Inflation is pretty much a built-in part of our current economic system. Every dollar that comes into existence is borrowed from somewhere – eventually leading up to the ‘Federal Reserve’ – a private entity which collects interest on ALL U.S. dollars.
Since more dollars are always coming into the system (the system would actually collapse without this) there is a sort of built-in inflation. For various and sometimes complicated reasons, some periods of our history (and no doubt our future) involve even higher inflation (than ‘normal’).
The effects of this include a more rapid erosion of the dollar’s value or purchasing power while the effective prices of things go higher.
The Federal Reserve tries to control inflation (the devaluation of the dollar) in context with the economics of the times. One might say that they are actually manipulating it.
Because there is SO MUCH debt now (everywhere), ‘they’ have to keep interest rates (the price of borrowing money) and inflation under especially tight control or else the whole thing goes bankrupt (debt defaults?).
In fact rates have been lowered all around the world to near zero (and negative!). Why? To keep the charade going – to keep the borrowing going – propping it all up.
The question is how long will they be able to control it all, given the gargantuan debt? How long will others buy our debt when rates are essentially (almost) zero here right now? “Full faith and credit” and all that? Ya-right…
This blog post originally published during 2017 (as you can see from the comments dated below) when I asked the question to our readers about inflation resistant assets.
However I am re-publishing today because I have a feeling that we’re about to see inflation (currency devaluation) which may be devastating for many people.
I’m not an economist. This is not financial advice. Rather it’s an observation of what I feel is inevitable. The party’s over. But most people don’t know it yet.
The system was ready to collapse before the Wuhan virus hit. But since then, we all know what has happened up until now.
Real unemployment in the US is around 24%. More than 30 million people here have recently filed unemployment claims. Main street businesses are crushed. Many small to mid size businesses are largely damaged or gone. Even many big businesses are going bankrupt as we speak. Production is essentially broken or non-existent right now to a great extent.
Many TRILLIONS have just been thrown at the problem as a temporary band-aid. TRILLIONS MORE will be spent soon. Shortages are becoming commonplace. Prices for these these things are going up at the same time people are losing their jobs and income while government devalues the dollar by spending TRILLIONS upon TRILLIONS.
It feels to me like we’re going to see inflation hit our currency as its value is devalued. In other words, if you’re holding cash, it’s going to be worth less – perhaps much less in the future as buying power diminishes.
Inflation Resistant Assets
So, what to do?
Okay, so, back to the question at hand. If we were to anticipate that at some point in our future real (much higher) inflation will kick in, then the prices of many, most, or all goods will likely go up, and up, and up.
So what are the things, the assets, the goods, the products that might be better to get your hands on now, before inflation might go higher or get out of control?
What are the assets that are inflation-proof or inflation-resistant in the context of preparedness?
I’m not suggesting that you go out and start a shopping spree, but it makes for good discussion to hypothesize the practical assets that might be good to have before any onset of inflation (currency devaluation)…
UPDATE: A few of your bullet points from the original discussion during 2017:
In no particular order of perceived importance…
- Gold and Silver
- Get out of debt loans where interest rises with inflation
- Food (any and all)
- Land (productive farm land)
- Land (just about ‘any’ land)
- Plant food producing trees, etc..
- Seeds, heirloom (in other words, grow your own food)
- Firearms & Ammo
- Canning equipment
- Food preservation equipment (any)
- Everyday consumables
- Work boots and heavy-duty work clothes
- Alternative energy source or sources
Note: With the presumption of inflation, we might simply say that EVERYTHING will go up in price, so this list could essentially include ‘everything’. However I’m curious about what might be especially prudent to acquire before hypothetically high inflation sets in. In other words, might some ‘things’, assets, etc.. go up higher than others and which of them might be a better ‘investment’ now rather than later?