I frequently get emails directly rather than via the comments section. This one, in response to It’s All Coming Apart, is interesting enough to post. It is from reader Don Walker who offers some insight into his personal experiences and views in this economic crisis. With his kind permission, I reprint it here:
Dear Monty,
That was one of the best articles I have read in a long time. It is simply amazing that most people cannot see what is happening. I have read Von Mises and Hayek, as well as lots of Sowell; but you shouldn’t need to be an economic geek to get it. It is documented throughout history.
I have earned a 125% gain on silver and 50% on CNQ, for instance in nine months. This is nuts. I keep a large percentage in cash expecting a collapse and to diversify, but the commodities and related stocks I have bought are up on average of 40% in the same period.
I know you have read the same from references you have made in your columns. Von Mises explained it in “Human Action” very well how inflation circulates though the system. First in commodities, then in some wages and finally in prices. My son just got a wonderful Offer for a small auditing firm after graduating one month from now. I could not believe the starting wage, but the Von Mises forecast was spot on. And now prices of gas, food, clothing and virtually everything except housing (due to the fact that sub-prime was the driver of the crises) is skyrocketing. Cotton is up more that silver, and corn more than oil sands drilling companies.
The shame is that many people will be totally surprised and confused when they are crushed by out of control inflation. My recruiting business failed, but if I can unload my house and buy something less expensive eliminating my mortgage, I can be relatively safe. But many will not accept advice and keep exposed to indebtedness. The lesson of Tunisia and Egypt is that when food prices skyrocket, there is little money left for everything else. When paying 50% for food, if it increases to 67%, you get riots. While we only spend 15% on food and 5% on gas, when that 20% becomes 30% or 40%; it won’t be easy to pay one’s mortgage or payment for the top of the line vehicle.
So thanks you for helping warning the less astute. I know you are confident in your proclamation, but I thought I would provide some further validation and real life examples.
G0d bless,
Don Walker from New Jersey
