Paradigm Shift

The revolution is currently being and will continue to be televised.

Every morning I wake up to the same news. I read it on the internet all throughout the day. In the afternoon I catch something on Oprah about it. And before I go to sleep the evening news makes sure to take one more shot at it.

The feedback loop, media fighting for ratings, and even small guys like me. We're all contributing to it. The continuing death spiral. Which won't stop until we get that death rattle.

Home sales continue to slump. Inventories continue to grow. Prices decline to their lowest levels in 20 years. Unemployment reaches their highest level in 20 years. Companies which were once large and proud have now lost 95% of their revenue levels in comparison with the same time last year, or in certain situations are losing the billions of dollars that the US taxpayers are fronting them.

Change is already happening.

There are a few things that really scare me though.

First and most importantly right now - that the US GDP is made up 70% of the US consumer. Since November and the market "crash" (I use quotations because all major indices are now lower than our lowest point intraday in November 2008) the US savings rate has gone from a negative rate - which it has been since the early 90s to quickly popping to a positive rate of 5%.

Hopefully you can do the math, but since this is my blog, I'll spell it out for everyone reading. If people aren't spending anymore, and the majority of our GDP relies on those same people spending...lower and lower we'll go.

What an awesome conundrum.

Secondly with the government doing everything in their power to help "stimulate" this economy (quotations used for sarcasm - thanks for my $20 tax break every month) they're dumping money on us left and right. Well not necessarily us - but on companies who decide to go and lose it. Because they were "too big to fail".

With all the dollars flying with more and more blank checks being written this is going to cause hyperinflation. And I thought the silver lining to this whole recession was going to be that gas would remain around $2 for the foreseeable future.

Not for long. OPEC is pissed. They've gone from a $100 profit margin just last summer to a little over $10. Wouldn't you be angry too? So they're cutting production. Hopefully you're doing the math on these too. But this equation has more than 1 answer:

Inflation of our dollar plus ridiculous amounts of spending by the government plus commodity prices skyrocketing = some form of taxation somewhere along the line to pay off what will be an astronomical deficit and people who can't even afford food with whatever they have left after the government takes more than half of it.

So here is where the paradigm shift is happening. People are realizing how wasteful they were even just last year. They're battening down the hatches. But what do you get when you have a sailboat without a sail? Lots of bobbing in the ocean, really going nowhere.

So we'll go from one extreme to the another. I don't know if it will be as ostentatious as I describe, but I like to dream.

We'll go from the stated income sub slime 1 income households somehow affording the half a million dollar home to the family that rents a 1 bedroom apartment close to work so they can walk there (assuming they still have a job).

Suddenly going off the grid won't be just for the truly outrageous green heads.

Sustainability - self sustainability will replace the house in the hamptons with the bentley and rolls royce out front. Can you imagine people on Cribs showing off their solar panels, the wind turbines in their backyard, the desalination machines (hopefully small enough to be provided to each community) and the irrigation they set up for their own organic farms?

I would love it. Sure, we don't all have the ability to do this now. But certain economic factors in the near future may force our hand to adopt some of these things or better yet to adapt.

But here's the thing - if you farm your own land, and provide your own power and heat, keep quality items of clothing that are durable - what do you need money, or "credit" for again? Remind me again why we had to keep this US economy churning at almost 90%+ employment levels for decades?

The shift will be in the definition of success. For so long the American dream has included a bit of excess with it. Doesn't the word "American" connote a bit of pigging out?

It's definitely time for a change.

I think it will be beautiful. People will begin to focus less on material items and more on the people that they are - the relationships that they have with others. Because what else will be left when we rid ourselves of all the distractions - all the "shiny things"?

As I wrote in a previous blog post:

Consume less. Live more.