currencies, and also the reputation of central banks fecklessly pretending to stop it. [Gilder's Daily Prophecy] March 21, 2022 [UNSUBSCRIBE]( | [ARCHIVES]( Attention! Before You Read Any Further… Before you read any further in today’s issue, an urgent situation needs your immediate attention. If you don’t plan on [claiming this new upgrade]( to your George Gilder Report subscription, you’re missing out on a huge opportunity. Right now is your chance to claim one of the biggest (and most valuable) upgrades we’ve ever made to a newsletter. We’re taking The George Gilder Report to a whole new level and I’d hate to see you left behind. [To see how to claim this new upgrade, click here now.]( Once you’re done with that, read on to see today’s issue. It’s come to our attention that you might be missing out on extra benefits exclusively for Gilder's Daily Prophecy subscribers. Check out our website where you can find archives, updates, and everything else included in your subscription. You can access it by [clicking here now](. The Betrayal of the Savers [Jeffrey Tucker]Dear Daily Prophecy Reader, The cash you hold is losing value. Financial markets are volatile, but even when rising, portfolios can’t keep up. Even the best-managed funds are scrambling for returns. Savings seem ever less like savings. Even with cost-of-living increases in salaries and wages, the purchasing power is shrinking day-by-day. The promises of “transitory” inflation turned out to be as credible as the promises to control the virus. Welcome to the strange world of persistently high inflation. It becomes a tragedy for the poor and working classes, who are daily astonished at the new terrain of high prices for everything that makes life good. But it is especially awful for the savers. They are all being punished for frugality and exercising good personal stewardship over their resources. Cash and Mattresses It was not a surprise to any economist that personal savings soared during lockdowns. This is not only due to few opportunities to spend money. That was the least of it. When a crisis hits, risk aversion dominates confidence. The pace at which money changes hands collapses. The cash stays in the mattress. This is due to fear, and it is entirely reasonable. This boost in savings during a crisis prepares the way for recovery. Once it ends, deferred consumption in the form of savings becomes the basis of investment in capital that then becomes the basis of the rebuilding. It’s a natural economic phenomenon. You can call it the silver lining of any crisis. There is recovery and it is built on the real economic behaviors inspired by the crisis itself. You can see this happening in the data from 2020 in personal savings. It ballooned from 7% of income to 33% practically overnight. In fact, we’ve never seen anything like this before. It’s a measure of just how awful things became so quickly. [chart] Of course, it was brief but still valuable. Household savings soared 120%. Corporate and business savings showed even more intense risk aversion, as they socked away a clean $600 billion in so many months. The Paradox of Saving You might think all of this is great news, the only good news of any economic crisis, but not everyone agrees. In 1934, John Maynard Keynes introduced the idea of the paradox of savings: what’s good for the household is bad for the macroeconomy. The reverse is also true, in his view: what seems bad for the household is actually good for society. So, sure, it might be good for household finance to save, but it is very bad for the whole of society. And while overconsumption and inflation might be bad for the household, it is fabulous for society as a whole. Essentially, his theory was an attack on hundreds of years of economic wisdom. The basis for it was his view that spending and consumption are primary economic drivers. His proof: in a recession, spending plummets. Keynes was of course confusing the effect with the cause. It’s hardly an unusual error, but in this case, it was devastating. It suggested to governments that the right way to get out of the crisis is to spend and borrow as much as possible. That is precisely what most governments did in the whole of 2020 and 2021. The spending was completely out of control. That spending ended up serving as a subsidy to lockdowns, allowing governments to keep up their egregious policies long after that had proven to be so damaging. It also laid the foundation for what would follow. Today, we see the effects in inflation that is in most sectors, now running into the double digits. It is cleaning out the purchasing power of saved resources, punishing everyone who behaved responsibility and rewarding those people who did not. It is an utter betrayal of those who made the right decisions. Crazy “Back Door” Way Into Alt Coins [Click here to learn more]( It’s no secret that people that are getting in on “alt coins” (any coin other than Bitcoin) have had the chance to make a fortune in the last year…. Virtually hundreds of these tiny cryptocurrencies have shot up 1,000’s of percent.. You don’t need to risk any money at all to get into some of these. You see, our resident crypto expert James Altucher has found a weird [“back door”]( way into these types oftiny coins. One that requires NO monetary investment on your end..(just a few minutes of your time) I know that sounds crazy, but it’s 100% true.. Don’t believe me? Just [click this link]( and James will explain everything in less than 2 minutes. Remember: [This could be your one shot to get in on some of the fastest moving cryptos of 2022 completely free](. The Planned Inflation When governments and central banks behave in unbearably stupid ways, it is worth asking whether there might be a point to the madness. That’s how I feel when I look at M2 data from 2020-21. [chart] This money printing peaked at a 26% rate of increase. Or look at the raw money data (again, we have to use M2 because they changed the definition of M1). The Fed inspired the addition of some $6 trillion to the supply of money! [chart] It’s possible that some people at the Fed figured that they would get away with this because they loosened dramatically in 2008, with no substantial effects on prices. They became arrogant and too sure that the net effect of all quantitative easing is positive. On the other hand, it might have been done with a full expectation that this would generate some wild depreciation in prices in the future. Under Keynesian theory, this is a good thing because it provokes people to spend, rather than save. More than that, it punishes savings, which is presumably good for inspiring economic recovery in the future. I have no idea which view is correct but the effect is the same. It was not only the savings that were wiped out in the subsequent inflation but also the purchasing power of the stimulus checks themselves. They worked for a while, until their effective value was essentially stolen by stealth. Even now, Americans hold some $2.7 trillion in savings in excess of what they held pre-pandemic. The economic planners in DC have essentially put a target on that saved cash. Even if you believe the reported inflation numbers, $1 saved last year is only worth $0.92 today and will be worth $0.84 by year’s end. And where did that purchasing power flow? To Washington, D.C., which has ballooned in size and scope. The Hunt for Value The realization of inflationary pillaging tends to dawn slowly and then all at once. In the coming months and years, we are going to see a dramatic change in the psychology of saving. More people will see that it is not worth it. Better to consume now. Live in the moment. Don’t plan for the future. Get rid of the paper as fast as possible before it loses ever more value. That’s how inflationary expectations work: it adds fuel to the fire of devaluation. We aren’t yet seeing much evidence of this yet but it could emerge at any time. This is how we can account for the new interest in hard assets. That includes homes and land but also gold and Bitcoin and other cryptocurrencies. Notice the celebration when oil prices finally started softening off their highs? There was tremendous relief in the air. The headlines were all about how the price of gas was falling if only a bit but, hey, we take what we can get. It was good while it lasted: after falling below $100 only briefly, they took off again and now sit at $109. There is just no stopping this beast that is eating through savings and currencies, and also the reputation of central banks fecklessly pretending to stop it. The wild swings are being exacerbated by tremendous uncertainty in supply chains and oil resources in particular. This war is causing absolute havoc not only in oil but all commodity markets. Keynes is still the muse of governments and central banks all over the world. They don’t want to give up their powers or the theories that justify their powers. Would that we could recapture the theories of French economist J.B. Say who wrote: “let no government imagine, that, to strip them of the power of defrauding their subjects, is to deprive them of a valuable privilege. A system of swindling can never be long lived, and must infallibly in the end produce much more loss than profit.” Regards, [Jeffrey Tucker] Jeffrey Tucker P.S. ** URGENT NOTE FOR YOU – RESPONSE REQUESTED BY MIDNIGHT TONIGHT** A big change is coming to The George Gilder Report. And as one of George’s readers, this change may have a direct impact on you. What’s going on? As you’re about to see, we’re launching a brand-new level to The George Gilder Report. And as a current reader, we don’t want to see you miss out… That’s why – for a very limited time, until the timer below hits 0 – you’ll be able to upgrade your subscription when you [click here](. Seriously. Just [click here]( now to see how to claim your upgrade offer. [Click here to learn more]( Once the timer hits 0, however, it’ll be too late… you’ll miss out. I’d hate to see you left behind. [>> Click here before it’s too late](. Former CIA Advisor: “They are LYING about inflation!” Despite the circus of distractions you’re hearing on the news... The lies and the misdirections... There’s one former CIA and Pentagon insider is revealing the TRUTH behind the inflation numbers in America. A story so shocking and so powerful that it could bring the Biden Administration to its knees. You might have known something strange was going on in America, but I can guarantee you weren't expecting this. [Click here to see the story the mainstream news is trying to bury.]( [Three founders Publishing]( To end your Gilder's Daily Prophecy e-mail subscription and associated external offers sent from Gilder's Daily Prophecy, feel free to [click here](. If you are having trouble receiving your Gilder's Daily Prophecy subscription, you can ensure its arrival in your mailbox by [whitelisting Gilder's Daily Prophecy](. Gilder's Daily Prophecy is committed to protecting and respecting your privacy. 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