Downsizing Ahead

Too much debt, higher energy prices, and higher food prices will bring forth downsizing in all areas.  Bigger houses and bigger cars will be a preference of the past.  You only have to go to Europe to see the result of higher energy prices.  The percentage of SUV’S in Switzerland is extremely small.  There are more Smart Cars than SUV’S traveling around Zurich these days.  I would suggest that you have at least one fuel efficient car in your garage, the sooner the better.  As in the early 80’s, large vehicles will depreciate much faster as the mainstream media starts reporting the peak oil issue.  As of this writing, peak supply occurred November, 2005.

Those in the Energy Industry have been surprised by the price of both oil and gas.  Their 20 to 30 years of experience have hindered their view of global demand.  Most of their careers have been dealing with cheap oil and gas.  Prior to this decade, many wells were plugged when exploration companies found only natural gas "downhole".  Natural gas is about double what was predicted by those in the industry.  Times have changed.  Coal is out of favor for generating electricity.  Natural gas is "in".  This will translate to higher electricity costs.  As our monthly utility bills increase, the demand for larger homes will decrease.  People will no longer tolerate the high cost of living in a larger home.  Smaller, efficient houses will be where the housing boom resumes.  There’s an old saying, "It’s easier to obtain than it is to maintain".  Alternative fuels will not solve the problem.  You can’t stick solar panels on our fleet of airplanes.  Our transportation infrastructure was built on the assumption of cheap oil.  Europe’s infrastructure was built on the opposite assumption.  They are in much better shape to absorb the higher cost of energy.

I expect town centers to be revitalized.  For most families, traveling 20 miles to the movie will become history.  The lower and middle class will be hit hardest.  Inflation is going to eat up private savings.  Bible Law demands equal weights and measures.  Playing with the money supply to promote the current financial system will ultimately result in hyper-inflation.  Note the following graph:



The Federal Reserve no longer publishes Money Supply-M3 data.  This number best reflects the increase in overall money injected into the economy.  This number is the root of inflation.  The result is price inflation.  Doubling our money supply growth will surely hyper-inflate the prices you and I pay at the grocery store, department store, and gas pump.  This problem will be systemic.  City, county, and state governments will increase taxes to cover increased costs.  Once a nation defies Biblical Law, judgment prevails.  Mercy first exposes the sin to be dealt with.  If no repentance occurs, judgment ensues.  The decades of American excesses will be cleansed.  The insatiable desire for bigger homes and cars will be quenched… the hard way I suspect.  What were we thinking???

What action should one take?  As I have written in the past, simplify.  Remove excesses from your life.  Reduce your discretionary spending for 30 days.  How difficult was it?  We tend to spend up to our monthly income.  Reinstate that budget that you abandoned a long time ago.  Learn how to grow a garden if you don’t know how.  It may be required soon.  The days of "2,500 mile" salads may be gone soon.  What’s a 2,500 mile salad?  Lettuce is grown in California and shipped to New York to be served in a salad.  The cost of transportation will prohibit many from buying those fruit and vegetables grown in distant regions.  In Switzerland, you find community vegetable garden plots of land.  Each family has a small section for their garden along with a shed to keep the tools and supplies.  They will share and trade with other families so that all will have a variety of vegetables.  I suspect prices will force people to plant vegetable and fruit gardens again.

How do I determine what is needed vs. what is excess in my life?  Ask Our Heavenly Father.  He knows your calling and knows what you need to fulfill your calling.  Not all of us need the same size house or car.  There are those who will need a private jet to fulfill their calling.  Others will only need a compact car.  Don’t envy those who have need of more capacity than you.  If they have excess capacity, it will be removed in the upcoming cleansing cycle.  More capacity requires more time and energy to manage it.  Don’t serve structure, serve God!

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