All told, that was about $2,300, leaving them $2,700. Then after taxes, maybe $1,500 left to do whatever they wanted to do. And that was a lot of money back then. For a single $50,000 income earner today, the idea of owning a home, owning a vehicle, saving for college, going on vacations, and having money to spare at the end of the year is just inconceivable. But the dark reality here is that it’s actually much, much worse. So imagine inflation as a rising river and deflationary factors as the dam holding back the flood.

In the 1950s, the water level was lower and it was a smaller dam built with cheap energy, booming domestic industry, and a stable monetary system. This was enough to keep things flowing smoothly. But over time, the water level rose as inflationary pressures, like a growing population, resource depletion, and currency debasement steadily added volume to the river. To keep us from drowning in debt, we’ve had to stack more and more bricks on the dam. Things like automation, technological innovation, and outsourcing for cheap labor, just to keep up with the flow. Now, if even one of those bricks weakens or a single leak forms, the dam could collapse precipitously and the true rush of inflation could burst through, pulling us under with it.

Now, if any one of the following deflationary mechanisms fail, we are going to see the price of goods and services correspondingly skyrocket. One of the biggest ways that the real inflation is actually masked is with cheap labor. If it wasn’t for cheap outsourced labor, primarily from China, the price of everything would be much more expensive. Lower wages and reduced labor protections have actually driven down production and service costs. And of course, this gets passed on to the consumer in terms of cheaper consumer devices. Now, of course, the planned obsolescent model means that a lot of those cheap devices you have to buy over and over again.

Advanced and more efficient systems of global shipping have also artificially suppressed the true price of things. Faster and more efficient shipping reduces logistical expenses, making imported goods actually a lot more affordable than they should be. Let’s not forget about automation. Without machines, replacing human labor and cutting costs, and then those reductions in production costs can be passed on to the consumer. Again, another deflationary mechanism that is actually keeping prices down. You take any of the aforementioned way, and the cost of that TV set in your living room is probably going to be 10 times the price.

What about artificial intelligence? This is going to reduce costs by automating various tasks. It’s going to improve efficiency and reduce overhead. AI is no longer an option. It’s actually going to be a necessity moving forward to continue to artificially suppress the true price of things. Advanced virtual reality is going to reduce the need for actual real physical experiences. You may not be able to afford going on vacation to a real place. But in the future, you’ll strap on a VR headset, or maybe they’ll even have holodecks. This is supposed to make up for the fact that you can actually afford a real vacation.

The internet is also inherently deflationary. Consider the fact that you now have a computer in your pocket that you can access all of the world’s information from. This increases your access to knowledge and information beyond the wildest dreams of anybody in the 1950s. Even remote learning and remote work are inherently deflationary. If you eliminate people’s need to commute to and from work, that’s one less expense that they have to incur. Yet people are still broke. Even genetically modified crops that seek to increase the amount of yield from a smaller and smaller plot of land is inherently deflationary.

Yet everywhere we go, the price of food is skyrocketing. Could you imagine now if we got rug pulled on GMOs? Suffice it to say, without the Green Revolution, there was a good chance that we would have had a Malthusian catastrophe a long time ago. Even resource depletion has been offset with better mining and extraction methods. Were it not for the shale boom, we likely would have hit peak oil in between 2010 and 2020. These improved extraction techniques have actually kept prices down despite the fact that the resource itself is dwindling. An increase in the price of oil at this point in time would almost immediately lead to a price hike in most goods and services.

Now we have energy efficient homes and the price of energy is still sky high. Lower energy consumption is actually reducing living costs. You would think that these savings from our lower energy consumption would materialize somewhere, but they aren’t. Even the homes that we live in nowadays are made with cheaper materials. They’re not built to last as long. And while it’s true on the whole, the square footage of the average home is bigger, there is a new movement towards minimalism and tiny homes and even living out of your vehicle. The reduced material and labor costs are making housing more affordable, right? Nowadays, people are having less children and you’re seeing increasingly more dual income, no kids households, also known as dinks.

Lower demand for child care, education and even family oriented products should keep prices down. Yet prices keep going up. What about the Airbnb style sharing economy? This is something that is supposed to maximize resource use and lower the cost by reducing ownership expenses. Yet for some reason, everybody’s still broke despite sharing all their stuff. Even when you look at digital entertainment, you know, there’s more entertainment at our fingertips for a lower price point than ever before. Streaming and digital media are actually reducing the need for physical entertainment, thereby reducing costs, faster internet speeds and faster data flows.

This is supposed to reduce inefficiencies in the marketplace. You can trade a stock just like that nowadays. Every financial transaction is flowing way more efficiently and quickly than it was back in the 1950s. Even immigration, whether we want to admit it or not, is actually keeping prices down by reducing production costs. Now there’s certainly a debate to be had here as to whether or not prices are in fact suppressed in the long term due to cheap labor being brought into a country. But just imagine how much more expensive food would be if you didn’t have low income labors picking the crops.

Even the elaborate just in time delivery system. This actually reduces storage and waste costs, thus lowering prices. Without the just in time delivery system, the price of things would be much, much higher. Now there is a localized argument to be made here. Some people think that local economies will actually be cheaper. And I think now in comparison to how we’re living, indeed, it’s going to be much cheaper to have your own garden, to raise your own chickens, even possibly engage in local trade. But globalization itself is in fact deflationary. This is because increased competition in trade pushes prices down by optimizing production worldwide.

In a world that is now on the verge of decoupling, prices are about to get much, much higher. What about the peace dividend from when the Cold War ended? Less spending on the military was supposed to free up more capital for investment in other infrastructural projects. Did that ever happen? Big agriculture is able to keep the prices down by using all kinds of hormones and chemicals and mechanization. Industrial farming methods in theory should be increasing food supply and lowering costs, but are they? Globalization has also given us product standardization. Mass production of uniform goods should reduce manufacturing costs.

Consider a USB cable. The universality of that item is inherently deflationary, and that is only possible due to the mass standardization that accompanies globalization. There’s been all kinds of advancements in the field of medicine that don’t seem to have translated into lower prices. But could you imagine what the cost of things would be without those advances in medicine? And lastly, you have psychopharmaceuticals that basically keep people just sane enough to continue to function in this rat race. The whole point of this conversation today was to put real inflation in perspective. The prices for goods and services are actually much higher, despite the fact that they’re already at record highs.

The question I have is, what’s going to happen when the system starts to break? And one by one, all of the aforementioned factors are pulled away. So that $50,000 a year paycheck to paycheck experience, living in a smaller and smaller home, having less and less nutritious food, it’s only going to get worse. And that is why on this channel we promote self-reliance skills. There are ways to offset your dependency on the system. Learn to hunt. Learn to grow a garden. Learn to do things for yourself. Because the system is incredibly fragile. I hope you found this video useful today.

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