Real spending grew just 0.1% in March. It fell 0.1% in Feb. But who’s counting?

“Of course, what’s happening to our hero,” Browne went on, “is also happening to millions of others, in various positions along the handout line. Businessmen are gearing up to these new demands — swimming pools, expensive restaurants, better cars, etc.

“But as soon as the inflationary currency has made one complete pass through the market, prices will begin to stabilize at a new, higher level. That’s the point where consumers realize that something has gone wrong with their calculations.”

Buying a swimming pool on installment, in short, starts to look very expensive. Because it costs more — in terms of poor Bumstead’s outgoings — than simply the new raise he brings home each month. Now he and the family must adjust their spending on all those other things (such as food, clothes, entertainment, meals out) they’d previously enjoyed regardless.

“The key number here is real spending, which has now been more or less flat since January,” said one talking head in response to this week’s personal income and expenditure numbers. “With credit tightening, cash flow being squeezed and confidence near record lows, this will surely continue.”

So no — in short — there really is nothing new in the world of money and finance. Just a fresh generation making the same tired mistake of confusing more money with wealth.

Here’s hoping they get to survive, if not profit from, today’s new devaluation.

Regards,
Adrian Ash
BullionVault

Source: Pool of Wealth

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