This is interesting but it doesn’t tell the whole story.  Maybe in a future post we could research jobs by country per capita.  North Korea has one of the highest military jobs per capita in the world.  Much of where a countries jobs come from would be based on their exports and what they specialize in.

In the debate about were jobs come from know how most countries employ their citizens could provide some valuable information.

According to the U.S. Department of Labor’s Bureau of Labor Statistics, there are nearly 31 million people currently unemployed — that’s including those involuntarily working parttime and those who want a job, but have given up on trying to find one. In the face of the worst economic upheaval since the Great Depression, millions of Americans are hurting. “The Decline: The Geography of a Recession,” as created by labor writer LaToya Egwuekwe, serves as a vivid representation of just how much. Watch the deteriorating transformation of the U.S. economy from January 2007 — approximately one year before the start of the recession — to the most recent unemployment data available today.

He went on to describe microfinance and the power of helping people that needed small amounts of capital to lift themselves out of poverty. Because of the nature of the loans and the social structures the re-payment rate is very high (well above 90%). In a small village many of these loans were taken out in groups. The group structure provided the needed pressure for individuals to pay loans back. Most of the loans were for a short period of time; less than 90 days.

The problem with microfinance came when he discussed the interest rate they charged on these loans. A one month loan would have a 10% fee. These kinds of interest rates are still the norm even today.

APRs over 120%….Are you kidding me?

This summit was attended by MBAs from the best schools in the nation. Mike Murray seemed like a very nice person and very intelligent. Why wasn’t anyone asking the question about the absurd interest rate? If the default rate was higher I could understand the lending rate being higher. An annual percentage rate of 120% being sold as “helping end poverty” seemed wrong to me.

I love the idea of microfinance and helping entrepreneurs in 3rd world countries. Are there any microfinance organizations that don’t charge “pay day loan” type fees and interest rates?

Primarily I wanted to see the difference between self made and inherited wealth. Inherited wealth always seems like a cheap way to be included on this list. Those people that inherited their wealth didn’t have to work as hard for their money. As I looked through the pictures and read the stories of each billionaire it became evident that those billionaires that inherited their money are less attractive than those that had to earn it. I know that is really shallow but go take a look for yourself. You’ll likely come to the same conclusion.

The other thing that stood out to me is that the only women on the list inherited their fortunes, none of them earned their fortunes. Take that as you will but the fact remains. In the future this may change. 60 years ago segregation and all kinds of social prejudice ran rampant. Only time will tell if this will change.

Lastly, I looked for any correlation between countries that fostered entrepreneurs (thus having more self-made billionaires) and the average income per capita. Using PPP (Purchasing Power Parity) as a guide to the average person’s wealth I found some interesting factors.

1)The middle east had more self made billionaires that what I would have expected.

2)The USA, Hong Kong, and the Middle East have about the same ratio of self made to inherited fortunes.

3)Europe and India both have similar ratios.

4)Russia surprised me by even making the list. Changing from a communist to a free market government would make any inheritance impossible. As the couple generations pass their ratio should change.

The result of these Keynesian policies is inflation. Inflation is a tool used to transfer wealth from producers to worthless bureaucrats and their special interests.  In place of higher taxes the population’s assets, savings, and future earnings are leeched away with the hidden mechanics of inflation.  Your 100K nest egg is only worth 10K but no one took a dime from you.

As the government becomes more desperate for cash, they will increase the flow of paper money (fiat currency) until the entire financial system becomes insoluble. As the American dollar weakens, foreign countries will sell their bonds (or not renew the purchase of their treasury bills) and flood the market with devalued currency. You can expect inflation like the U.S. has never experienced. The cost of items will skyrocket and your wages will stay the same (or you will be laid off). Those in power will blame the free market and capitalism but the real cause of the fall will be their years of failed economic policies.

Hyper Inflation in the USA (what it might look like)

The amount of cash injected to save the country has a real possibility of destabilizing the US currency and increases the chance of total collapse.

Money will be used for fuel since buying fuel would take more money than the heat it would provide.

A pile of devalued dollars will be needed to buy basic items.

Food prices will increase substantially and shortages will be common. Luxuries like chocolate, butter, and fresh fruit year round won't be available.

Gas prices and other commodities will skyrocket. Because desiel fuel has higher demand on the world market it will be much more expensive than regular unleaded gasoline.

Much of the nation will be unemployed with unemployment rates in the high 20-30% range. Because of budget problems federal and state governments will not be able to fund unemployment benefits. Food stamps and other welfare programs will be increasingly hard to fund and maintain.

Businesses will close adding to the unemployment and shortage problems. Investment for new businesses will not occur during times of hyperinflation.

Roads will deteriorate and utilities will not work dependably. Years of poor budgeting and excess spending will leave cities and states will no money for basic services. Extended black outs and brown outs will be common.

Foreclosures will rise as families struggle to make ends meet. People moving to find work will be common.

How to overcome and prepare for hyperinflation.

The next depression will be 20 to 30 years and make the first depression look like a picnic.  Hyperinflation will be the beginning and the true economic impact will take a very long time to correct.  These steps will help you weather the economic storm.

Pay off your debt – As prices increase keeping up with payments will be extremely difficult.  Too much debt will force you to lose your home, vehicles, and you will struggle to make ends meet.  You will need all the money you make just to buy food.  Avoid large homes, credit card debt, excess student loans,  and new car purchases.

Buy tangible goods – While gold and silver play a role in shifting to a new currency don’t overlook things you can use in the shorterm.  Barter will be popular again and having long term food storage,  kerosene, medical supplies, seeds, and luxuries like toilet paper or chocolate can help you when there are shortages.   In the mid term gold and silver will be very important but don’t over look the basics of daily life.

Invest in things that are inflation resistant – Invest in economic sectors that can raise their prices or adjust their value as the prices increase.  Treasury Inflation-Protected Securities (TIPS), commodities (like oil and metals), and real estate are generally safe bets to overcome inflation.  Make sure your loans have fixed interest rates.  Expect to pay extremely high interest rates (in the 20% range) and expect to put much larger down payments down.

Strengthen the family – Family ties and local communities/churches will help those that are struggling (sorry government programs will not be there to help; think Katrina).    Those on fixed income or welfare will be the hardest hit by economic problems.  The traditional family unit has stood the test of time for good reason.  Grandma and grandpa will be moving in and you might need to take care of your siblings too.

Learn how to grow food – Plant a garden and learn how to preserve food.  If possible raise chickens for eggs and goats or cows for milk.  Canning fruits and vegetables will be common.  Stock your root cellar.  Learn how to make your soil healthy and nutrient rich without buying fertilizer (e.g. learn how to compost).  Avoid hybrid seeds because after the first crop the next batch of seeds will provide inferior and low yield crops.  Buy heirloom seeds and plant them.  Harvest seeds for next year.

Buy bulk food and learn how to use it – Start using wheat by grinding it and baking with it.  Find recipes that call for use of basic stable grains like rice, beans, wheat, and lentils.

Get all the education you can – Finish your degree, learn new skills, get certificates in your area of expertise.  The job market will be extremely competitive and all the extra skills you have will give you the edge.

Diversify your income – Start side businesses, turn your hobbies into income, or consider rental property. Try to get income from as many different sources as possible.

Learn to do more with less - This requires some creative thinking when shopping, using what you have, and throwing things away.  Many times you don’t need something new, you need to use something you already have.  Instead of throwing something away consider repairing it or re-purposing it as something else (e.g. using old jeans to make a quilt).  Buying quality products instead of cheap Chinese crap.  You’ll need things to last longer.  Start now by buying quality instead of cheap quantity.

Stay positive – Your mindset and your positive attitude will be your biggest asset.  While these will be trying times you can still choose what makes you truly happy.  If you are attached to material objects start now  by weening your way off new technology, a home that’s too big, and cars you can’t afford.  Learn to enjoy the simple things in life and the company of the people you love.

THINGS TO AVOID – Avoid Adjustable Rate Mortgages (ARMS), Bonds, and Debt.

Hyperinflation In Other Countries

German Children Playing With Money

Woman Burning Paper Money for Heat

Wheelbarrow of Worthless Money

Sweeping paper money from the streets in Hungary

Making a fort is fun!

Woman burning cash in stove.

Boys building a kite with money.

Recent Inflation in Zimbabwe Africa

Man carrying arm loads of cash.

Starving billionaires.

Zimbabwe Paper Money Used as Toilet Paper

With the reckless printing of fiat money hyperinflation is guaranteed given enough time. To defend yourself from losing all assets buy things with intrinsic or real value (e.g. food, shelter, gold, silver, land). The basics of buying food and other essentials will be very difficult.

Real Risks to the Dollar
As unfunded liabilities (Social security, medicare, medicaid, Bush’s prescription drug benifit program, and now health care) come due many experts predict debt becoming unmanageable.  Our entire GDP could not fund the interest on the debt.  Every second the US governemnt goes an additional 500 Million dollars in debt.

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