As the Fed sees it, some inflation is good for the economy. The problem to me, is that when it is measured in the way those “in charge” measure it, we don’t get an accurate picture of what is happening to our purchasing power and, more importantly, the value of our labor.
Not long ago working hard to get ahead was a noble and fulfilling idea. Long hours were traded for a better standard of living and providing things for our families that we may not have had growing up.
While the powers that be massage the numbers to make inflation appear to be much lower than we are experiencing, the real world is getting so out of control that massaging the numbers is not enough to keep enough people in the dark. In the last 12 months the REPORTED inflation was 5%. Likely FAR higher while wage “growth” FELL 2.8%. Tell me again how inflation is good. People are earning less and paying more.
Today, because of the inflation we have seen recently, many are finding it more lucrative to sit around and play video games rather than trying to accomplish something productive. Many blame this on over-generous payouts by the government and to a great extent that is true but the fact that many feel like they are better off sitting around and collecting “money” that was just recently was conjured up out of nowhere tells a lot.
Many argue about the minimum wage and what it should be. Actually, there should be no minimum wage in my opinion because wages would then have to be set according to the economics of the job. A perfect example is internships and apprenticeships. What value can you place on learning a trade from a person who knows all you need to know or learning habits that can make you successful in future endeavors? The actual “pay” is worth far more than a few bucks. I am proud to say that we have done many internships and we always pay our interns. I believe we have had 9 interns or so and every one is doing extremely well- some better than we are.
I believe that if we had a stable currency there would be no need to even think of a minimum wage because the value of our labor would have held its value over time. The reason we are always discussing higher wages is because those wages are purchasing less and less as we go along.
So many young people are unaware that if we had a stable currency we wouldn’t have to earn hundreds of thousands to be middle class. We wouldn’t have to be debt slaves and have multiple jobs to buy what our parents bought with one income that is a fraction of what we earn today.
The sad part is that we have likely not seen anything yet as the central banks are conjuring up tens of trillions in currency units to pretend that all is well and it is likely if they even pause a bit the entire edifice could come crashing down in no time. This is the best reason I can think of to explain why this inflation we are seeing is not likely transitory as they would like us to believe but just the beginning of a MAJOR loss in value for all fiat currencies with the US dollar being the most at risk in my opinion.
Since just about all assets are measured in US dollars I am expecting the amount of dollars needed to purchase just about everything to rise substantially as we go along. This is the main reason I have been imploring people to buy hard assets or at least companies that produce hard assets.
In looking at many companies in the commodity space I have been pleasantly surprised by excellent revenues and net profits and have noticed at the same time most of the companies I like are not drowning in debt like most of the media darling stocks are. These revenues are being produced while prices may have just begun rising.
Physical gold and physical silver are also extremely undervalued in my opinion and the risk-reward is off the charts. The US Mint has stopped making silver eagles because they can’t source enough silver. China and Russia have resumed massive gold buying along with many other central banks and major banks. Russia is also divesting of ALL US dollar reserves. What might Putin know that we don’t?
I believe that a good plan of action is to have some cash on hand. I also believe that having some physical metals on hand is a good idea. Having a stocked pantry and at least a 30 day supply of food and medicine is just good planning.
The way the world is going today- particularly if I am right and the dollar loses most of its purchasing power you better be prepared to protect what you have. That means have weapons and know how to use them if you are unfortunate enough to have to.
While a lot of this seems dire I also believe that after the turmoil that appears headed our way there will be opportunities galore for those that have prepared and have the ability to act. I have written many times about the idea of buying assets that you can’t imagine owning today. I believe some assets will crash and burn because they have been artificially propped up for decades while other assets that have been artificially suppressed will likely skyrocket to get to a real value rather than the manipulated prices we see today.
Remember, this revaluation of assets has to take into account DECADES of manipulation.
One of the biggest threats I see to many today is that because they have a lot of dollars they think they have wealth. Just think how much more that “money” was worth just 10 years ago. The devaluation has been picking up steam and soon what appeared to make one “wealthy” may buy only a fraction of what you were expecting not long ago. The very definition of “safe” does not exist in my opinion. Just because you don’t “lose” dollars- those same dollars are losing purchasing power at an accelerating rate.
In Zimbabwe everyone was at least a billionaire in their currency. Too bad it cost a trillion Zimbabwe dollars for 3 eggs a few years ago. In Venezuela it costs millions of bolivars for a cup of coffee while an ounce of silver feeds a family of 4 for a month.
Those who have lived through true hyperinflation will never forget it. Those who think it can’t happen here- I hope you are right BUT that would have to mean that economic laws apply everywhere on earth EXCEPT here. Not likely.
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