The economic outlook

Here, for what it is worth is my view of the main western economies (chiefly the UK and the USA).
I believe the main problem with both nations is too much debt. This is particularly dangerous because the government, the consumer, and business are all equally insolvent. This means that the state can no longer stimulate the economy by assuming the debts of other players the way it attempted to do with the banks.
I expect a series of short term apparent recoveries each of which will be followed by a further slump. None of these are likely to be as severe as the great depression but I do not expect a decisive return to health for a number of years.
Most governments understand the dangers of deflation (falling prices and wages) that was seen in the 1930's and the Japanese experience shows that there is no way to halt a deflationary spiral once it has started. This indicates that both the USA and the UK will adopt strongly inflationary policies designed to stimulate consumer and business demand.
Stimulus packages do work- for a while. The problem is that they work too well on some levels. Consumer confidence is only another name for the willingness to spend and borrow.
Recovery will only occur when consumers, government and business can spend once again. This will only happen when these groups are solvent. The problem is that both governments are going for a quick fix by encouraging them to borrow even more. This can only result in short term relief- followed by further decline.
1) Do not rely upon government solutions. Sooner or later the government will be unable to borrow any further money.
2) Reduce personal debt.
3) Diversify. Have more than one source of income.
4) Devote 10% of your income and 10% of your time to Survivalism and the Alpha Strategy.


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