In the past few months I’ve seen continued online conversations of inflation, recessions, and angst – understandably given all the changes we’re experiencing. My wish for you is that you live a life that is only marginally impacted by the business cycle, including inflation, deflation, recessions, and yes, even growth.
I rarely write about these topics because I consider them current events. It feels like I’m talking about the tide, when in reality it’s the ocean we need to understand.
When did you meet the business cycle?
When I was a child in the early 90s, Mexico joined NAFTA, Salinas de Gortari (the Mexican president at the time) stole a ton of money, and a Mexican presidential candidate was murdered all in the same weekend, or at least that’s what I understood as a child though my dad has explained it was over the course of months. The conversion rate was close to $2 Mexican pesos for a dollar. After one unimaginable weekend it flew up close to $10 Mexican pesos for a dollar.
Imagine your life savings lose their value by 80% in one weekend. Imagine you had $300k in your retirement account on Friday, and on Monday that money only has $60k of purchasing power. Imagine there was nothing you did to make this happen, and there was nothing you could do to make it change. It was devastating.
I grew up listening to my uncle’s talk about how the funds they had set aside for business improvements for their air conditioning company meant nothing after that point. My parent’s store suffered because most of our clients were Mexican and were no longer able to afford what we sold in US dollars. I lost all faith in governments and to this day, I struggle to hold hope in political action.
My introduction to the business cycle happened at the age of pre-school. I was introduced to inflation and the loss of purchasing power; to international government policies and corruption. Growing up on the border meant I’ve always been in touch with the dollar-peso conversion rate. I get to see and feel inflation, deflation, and the business cycle in two countries.
The business cycle includes shrinking and growing, just like any cycle. The more money you have set aside, the more you earn, and the lower your lifestyle costs the more you can be independent of it. That has been my personal experience of and my offer to you.
- My emergency fund is meant to protect me from devastating inflation, though I’ll be SOTL if there’s deflation and currency loses value like it did for my uncle’s.
- My community reminds me that joy is not in money, but instead in dancing, eating together, hugging each other. My family and my Quakers let me know I will never be without a bed to sleep in or food to eat.
- My connection to spirituality and past experiences of financial abundance remind me that man does not live by bread alone.
- Having plenty of money is meaningless if I don’t love my life. Loving my life puts money in its right place for me: a tool, a means to an end, rather than an end in itself.
The Business Cycle and You
Most of the human race, including those in the US, live in a country without a strong social safety net to shield the most economically vulnerable from the business cycle. Extractive capitalism sees most of the human race, nature, and anything outside of quarter-end profitability as externalities, things to not be taken into consideration when making decisions.
After I finish shaking my fist at greedy capitalist pigs and shake off the fear of a red revolution a la Khmer Rouge in Cambodia where 25% of the population was murdered, I’m left knowing that none of us is free, until we are ALL free.
Eventually my uncle’s recovered from the loss of value in the Mexican peso, we got used to NAFTA and the way it made serfs out of many of Mexican’s farmers, and for my entire life I know that a US business that serves Mexican clients will need to dance to the beat of international relations between these two countries.
When the Mexico-US border closed because of COVID my aunt who now owns the family store went into despair, hopelessness, and then acceptance. What else can we do?
I invite you to pause before consuming a lot of current events news. Instead look back over your personal history and those of people you admire. How did they make it through difficult times? When my grandfather died my grandmother was left with 6 children to care for. So she made empanadas to sell, fed the kids rice and beans, and became an incredibly generous woman. You can learn more about her generosity in Retirement Planning in my Mexican Family.
There is so much out of our control, and yet at all times we have agency.
- You can change your grocery shopping habits away from processed food and meat.
- You can carpool more and switch to public transportation.
- You can focus on ways to increase your income.
- You can decrease your savings rate.
- You can donate to food banks.
- You can learn about alternative ways to think about the economy, such as Donut Economics.
Yes, be an informed citizen. Yes, understand how you will be affected by the Fed’s recent interest rate hike. Yes, be responsive in your spending as prices change.
But no, do not give your well-being and serenity over to the financial news industry.
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