The Big Screw You've Likely Missed - But the One That's Ripping Our Financial Guts Out

Today we "reveal" the Big Screw most of us have missed - for good reasons we'll explain. We'll focus on this "Biggie' for two reasons: 1) It's leaving a big and deep hole in our financial guts; 2) It's going to be our last "Screw" post for a while.

Before we get to #1, here's why we're leaving the Big Screw behind for now: It's the Holy Season of Advent. Advent is our time to prepare ourselves for Christ's coming into this world. We do that in two ways: 

First, we prepare to celebrate His Birth over 2,000 years ago - The First Coming of Christ. Too few of us prepare ourselves properly these days. We're wrapped up in the hoopla of "the holiday season" with it's Christmas trees, decorations, Christmas music, parties, etc. Not that any of this is bad. But it's too early for all this. 

The way Christmas celebrations are supposed to work is this: We begin celebrating at when Christmas arrives. Then we keep celebrating throughout the Christmas Season. 

But it's not Christmas yet. And the Christmas Season doesn't start until Christmas Day - okay maybe Christmas Eve. Now it's Advent. And Advent exists so that we get ready for Christmas. The first thing we get ready for is the coming of Christ. To do that we take a good look at ourselves. If you're one who doesn't spend enough time on your spiritual life, you may not know exactly what to do here. So think of it this way: Have you been naughty or nice? You remember this, right? It's a line from Santa Claus is Coming to Town - one of those Christmas music selections you'll likely hear ad nauseam if you keep one of those 24/7 radio stations dialed in.

So even if you neglect your spiritual life as a rule, the naughty or nice thing should help you make some sort of self-assessment. And if you're a relatively normal human being you'll likely find a lot to be desired. And that's one good reason why we have Advent.

With your self-assessment in hand, you take it upon yourself to do two things: make up for those naughty thoughts, words, and actions that have sullied your soul. At the same time, you try to improve on whatever "nice" side you may possess. During Advent we make up for the former - the naughty - by acts of penance and the latter with - the nice - with some sort of prayers and spiritual works that will strengthen the soul which builds up what's already nice, and adds even more nice.

You do all this instead of celebrating Christmas before it's actually Christmas.

Okay, so you'll likely ignore all this and just go about doing what you've always done during the "holiday season." Have fun.

However you're preparing for the coming of Christ - the first way we prepare during Advent, don't forget the second way we want to prepare. And this one's arguably more important than the first. It's where we prepare for His Second Coming - as in the end of the world. That's when all "this" goes away. At that point, we're either going to Heaven or Hell - if we're not there already. No more world as we know it. What post-end-of-the-world will look like or be like is beyond my pay grade. But it's coming. 

That's not to say it's coming soon (although you never know); just that's it's coming. And the recollection that all this will end some day can serve as one darn good motivation to stop being naughty and start being nice - all the time. You don't want Christ to show up on that awesome Last Day only to find that you're a creep. (Although He'll already know you better than you now yourself before He comes.)

Okay. I hope you found the pep talk about Advent helpful. I enjoyed writing it because it reminded me what Advent is really about. It's easy to forget when everyone around you is whooping it up, listening to "holiday" music, going to parties, putting up their Christmas trees and other decorations, etc. And it's not like I don't sort of enjoy all of them enjoying all of that. But, still, it's Advent and I'm determined to keep it as it ought to be kept.

Now for the Big Screw you've likely missed. It's inflation.

Now, many of us have already figured out that inflation's come to stay for a while. Heck, even the Fed and the federal government in the persons of Fed Chairman Powell and Treasury Secretary Yellen admitted as much. Of course, you had to stay awake if you were trying to listen to their testimony before Congress, given how boring and slithery their comments were. (Can't these people just say something straight out?)

But their understated confession missed the dark side of our current bout of inflation. Not only is it not one of those quick shots we get from time to time - the ones where food prices, for example, spike for a while then settle back down. (And, again, many of us already have seen a lot more than food prices creeping up.) What's disturbing this time isn't just that inflation staying for a while. It's that it's going to be worse than that bad stretch we had in the 1970s.

And we're not talking about "stagflation" here. That's where prices go up and the economy remains stagnant. That's bad enough. The 1970s taught us all about stagflation. But what's worse is the combination of our current elevated inflation with our continuing suppressed interest rates.

You see, in the 1970s, you could stay a step ahead of inflation and done so without risk. A good example of that: at the end of the 1970s, inflation jumped up to 11+%. But at the same time 3-month Treasury Bills paid over 14% in interest. So you "cleared" more than 3% after inflation - with no risk. 

What about now? If you haven't guessed, interest rates are no where near 14%. For your no risk you get, what?, something like 0.10%. So now instead of staying ahead of inflation by 3+%, with inflation running, average, around 6-7% lately, you lose 7%. Every dollar you hold loses 7% per year for as long as these conditions last. At that rate, your financial guts will be eviscerated.

Will these conditions last? Well, comparing our current inflation pattern with that of the 1970s, it could be a while before inflation reverses. And despite the Fed's recent comments that they're looking to hike rates, you don't really think they will do you? How can they when our government's debt over $28 Trillion, soon to be $29 trilion? If interest rates go up to any significant degree, the government will have to pay more interest on all that debt. It can't afford the interest now. It borrows more to pay the interest it owes, thereby driving up the debt - along with other factors that drive the debt up. So forget higher interest rates that can outpace inflation.

We're screwed.

And that is the Big Screw you likely missed: the combination of higher inflation and the lowest interest rates we've even seen, thanks to the Fed keeping those rates suppressed - since 2008.

And there's nothing any of us can do about it.

So better to switch our thinking to Advent and something we can do something about: spruce up our souls in anticipation of the coming of Christ. Despite the Big Screw, if we do that it will be, in the best sense, a Merry Christmas this year.