Bearings and the Great Depression

Posted by Jeff 01/06/2016 0 Comment(s) The Bearing Market,

If all you watch are the network channels and CNBC, you probably aren't worried about any impending economic malodies. The news is all good: unemployment is down, the stock market up near all time high--and if you don't get in soon, you'll probably miss out on yet another rally.

 

But look beyond the official figures and you'll see that things might not be so rosy after all. The government debt to GDP ratio is well over 100% and that is only the debt held by the government. Add another trillion in students loans, a trillion on top of that in credit card debt and 13 Trillion in mortgage debt and I seem to remember reading that car loans are hitting all time highs.

 

The whole economy has been twisted and warped by zero-percent financing. The safest asset—the U.S. treasury bond—is not looking so safe and it provides very little yield. The baby boomers in the U.S. are getting ready to retire, which means there are a lot of fund managers out there looking for yield. Not so long ago, they could plop it into an index fund or even find a safe bond issue that would yield and easy 6%. It was so easy and so normal those 6% yields became a part of the model for many pension funds and—now that they are gone—pension funds all over the country may soon be going belly-up.

 

Once you scratch the surface, the glowing economy is perhaps not so glowing. Perhaps central bankers are not omnipotent. Perhaps all “the Maestro” Alan Greenspan did was produce a bubble economy fueled by cheap money—a model followed by all those who have come after him.

 

I remember once being in Great Britain when the truckers blockaded the fuel ports to protest a hike in the tax on diesel fuel. No gas and no truckers meant that the store shelves were not getting filled. It did not take long until all the bread started disappearing and after just a few days most shelves in the London Supermarkets were quite bare. Which is what worries me.

 

Back in the 1930's—the first Great Depression—most Americans still lived on farms or had a relative who did. If the grocery stores emptied out, there was always the root cellar. Today, no one even remembers what a root cellar is. If the grocery stores empty out, I can only imagine the chaos.

 

Which is what brings me to bearings. A bearing is a symbol of self-reliance. If you know how to switch out a bearing, you can repair your own stuff and probably know how to grow your own food. And if you can do that, who really cares which way the economy goes.

 

A spirit of self-reliance, hitting farmers markets instead of huge chain groceries and getting the supply-chain as local as possible are what this country needs. So stock up on your popular bearings. Make sure you have a few LM67048/10s on hand and maybe some SA205-16 inserts or a few 6203-2RS radials for good measure. You never know when they'll come in handy and a shelf on your garage is as local as a supply chain gets.

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