WIN: Whip Inflation Nonconformably

In recent months, I’ve had several consulting clients ask me about how they might protect themselves from the ravages of inflation. The official rate of inflation is now at 9.2%, but everyone knows that the real-world rate is somewhere north of 14%. I’m offering some concrete suggestions that I will relate in this essay, but first, let me digress into some history:

According to the Wikipedia article about the WIN campaign:

“[President Gerald] Ford had taken office in August 1974 amidst one of the worst economic crises in US history, marked by high unemployment and inflation rising to 12.3% that year following the 1973 oil crisis. As a Republican, Ford favored the WIN campaign’s emphasis on addressing the problem through voluntary actions of citizens, instead of price restrictions imposed centrally by a big government bureaucracy.

The campaign began in earnest with the establishment by the 93rd Congress of the National Commission on Inflation, which Ford closed with an address to the American people, asking them to send him a list of ten inflation-reducing ideas. Ten days later, Ford declared inflation “public enemy number one” before Congress on October 8, 1974, in a speech entitled “Whip Inflation Now”, announcing a series of proposals for public and private steps intended to directly affect supply and demand to bring inflation under control. Suggested actions for citizens included carpooling, turning down thermostats, and starting their own vegetable gardens.”

Ford’s WIN campaign had lackluster success, mostly because it failed to address the real roots of inflation, which the U.S. Treasury’s monetary policy and the credit policy of the Federal Reserve banking cartel. To his credit, Ford came into office at the tail end of a five-month long Arab oil embargo, an already weak economy, and already high inflation. This was when the term “stagflation” was popularized. Ford served as President for just 895 days. In 1974, inflation peaked at just over 12%.

Granted, the consumer price index dropped from 9.1 percent in 1975 to 5.8 percent in late 1976. But that had more to do with credit tightening and the business cycle than anything accomplished by the WIN public relations campaign. Inflation surged again under President Jimmy Carter. By the summer of 1980, dollar inflation was peaking at 14.5%.  It was only a tighter credit environment triggered by the Federal Reserve’s higher interest rates that finally brought inflation under control. But this of course came at a cost: Interest rates that were so high that they nearly killed the U.S. economy. According to the Freddie Mac data, 30-year mortgage interest rates averaged 16.63% in 1981. Some 15-year mortgages were written at a whopping 19.5% annual rate.

Inflation in 2022

Let’s jump forward to 2022.  Interest rates are now climbing, but not nearly enough to combat   inflation. The economy is slipping into recession. Government spending is out of control. Layoffs are looming, and the housing market has peaked. Stagflation is back!  It now appears that the Federal Reserve will not have the willpower to raise interest rates to match the rate of inflation. Therefore, ongoing stagflation seems inevitable, perhaps for years to come.

Whip Inflation Nonconformably

How do we “whip” inflation, in 2002?  The short answer is that we can’t, collectively. But as individuals and as families, we can at least effectively hedge against inflation. Here are my suggestions, supplementing what I’ve previously posted. Many of these do not conform to the popular “wisdom” of 21st Century American culture:

  • Cut out needless expenses. How? No more Starbucks lattes. No cable television or streaming video services. No big vacation trips. No store-bought frozen or packaged foods. No more luxury gourmet foods. While you are at it, cut out smoking and drinking, as they are both unhealthy and a drain on your finances.
  • Combine shopping trips, and carpool.
  • Team up with your neighbors and relatives on bulk purchases.
  • Plant a garden and preserve those garden crops. (This is one thing that Gerald Ford had right.) Sell any excess crops at your local farmer’s market, and give some away, charitably.
  • Keep livestock that breeds, rapidly. Chickens and rabbits are legal to keep inside of city limits, in many jurisdictions. (Research your local laws, first.) With the current high price of eggs, having your own little egg factory can be quite profitable.
  • Line dry your washed clothes, and even hand wash clothes instead of using electric washers and dryers.
  • Turn off the lights and go to bed earlier. Get up early, with the sun, and get busy.
  • Turn up the temperature on your AC, and turn down the thermostat of your heater.
  • Presently, cash on deposit at a bank is losing about 9% of its value, each year. This is like compound interest, working in reverse, Ugly! So withdraw most of that cash and instead put it in inflation-beating tangibles. You’ve read my advice about this before, so I’ll just tersely summarize my list of key tangible hedges:  Silver, gold, guns, productive farmland, tools, and ammunition.
  • Stay home and do It yourself. Don’t hire tradesmen to do anything that you can do yourself. Don’t eat at restaurants when you can stay home and cook.
  • Build an off-grid power system, as a hedge against eventually much higher power bills.
  • If you work at an office, at a store, or at a factory, then pack a sack lunch, daily.
  • Cut your own firewood. (See the SurvivalBlog archives for safety tips.) If you split enough wood, then you can cut out your gym membership expense.
  • If you are a typical family with two vehicles, then trade in one of them for a very reliable fuel-efficient runabout. As much as I loathe buying foreign cars, I must admit that a 6-year-old Subaru Outback or Forester is now looking quite appealing to me.
  • Clip coupons. (Or these days, find them online, and print them out.)
  • Buy in bulk, especially when the staple items that you use go on sale.
  • Buy in advance for items that you are certain that you will need, in anticipation of price increases.
  • Stick to basics and essentials. No frills. No “designer” items. No chic brands. Cook with old-fashioned recipes. Think: The Waltons, not The Kardashians.
  • Eat nutritiously and avoid junk foods and empty calories. Starchy, sugary, and salty packaged snack foods and sugary cereals are the worst offenders.
  • Develop multiple revenue streams. Here are just a few ideas: Tool rentals, a home-based mailorder business, a part-time gardening service, a home-based appliance/electronics repair service, a home-based locksmithing service, or a home-based tool sharpening and/or chainsaw chain-sharpening service. The latter can even be done via mail, using USPS Priority Mail flat rate boxes.
  • By the way, a lot of other folks will also be staying home and dropping their Netflix accounts, so there may be a resurgence of interest in DVDs. Buy quality (wholesome) used movie DVDs in bulk lots and then sell them off one or two at a time via eBay, Craigslist, or the Facebook marketplace.
  • Sell off any useless do-dads. Do you really need a ski boat or a jet ski? Plan on running two or more garage sales, in coordination with your neighbors. (A publicized “Neighborhood Garage Sale” always draws a bigger crowd.)
  • Learn to barter, and learn to dicker. You can negotiate prices –even with your dentist.
  • Shop for most of your clothes at thrift stores. Encourage your daughters to develop a retro style of their own.  “Pick a decade, and run with it.”
  • Replace any expensive hobbies — such as golfing — with ones that cost little or nothing, or better yet ones that will make you money.  A few suggestions: Researching and assembling genealogy and family history files. Repurposing crafts — see Make magazine. Fishing fly-tying. Practical crafts, such as making laminated cutting boards.
  • Invest in used, quality tools that will make you money. But there is one exception to that “used” advice: Buy a very recent generation 3D printer.
  • Keep the tools that you own as productive as possible. If you buy a dehydrator or a freeze-dryer, then keep it running. Any downtime for that equipment is like throwing money away.
  • Learn to distinguish between productive debts and draining debts.  A little debt, if it goes toward earning you more money, can be a good thing when that debt will be extinguished rapidly, by inflation.
  • Focus on inexpensive family activities and games, in or near your home.
  • Whenever considering a change of any sort, ask yourself: How can I make it inflation-proof?
  • Whenever considering an investment, ask: Is it inflation-proof? If not, then look elsewhere.
  • If in doubt, then eliminate any superfluity.
  • Buy items that are both productive and multi-purpose.
  • Stick to the Great Depression-era adage: “Use it up, wear it out, make do, or do without.”

The aforementioned approaches are not perfect. It is difficult to predict how high inflation will get, or how long it will persist. Nor is this a complete list — just a starting point. For some more ideas, see the book Possum Living, by Dolly Freed.

Regardless of our best penny-pinching efforts, we will still face bigger bills each month for groceries, rent, fuel, home heating, just about every item we buy, and every service that we hire. Even families that mostly live off the land still have to pay some fuel bills, insurance bills, and pay for a few staple items. Times will be tight!

We are in for a few years of a battered economy, and an inreasingly worthless Dollar. If the succeeding presidential administrations and congresses don’t turn things around, then this could stretch into an economic depression that could last a decade, or even longer. Given the recent track records of our nation’s decision makers, then plan on lots of mediocrity, indecision, poor judgment, low morals, fiscal irresponsibility, and lack of resolve.

Buckle up for a long, bumpy ride. – JWR