Dragflation has Arrived

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For some time now, Gerald Celente in the Trends Journal has predicted that government policy would lead to Dragflation—high Unemployment with higher inflation. That has now arrived in Canada, North America, and Europe.

Intel just announced the layoff of some 15,000 employees. This has been going on for some time. If you watch what is happening in your towns, cities and neighbourhoods, you can see people cutting back everywhere. McDonalds just reported decreased sales as people cut back from buying fast food. They can’t afford it anymore. Even those with significant wealth are buying less. Prices continue to rise, and no one is buying.

Intel layoffs also help us understand that AI technology is rapidly becoming a commodity. It’s not unique anymore. Several companies in the space are losing value as profits and real sales appear to be fleeting.

The governments have announced their intention to cut interest rates, but it looks like it’s too late.

If anything, that will just push inflation up higher, making groceries and housing even more costly.

It sounds a lot like stagflation, where things just stop being bought or sold, and prices continue to rise. Unemployment levels erode people's ability to buy the essentials, increasing frustration and cries for assistance.

Investment has started to dry up as investors become more cautious about hoarding cash. Banks have also started cutting back on lending, putting the entire system into a cement-like situation.

Printing more free money, as governments have done in the past, makes the situation much worse. Hyperinflation begins to set in, and then it spins out of the economy.

In previous newsletters, I discussed the value of owning real things like real estate and gold to help manage these uncertainties. I’ve also discussed the value of having cash or other funds to be ready when opportunities present themselves.

That time is now and getting more obvious. So, is running a tight ship in your home or business you own. As we learn from the honeybees’ little bits, become big bits. Look at your expenses and possible opportunities to increase cash flow regardless of how small it may seem. Continue to invest and look for opportunities. Individual investment matters much more than the macroeconomic trend. So, what am I doing due to dragflation?

The same: Assessing and buying great-value investments and passing on everything else. It’s my long-term solution to most economic problems. Simple.

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