Subscribe Feed (RSS)This past February we posted a pair of articles about food safety — Managing Your Food Storage Space Wisely and Should You Stock Up On Groceries In Advance Of Inflation? — sharing our thoughts about buying food in bulk and keeping it on hand for many years to come. Basically, we were looking at two reasons for taking such an important step: possible food shortages created by any number of events (political, natural catastrophe, etc.) and as a hedge against inflation.
Another area for consumers to consider making bulk purchases is with soft goods items. That category includes napkins, paper towels, tissues, toilet paper, feminine products, paper plates, paper cups, etc. Oftentimes we can overlook buying these items in bulk for the simple reason that soft (dry) goods demand on storage space can be quite high.
Where to Store Your Soft Goods
Beyond stuffing a linen closet to the rafters, where else can dry goods be stored? Several places actually, some better than others:
Your Garage – If your garage is fairly well regulated as far as temperature and humidity goes, then you quite possibly have an area in your home ready made to store large quantities of soft goods. Even if your garage is humid or gets very cold in the winter, plates and cups have a better chance of withstanding harsh conditions, while some paper towels and napkins may turn yellow or attract a musty smell.
Your Basement – As with your garage, if your basement has a fairly even climate, then it could be the best place to create a dry goods storage area. Recommended: a dehumidifier. You want to control moisture and eliminate mustiness.
Your Attic – Not recommended unless it is finished off and used more like a “bonus” room found in some homes with a room above the garage. It probably isn’t worth your investment to redo this area of your house to turn it into a storage area especially if it is unfinished. You’ll also want to think of the potential fire hazard – dried paper goods can go up in flames in mere moments, taking your home with it.
Why Store Soft Goods?
So the question that remains is this one: why would you be interested in storing dry goods in the first place? Probably for one reason mostly: as a hedge against inflation.
Many economists are worried that inflation will rear its ugly head sometime in 2010, perhaps before this year ends. With inflation comes price increases, some which can be enormous. If your soft goods are petroleum based (cups, plates, plasticware) then these prices can increase sharply if oil prices climb as they did last summer. Few people expect gas prices to stay below $2/gallon for much longer with prices expected to climb above $3/gallon later this year, perhaps topping $4/gallon when expected tax increases become law.
Regardless of what takes place at the pump, a $3.6 trillion spending spree by Congress and the Obama administration will saddle generations to come with debt. Of course, one way to handle debt is to devalue your assets which has the same effect as inflation: it makes whatever you want to buy more costly to you.
Tags: attic, basement, dry goods, garage, inflation, soft goods, storage
prices which are currently at record levels.
GDP: Do You Know What It Means?
February 9th, 2009 by Matthew C. Keegan | 2 Comments | Filed in CommentaryMany Americans are confounded by all of the business language that they are hearing surrounding the stimulus package now working its way through Congress. Unless you are an economics major or tax professional, more than likely you’ve been forced to Google up a term or two to try to figure out what people are saying.
Plain Talk Express
On SayEducate, we try to discuss plainly without giving you meaningless phrases, helping you cut through the hype without forcing you to seek out many other sources to uncover what we’re saying. After all, we want you to stop back by frequently, not be chased away by silly talk.
One term that you may have heard a lot of lately is GDP which stands for Gross Domestic Product. You’ll want to familiarize yourself with what GDP is all about as the stimulus package and other bills soon to be approved by our beloved political leaders will be added to the national debt which will impact GDP.
What is GDP?
But, before we talk about debt, exactly what is GDP? In short, the gross domestic product is all of the income and goods produced by Americans in any given year. Economists include consumption, investment, government spending and exports (minus imports) in calculating the GDP. The GDP works as a barometer which measures the health of the economy.
Naturally, you want the GDP to increase, but not every aspect of it. Producing more goods for export is good especially when exports outweigh imports. Increasing investment is also good as it provides money to support private projects such as building homes, investing in businesses, etc. Finally, consumption is also important because when consumers spend their money that provides the biggest injection of capital into the system.
Government Spending and the GDP
What I left out above was government spending. Government spending actually takes away from the other aspects of GDP and creates debt which must be repaid. However, our political leaders continue to add to the debt and are only paying interest on that debt. This means that no capital payments are being paid on the debt, just interest.
With the stimulus package now being considered, some of that money will be used to create jobs which means that people will go back to work, produce income and add their monies to the tax pool. However, analysts are saying that the percentage of the proposed $900 billion package (which will be added to our national debt) that will actually create jobs is no more than 12%, hardly the stimulus our country needs. Instead, most of the money will go to fund pet projects around the country, expanding government services, but not bringing in any money in the process.
A Big Government Expansion Is Coming
So what you have now is a package that uses the word stimulus but actually is a huge expansion of government. Most of the funds will not even become available for two or three years which by that time we should be well into a recovery. However, with new programs kicking in or others greatly expanded, those funds could put a drain on the economy and bringing about another slowdown. Worse, with debt needing to be repaid, taxes will have to be raised which will lead to inflation.
Ask anyone who lived through the last big recession of the late 1970s and early 1980s and they’ll tell you that prices jumped and high interest rates (15%) on mortgages held the housing industry back and depressed home prices. Unemployment was high and consumer spending was down.
It wasn’t until President Ronald Reagan cut taxes did the economy begin to recover, which led to a sustained 25 year economic boom. That boom ended because of federal tampering with the housing industry which fueled the subprime mess that led to the current financial collapse.
Are You Still With Me?
Okay, maybe explaining GDP isn’t that simple to understand after all. But, my main point is this: if government spending continues to increase ($700 billion TARP money plus $900 billion “stimulus” plus whatever else is planned) then debt will become a greater part of GDP. Right now, America’s GDP is $13 trillion annually, but our debt is increasing rapidly having reached $10.6 trillion ($34,700 per person) recently. Factor in the coming $900 billion stimulus package and the numbers surge even higher.
The U.S. isn’t likely to default on its debt obligations, but the more debt created the more money will have to go toward servicing that debt. How will that money be gotten? Through taxes, both personal and corporate — the former you’ll notice when you fill out your 1040 form, the latter as companies increase their prices to cover the higher taxes. The result of both is something that we call inflation.
Adv. — SayEducate.com encourages our readers to stop by a new site established to help you take on the recession with confidence. SayRecession.com has been developed to equip you to make the life decisions you need to not only survive, but thrive during tough economic times. Learn how to pay off your mortgage as well as how to set aside emergency income in the event that you lose your job.
Tags: corporate tax, debt, GDP, gross domestic product, income tax, inflation, national debt, stimulus package, taxes