My Kids and the Coming Economic World

My Kids and the Coming Economic World by Don Harrold
Image by faungg

A large part of my paternal job is to keep tabs on the world and how it affects my family.  What’s happening and what must I do to adapt?  More importantly, how do I help prepare my children for the world in which they’re going to live?

Parental roles are slowly blending and blurring as fathers take on childcare and mothers expand into the workforce.  But each still has a certain impact upon the kids and for dads, it’s how the child perceives and interacts with the outside world.  Research demonstrates first that it’s a father’s input that spurs vocabulary and language skills in small children. When fathers were involved, the language skills of a three year-old were higher at a statistically significant level.  More recent research finds that dad’s horseplay and interaction with the kids encourages self-confidence and the corresponding ability to meet and cope with the outside world.  It’s simply part of our job to prepare our children to survive and be productive in the outside world.

But our times are significantly different than our own parents’ and the economic challenges facing our children will make ours pale in comparison.  If we’re going to prepare them, we have to first get a handle on what they’ll be facing in the future.

Through A Glass, Darkly

Stroll through the internet’s economics offerings and you’ll find the full gamut of opinions on what’s going to happen and unless you live in Chile or Norway, little of it is good.  Views are offered by economists, investment strategists, pundits and even astrologers only semi-jokingly referring back to the Mayan calendar of 2012.  The opinion spectrum runs from stagflation and economic depression to Japan-style deflation and hyperinflation;  to paraphrase one economics blogger, we really have no idea what will happen.

The short-term future is fuzzy at best but statistics and anecdotal evidence make the long-term outcome pretty certain.

  • The quoted unemployment rate (U-3) is stuck persistently at 9.5%+ but the more realistic rate of U-6 is closer to 17%.
  • The gap between the wealthiest Americans – the top 1% of wage-earners – and the rest of the country has widened to a point not seen since the days prior to the Great Depression.
  • We remain an oil-based economy with an oil-based infrastructure, reliant upon foreign suppliers who often really don’t like us and only tolerate us for our military and our currency; unfortunately, you can’t field a military without a viable currency.
  • Precious metal prices are at global 30 year highs as individuals and institutions increasingly move into them as they fear the continuing devaluation of the dollar and other fiat currencies.
  • Within the past several weeks, 25 nations have piled into what the Brazilian Finance Minister openly calls a “currency war”.  Hell, even Peru bought $12M in order to drive up the dollar versus whatever they call their currency.
  • The United States Federal Reserve System will again engage in further quantitative easing, effectively flooding the economy with additional cash and liquidity.
  • The financial markets are largely broken.  The pervasive use of high frequency trading have led to a market-wide “flash crash” and multiple unpublicized flash crashes of individual stocks, most notably Apple.
  • Through unfettered lobbying and campaign contributions, the financial system has corrupted the legal/political system to a degree unmatched in our nation’s history.  In 2009, Senator Richard Durbin (D-IL) told an interviewer that on Capitol Hill, the banks “own the place”.  The attitude of banks and financial institutions has become so cavalier regarding bedrock legal principles of title and property ownership that in 23 states, large mortgage lenders have suspended foreclosure proceedings when their actual financial interest in the foreclosed properties was found to be questionable.  In a few of these cases, they were found to be wholly non-existent.  Additionally, mortgage servicers have been caught presenting counterfeit writs of service attesting that foreclosure notices were delivered when they really were not.  Most disturbingly, Reuters recently reported that notes of the Federal Reserve’s Open Markets Committee, which helps set interest rates, are being provided to paying clients by a former governor of the Federal Reserve in advance of their scheduled release to the general public.  This individual receives $75,000 from each client for his services.
  • Our elected representatives are failing in their most basic duties as they declare for a pre-election recess without having yet passed an actual budget.

Viewing even only this partial statistical and anecdotal evidence, our nation is truly on the cusp of huge structural challenges that haven’t been faced in generations.The Long-Term Upshot

Whether it happens hard or easy in the near-term, the long-term outcome for our children is difficult.  There is real risk that the American Middle Class will be largely eliminated as the political and financial elites sacrifice the common good for their own power and benefit.  Our children will be marginalized to an underclass forced to subsist in lower-paying jobs with little real hope of prosperity, their earnings spent meeting the debt payments on a societal-wide model based upon the company-town of the 19th/20th century coalfields.  Their freedoms will be likewise jeopardized as those in positions of power consolidate their grasp on the levers of government, twisting the screws even further as they bleed our children.

So what can any typical father do?  There are no magic tricks to suddenly undo what’s been in the making for decades and I doubt that there will be calls for acts of civil disobedience.  The great changes will have to be made at the level of thousands – millions – of families and fathers have to expose them to the wider world as we do with our words, language and horseplay.

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