Meeting our needs amid a rapidly evolving economy - Jim Duffy comment

Maslow’s Hierarchy of Needs is one of those terrific visual representations from the sphere of psychology that is easy to understand.

In November, the Bank of England added another £150bn to its QE programme, notes Duffy. Picture: Dan Istitene/Getty Images.

It’s a pyramid picture with various human needs ranging from food and shelter to status and respect. The base of this pyramid is long and deep and caters for the basics that we humans need for survival and growth. Let’s call them our physiological needs.

And right up at the top, forming a neat acute angle, are our self-actualisation needs. These are all about purpose and meaning in life and being the best that one can be. I guess at different periods of our life we move up and down the triangle as we learn more about ourselves and the world we live in. And right now, I’m back at the bottom of this triangle, thinking hard about my safety needs – property, wealth and security.

Only this week, the investing platform that I use for cleantech and hydrogen investment sent out a newsletter that was rather downbeat. In short, the bond market is not in great shape, European Central Bank debt is rocketing upwards through quantitative easing (QE) – or as many commentators now regard it, money printing – and the UK government is leaving all new taxation strategies on the table. Indeed in November, the Bank of England added another £150 billilon to its QE programme, making the total quantum a whopping £875bn. That is not chump change and it should scare you a little.

It scares me and that is why my Maslow needs are becoming less about purpose and finding myself and more about survival. Why? Because it makes clear, even to the most bullish banker or economist, that we, the UK, and our friends (for now) in Europe are so utterly skint and on the never never that there is no end in sight as the money printers go “brrrrrrrr”. There is just not enough economic growth from anywhere that can dilute any of these massive structural debts that are piling up. But someone has to start somewhere to pay them down – right?

Taxation is the primary lever that the UK and Europe can use as they try to bring some order to markets and borrowing. But, with so many people suffering already, that is going to be a tough pill to swallow. Are we truly ready for big capital gains tax raises? What about a tax every time you buy or sell a car?

That’s what the Spanish do. Or even meddling with that sacred property bond we have with the state in the UK that says we can sell our home free of capital gains tax. How about 10 per cent tax on the sale of our homes? All decent enough examples, but in fact and in effect they just cripple and slow down economies. Look at France and Spain. But never say never, and they might be round the corner.

I’m not sure a more onerous or wider taxation policy is the best way to pay down the money-printing debts. So how, then? And this is the really scary bit that I believe is coming down the tracks. And while my online broker didn’t come right out and say it, if one reads between the lines, it is evident. The “Great Reset” is being planned as we speak.

Unsustainable

The economists and central bankers know only too well the level of debts we have incurred over the last few decades as a result of encouraging credit and profit in retail and investment banking are completely unsustainable. Moreover, and significantly for you and them, they are in danger of crippling the world order and bringing the whole pack of cards crashing down.

What does this mean? Many things, but in short a devaluation of cash and inflation of tangible assets. Hence why my learned broker highlighted gold, Bitcoin and property as the hedges or “picks” to be invested in over the coming months. The markets have an eye for what is upstream and growth in equities is going to be tough.

That is why investment “Gods” like Ray Dalio are now taking to Twitter and asking to be educated on Bitcoin. That is why PayPal is buying up truckloads on newly minted Bitcoin as its customers “diversify” into cryptocurrencies.

There is great change ahead. I’m predicting in the next three years as central banks “reset” these huge debts and start again. Hence why my Maslow fascination and reflection is front and centre.

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