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How To Prepare for the Collapsing Economy
"You have power over your mind, not outside events. Realize this, and you will find strenght." - Marcus Aurelius
The Federal Reserve (Fed) raised interest rates by 0.75%, as we predicted earlier in the month. However, what wasn’t expected was how aggressively the Federal Reserve would attack the economy for the next three years. Earlier in the year, the Fed stated that they would increase rates to 4% by 2023, but from Jerome Powell’s speech, the rates can go as high as 4.6% by the end of next year.
For a more in-depth analysis of what could occur, please the inflation article, but in summary, things are about to get a lot much worse - possibly a recession.
Within the article, I’ll provide resources on how we can control the effect of the demolition of the economy. We can’t stop the possible recession from happening, but we can control how we respond to it - our locus of control - and learn how to even grow from it.
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“No Pain, No Gain!”
The first thing we need to accept is that we will suffer. Things are going to go bad. Prices will increase, money will become tighter, etc. Nothing can be done to stop this economic onslaught. However, that doesn’t mean suffering is necessarily a bad thing.
The Academy of Ideas has a video called “Why Suffering can Promote Strength and Health.” From the transcript, we read the following:
“Suffering is inevitable. It is an essential component of the human condition, and the sources of suffering are many… So given that we will suffer, the important question is: ‘How will we suffer?’ Will we let our suffering destroy us and drive us into a pit of despair, or will our suffering lift us to the heights of a fulfilling life?”
From coming through suffering times, we become stronger individuals. In the video, it’s stated that depression - even though tramatic - offers a depper and more realisitic insight to life. The idea is not to stay depressed, but to grow and overcome it.
With our economy falling and potential job loses, this is not the time to mope or sulk. By understanding that suffering is a part of life, we become more in tune with reality. And once we we’re in tune with reality, we are able to prime our brain to find opportunities within our lives to grow from.
Now that we’ve come to this conclusion, our next step is to focus.
Three Year Plan
In the “Transcript of Chair Powell’s Press Conference,” we read the following:
"As shown in the SEP, the median projection for the appropriate level of the federal funds rate is 4.4 percent at the end of this year, 1 percentage point higher than projected in June. The median projection rises to 4.6 percent at the end of next year and declines to 2.9 percent by the end of 2025… Of course, these projections do not represent a Committee decision or plan, and no one knows with any certainty where the economy will be a year or more from now.”
So we at least know that the Fed plans on tackling inflation with aggressive strategies for the next three years. This gives us a timeline to focus on.
In the first year: You begin to see the transformation in yourself.
In the second year: Others begin to see the change in you.
In the third year: Your environment has literally transformed around you.
The core message is that if you’re laser-focused on your goals for the next three years, that transformation is so profound that it produces a new reality.
So if we know that we will be in an economic upheaval that will affect our society for the next three years, what exactly should we focus on transforming?
“What’s the priority here?”
In her TED Talk, in what looks to be an all-women conference (except for the lone male at the 2:30 mark), author and mother of five children and time management expert Laura Vanderkam provides an insightful piece on how to identify life goals for us to focus on.
We start by looking ahead at the end of next year and write ourselves a performance review. We do this in three areas of our lives: career, family, and ourselves. For example, we would imagine ourselves in December 2023 and review January through December to see if we accomplished our career, family, and personal goals.
This foreword thinking allows us to ask ourselves, what would we like to accomplish in those areas? Try to have at least six goals in each area, so you have something you’re focusing on in each area of your life. The book 12-Week Year is another resource that can assist in meeting our yearly goals. I cover that and other production strategies here in this article.
Once we have these goals, we need to ensure we prioritize them. As a time management expert, Laura teaches us that time is highly elastic; we cannot make more time, but time itself will stretch to accommodate what we choose to put into it. She states the following passage in her speech:
“This reminds us that time is a choice. Granted, there may be horrible consequences for making different choices, but we’re smart people, and certainly, over the long run, we have the power to fill our lives with the things that deserve to be there.”
Summary and Conclusion
During the Bush Presidency, Journalist Ron Suskind of The New York Times interviewed a Senior Adviser to Bush. The following is an excerpt from the interview:
The aide said that guys like me were "in what we call the reality-based community," which he defined as people who "believe that solutions emerge from your judicious study of discernible reality." I nodded and murmured something about enlightenment principles and empiricism. He cut me off. "That's not the way the world really works anymore," he continued. "We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do."
If you trust that the powers that be may be destroying the economy may be part of a bigger plan - let's say a 2030 Agenda - this quote may prove you correct. Ironically, since the creation of the Federal Reserve, the power of the dollar has fallen ever since:
But - as this article shows - we don’t have to be simply the actors in this great game. By being aware of what is to come, we can prepare ourselves for it. We can grow from the suffering the Fed is about to unleash by focusing on our priorities.
As stated in last week’s article, Fed Chair Jerome Powell stated that the belief in inflation could become a self-fulfilling prophecy. At Wednesday’s conference, he stated that “longer-term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets….”
Yes, inflation is coming. Yes, it will affect us. But just as turning our attention towards inflation can make inflation a reality, focusing our attention on our personal growth - through this time of suffering - can produce life-enriching results.
“All good in a man for which he is praised or loved, is merely good suffering, the right kind, the living kind of suffering, a suffering to the full… From suffering springs strength, from suffering springs health.”
Hermann Hesse, Zarathustra’s Return
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Transcript of Chair Powell’s Press Conference (Preliminary) | https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf
New York Times Article | https://archive.ph/ybYwL#selection-915.0-915.692
Visual Capitalist | https://www.visualcapitalist.com/purchasing-power-of-the-u-s-dollar-over-time/