QE3 or Quantitative Easing 3:
There have been a variety of monetary policies that have taken place, whether called a "bailout" under President George W. Bush or a "stimulus" under President Obama. Those had definite ends.
What is striking about the Qe3 announcement is that it is open-ended. The Federal Reserve has taken it upon itself to inflate the money supply endlessly -- without having a solid standard to back it up. When more money is printed, the "value" of the currency in circulation goes down.
A definite end.
No end in sight.
Inflating the Monetary Base
The Federal Reserve Bank of St. Louis has economic research on its website (Federal Reserve Economic Data, or FRED®). This page has a graph that shows the St. Louis Adjusted Monetary Base (BASE). You can see for yourself the huge spike in the money supply in recent years.
We liken expanding the monetary base to blowing up a balloon.
Everyone knows that there is a limit to how big a balloon will get and how much air it will hold.
It will stretch only so far before it bursts.
Will Qe3 and its endless inflation of the monetary base destroy it?
A September 18, 2012 article from Forbes.com has a graph that shows how the price of gold has surged with the increase of the U.S. monetary base. If you search online, you will find that many people consider gold to be a wealth protector. If the price of gold goes up, that means that the value of the dollar went down.
We reported previously on our investment advice page about the amount of inflation we have had in the USA since 1913, the year the Federal Reserve was created. One can calculate inflation on the BLS' CPI Inflation Calculator. According to the calculator, the buying power of one dollar ($1.00) is only $0.04 (compared to 1913) -- meaning that 96% of the buying power has been destroyed. According to John Williams (of ShadowStats.com), 98% of the buying power of the dollar has been destroyed.
We (and others) interpret Qe3 to mean that the Federal Reserve is bent on destroying what little is left of the value of the paper dollars (Federal Reserve Notes). It will take more of the paper dollars to buy goods and services that we buy. This is inflation.
Inflation is the Start
You may be familiar with the collage we have on our home page of saving and growing money:
One definition of inflation is: "A general increase in prices and fall in the purchasing value of money." That's what we've been facing.
We've created another collage to show the effect of inflation or deteriorating value of money:
When you have "monetary inflation occurring at a very high rate," that's hyperinflation.
There have been hyperinflations in the past. On September 19, 2012, Gary North referred to an article on the worst 56 hyperinflations (found here). On page 13 of that document, you will find "The Hyperinflation Table" with some truly frightening information. Folks like us have heard about Zimbabwe's hyperinflation. But until seeing this table, we didn't know that they had, among other things:
Are Americans and American truckers facing something as bad as this with Qe3? We don't know. We hope not. But the USA is trillions of dollars in debt and we think that truckers will be adversely affected.
Will truckers outside the USA be affected by Qe3? If truckers in the USA are affected, most likely truckers elsewhere will be affected too, although maybe not so much. It depends on the stability of their currency.
Mr. North (among others) sees Qe3 as leading to hyperinflation in the USA and eventually the U.S. government defaulting.
Personal Savings Rate, Net Worth & Income Drop
If Qe3 leads to greater and greater amounts of inflation, it will be harder and harder to save money. We're already seeing how hard it is for some people.
One website defines Personal Savings Rate as "the fraction of personal income that is not consumed." Another website defines it as "Savings as a percentage of the population's average disposable income." YCharts.com has data and a chart showing the U.S. Personal Saving Rate. As of this writing, it was 4.2% for July.
A June 12, 2012 article from CNN Money states:
The average American family's net worth dropped almost 40% between 2007 and 2010, according to a triennial study released Monday by the Federal Reserve.
The stunning drop in median net worth -- from $126,400 in 2007 to $77,300 in 2010 -- indicates that the recession wiped away 18 years of savings and investment by families.
Many other documented numbers about the economy are compiled and updated by Michael Snyder. For your convenience, we are linking to some of his compilations:
How Will Truckers Be Affected by Qe3?
Qe3 will affect nearly all Americans. Some will be able to weather the storm better than others. Unfortunately because of your mobile occupation, you as a professional truck driver may have a particularly hard time -- especially if you're away from your home base for days, weeks or months at a time.
Depending on whose information you read (or where your imagination leads), Qe3's inflation could give rise to such things as poverty, food shortages, desperation, civil unrest, looting and rioting, violence, bloodshed, martial law, arrests, etc.
Everybody has to eat. Will Qe3 affect food? Yes -- especially those who are dependent on the government for it.
As of June 2012 (the last month for which figures were available as of September 2012), the number of Americans on food stamps was 46,670,373, with over 22.4 million households receiving them.
Scott Lazarowitz penned an article in which he wrote:
When people get hungry, they do crazy things.
We hate to do so, but we predict that the time may come when professional truck drivers -- especially those who haul refrigerated vans filled with refrigerated or frozen food -- will become targeted by hungry people.
Of course, when hyperinflation from Qe3 (and many other government actions leading up to it) kicks in, any trucker hauling anything may be targeted.
What Can You Do? How Can We Help?
We have already attempted to help you prepare by writing about such things as
Based on the information in these YouTube videos (link and link) decide for yourself if holding your wealth in the form of U.S. dollars -- if the "value" of those dollars continue to decline -- is what you want to do.
You may want to consider other types of investments.
Money saving tip: Get out of debt -- now.
For you owner-operators who do not yet own your own truck, if you are thoroughly convinced that paying for a truck that you do not yet own is still the best way to go, do everything in your power to get the truck paid off as quickly as possible.
According to the Bureau of Labor Statistics, Heavy and Tractor-trailer Truck Drivers earn:
Another source of wage info (May 2011) is here.
Find or create a second income that you can do during your off time. (Make sure you get adequate sleep so you can drive without being sleepy!) Work to build that income source so that you can lean back on it during hard times -- or in the event that you are forced to retire from the trucking industry.
If you have the money to do so, you may wish to investigate the possibility of investing in "hard goods" that will have a better yield than other investments. We read an inspiring true account of a 14-year-old girl (yes, only 14 years old!) whose entrepreneurial spirit led her to find a source of income that she saved that enabled her -- together with her mother -- to buy a home that she is now renting out. Now that's creativity!
If you have a home support team back home and your home is large enough to do so, consider renting out part of your space. As of this writing, we are currently doing this in our dream come true. To learn how to rent your space, enter your name and email address in the short form below.
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