My Water Bill Went up 30% Overnight

I support ‘Stacking Phyzz’, because the principle, largely works. It demonstrates that you’re a saver, operating a surplus and choosing to save that excess in a hard asset, rather than bank credit. Good. Someone with a productive, industrious nature, adding value to society. Taking charge of your savings is a pragmatic thing to do, especially since banker-based debt is just really another way the government can take charge of your savings for you and consume it, as a matter of policy.

FOFOA’s latest post describes some details of how the debt works to create an 'exorbitant privilege', it's a good read and kind of sobering to see his exploration and expectation of a coming hyperinflation (I secretly hope he is wrong). For those who don't have time to read it, I thought I might post a few snippets, with a few bits from Victor The Cleaner who has been on fire in the comments section last week.

The savers of the world, the big ones, the ones who buy large chunks of government debt (like the chinese) are actually the ones, in part, allowing the ponzi).
"... As long as the producers continue to lend to the consumers, they neutralize the adjustment process and cause massive misallocation of capital on both sides. The misallocation on the side of the consumer is such that it gets more and more difficult for them to service that debt." – Victor the Cleaner
When a savers asset is debt, this helps create that one-way cyclical wealth pump that is so very convenient to those in charge of the money supply (the ‘exorbitant privilege’), but one day it will come undone.

"... you cannot fix it by dealing with the debtors. The debtors just borrow what they can get and then spend it. You can force them into labour camps or whatever you can think of - they will never be able to service or pay back this debt in real terms - even if they wanted. It is too much.
The only way of fixing it is that the savers learn their lesson." - Victor the Cleaner
The pending (mathematical) collapse of debt will come as a surprise for many, and up until recently I was a little smug in figuring that these changes would need a lot of time to filter through societal ‘pipes’ before they became reality (i.e. in order for the 'collective conciousness' to accept a new societal paradigm).

I realise now that events will not necessarily wait, and that fairness is never guaranteed. These were being handed out in the shopping mall the other day – it demonstrates the current estimation of the masses ignorance:

Cash for Gold, made convenient by a little yellow plastic bag and alluring with a replica of a plastic bank credit.
After reflection I realise it’s not so much a government program to get physical gold; it’s just an arbitrage trade on people’s naivety – after all the advertised rate is around $25 per gram. I can only assume most folk will think ‘hey that’s more than I paid for it’ and happily trade away the one bit of wealth that would otherwise keep them with healthy reserves in the future. Here’s a quote to describe these folk:

"There are always the 90% who don't care and who don't know. They will get wiped out. This is one of the truths of history." – Victor the Cleaner
I feel sorry for the general public unsuspectingly giving up their gold - most likely they are striving to save their wealth nominated in bank credit, yet all the while the government is bleeding them dry through inflation. This guy said it best (my emphasis):

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some....The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose."
- John Maynard Keynes Economic Consequences of the Peace, 1920
And it’s not just currency debasement by itself – sometimes its ‘inflation in the stuff you need’. Here in my city, everyone's water bill suddenly jumped *&#!ing 30% not through excessive water usage but by decree of the local government. Annoyingly, (upon research) the price rises appear to be planned to continue year on year for the next 6-7 years. What to do? The middle class is being forced to run faster and faster on the hamster wheel!!! As far as I can see, the only way to hang on to your wealth in the long term is through physical gold. The ride will be particularly scary if paper gold contracts sell off like most expect to, but fortunately it doesn't take a whole lot to understand and thanks to FOFOA's great expositions, the big picture is becoming clearer. Take for example, a selective view of the recent gold chart.

Regardless of the reasons for the movement of the gold price, those who bought back in 2002 are doing great today. Some like Victor suggest the reasons for the rise are political and this bears attention for future projections as well. A great 7-paragraph summary of the political side is here. For the savers (like myself) who realised they are savers and not really investors, it may be easier to resist all the noise (like Dan D) and just keep stacking phyzz. This quote from USA gold sums it up nicely for me:
"... hence, it is best that you work to actively establish your desired gold position without undue delay, and then with peace of mind you can turn your full attention to the business of living your life as it was meant to be. Spending significantly further time obsessing over currencies and investments is a fool’s errand." - Randy Strauss


Robert LeRoy Parker said...

Damn that is some good photoshop!

Louis Cypher said...

This is one of the reasons I am nervous about jumping back into the landlord role. There are areas that the numbers are starting to make sense again.

As local and state Govts scramble for cash that positive cash flow can quickly turn around into negative cash flow. Even though rents have been rising and housing prices falling one could find oneself struggling within a couple of years or less.

This month there are a couple of new developments in in Europe that should be noted.
German and Swiss govts have reached an agreement that the Swiss banks will collect german taxes without necessarily revealing the owner of the bank account. Of course the German customers are being encouraged to reveal their identities and receive a lower tax rate.
Berlin can look forward to a one-off windfall thanks to a retroactive tax on undeclared income of between 21 and 41 per cent on accounts opened in the last 10 years. Future capital gains will be taxed at a rate of 26.4 per cent and the proceeds forwarded to the German exchequer.

Germans who inherit a Swiss account will have the option of paying a 50 per cent tax to keep it anonymous.

(The smart money will be getting out now and buying something that can't be taxed.)

In Ireland it used to be that you could buy a house and it would be yours once you paid for it. There was no property taxes. You paid a hefty "stamp duty" to the govt on purchase of the house. A sales tax by any other name.

Now Ireland has a version of the infamous "Poll tax" of Maggie Thatcher / UK.
It's only 100 EU right per household now but that will quickly shift into full fledged property tax once the idiots who run the place figure out how many houses there are in the country and who owns them.
Ireland has two registry of deeds for some reason and they don't talk to each other. There are other quirks in the system that allowed scammers to mortgage the same property in full several times over.
Just on it's face this is inequitable and disproportionate. There are exemptions. For example if you own more than 50 properties you only have to pay for the first 50.
martin Armstrong had a guest piece a few months ago about how Ireland might be the place to buy property just based on the fact prices had fallen by 50%. That assessment couldn't have been more wrong. One third of the market is still speculative and propped up by govt. hand outs to developers.

I think France is the only Euro country left with Allodial title (fancy way of saying no property tax)
Someone correct me if I am wrong on that one.

Warren James said...

@RLP, thanks - I've been having fun with Photoshop CS5.1 ... curiously (your) Varecia Rubra was the only prosimian with enough colour to balance the pic.

Never thought I would dabble with political artwork, but it's increasingly clear to me that it's important to protect your budget from random government-induced liabilities - as much as it is important to protect wealth.

Trying to budget, plan and invest in this environment is an absolute minefield (as Louis described above with regards to rentals).

Robert LeRoy Parker said...

Sounds like it might be time to drill your own well. Maybe you'll hit oil.

Warren James said...

Water tanks purchase is being moved up the priority list. But generally they still get you by increasing the core charges like 'Water Access Charge', this has happened with the electrical bill anyway.

Anecdotal reports from the UK of a new 10% renovations tax, plus increased taxes on cigarettes.

I figure this is how hyperinflation starts. I wish freegold were already here, so that the price of gold savings moved directly in line with the monetary crap, instead of this gold contracts illusionary shite that we have today.

I also wish I were older so that I could have had more preparations in place much earlier. Oh well.

More Beer, please.

Warren James said...

Apparently (recently) in the UK, now paying tax on food - anything which is hot food, so tax on pasties, pies, etc.

Not researched, just talking with the in-laws. It's pretty obvious to me that the inflation they wanted, is now here, but this time the fire won't stop until it's all burnt to the ground.

More beer.

Warren James said...

Forgot to mention the doubling of fees earlier this year for dumping rubbish at the tip! That was also a random 100% increase in a short space of time.

We are all frogs in boiling water.

More beer.

Anonymous said...

Warren, old chap, you've obviously completely forgotten about all that tax on beer. It goes up with every budget!

You need to drink water instead. Far more economical.

Oh, wait...


Warren James said...

There are at least two classic Wizard of ID comic strips which are amazingly relevant to my post here, and I wish I could find them. Unfortunately it's from the 70's and I can't find it. I can see it in my head, dialog and frames go like this:

Peasant appears before the king, ushered in by Rodney: "Sire, this peasant was robbed and had his life savings stolen".
King (outraged at the crime): "What did they take?"

Peasant (sobbing): A bag of gold, sire.
King (in reaction): "I don't believe it!!"

King (incredulous): "You saved a bag of gold?"

#2 ---------- and of course, the IRS agents visiting a peasant to collect taxes:

IRS agent: Your [random staple] tax is due.

Peasant: Why, you unscrupulous dogs, you'll be taxing the air we breathe next!

IRS agents (turning to each other with smiles and agreement on a sudden new idea)"AIR???!"