Massive inflation is hitting the United States and most of the western countries. It’s unavoidable. U.S inflation hit 7% in December, fastest pace since 1982. Consumer prices in Germany rose by 3.1% in 2021. France shows a 12 -months inflation rate of 3.4% the highest since September 2008. You can read the other articles here in the inflation course.
The reason I’ve put the course together is simple: inflation is unavoidable. There’s no way around it. The dollar is going to get extremely weak over the next few years, and prices are going to be artificially high. Understanding when inflation is going to hit is essential to being prepared. Below is a basic explanation of what’s happening, and a quick blip about how to prepare.
Yesterday, in the article Energy and food drive US inflation to new 40-year high, we gave examples of how food and energy are up 20-40%. Inflation rates have reached 9.1% and experts are now predicting they could hit 11% before the end of the year. That’s absolutely crazy. The prices of commodities, energy, and food are all exploding, and there’s a reason for it.
Why Is Inflation Rising so high Now?
Inflation is an extremely controversial economic concept, basically it’s come from governments decision. Inflation is not tied to supply and demand. Inflation is the expansion of the money supply. Record spending by government, bailouts to wall street, the buying of securities from wall Street by the fed to roll the banks. Now we are being told we must have higher borrowing costs and debt service costs because the government has spent too much.
- The Federal Reserve. They’re hell bent on destroying the dollar. They’re constantly announcing that they think inflation is too low. They’ve printed trillions of new dollars in the last two years. They’re not stopping anytime soon.
- Government Spending. Government spending, in the end, must be paid for with new dollars or taxes. Since raising taxes isn’t popular, it’ll most likely be paid for with new money.
- Investor Fear. People are worried — they’re trusting the dollar less. As time goes on, this will just get worse and worse. The less people trust a currency, the more of that currency it takes to purchase items.
Inflation is going to increase, period. There’s really no way around this. Even George Soros said that this, and Ukraine war could end the civilization. and Warren Buffet and Jim Rogers agree that inflation is going to hit. The only question is when, and how hard it’s going to hit, and what you can do to prepare.
How Bad Is It Going to Get.
I typically try to stay away from exact predictions, because I’m not a believer in timing the market. I believe good economics and investing strategies are timeless, meaning you shouldn’t have to necessarily worry about day-to-day events when you have a strong investing plan, and making sure you take advantage of low interest rates to fight inflation. The broad-based Standard & Poor’s 500 stock index is down more than 20% since its high. U.S. consumer confidence has sunk to record lows, thanks mainly to inflation. Retail spending, home-building, and manufacturing output all declined. And consumers, who drive the U.S. economy, are starting to cut back on discretionary purchases, such as appliances and services. Regardless of our market conditions, however, we should continue to promote savings and smart investments.
In the end, the only thing we can be sure of is that inflation is already hitting, and it’s not anywhere close to being over. The stock market will probably benefit over the next year as inflation is used to siphon wealth from the rest of the nation into banks and publicly traded stocks. But stay away from Crypto money! Crypto rose promised millions and then collapsed, taking people’s fortunes with It. Learning and growing is the only way we can harness our skills and build ourselves. Most interesting thing is that the rich get Richer because the poor thinks that every opportunity is a scam especially investment like Binary Options a few years ago, and today is bitcoin, dogecoin, safemoon, crude oil, ethereum, litecoin, cardano, polkadot, stellar, chainlink, binance coin, (BNB) etc. Investing is the surest way to financial freedom.
Either way, inflation is going to explode. Economics simply requires this to occur. There’s no way around it. Even if radical capitalists take over the government and decrease spending (which isn’t going to happen), the harm is done, and we’re going to pay for it — period. But all artificial bubbles pop, and our governments haven’t learned their lessons yet. The real inflation rate is already at 8-15%, and it’s only going to get worse. My prediction is that the real inflation rate should be in the 12-20% over the next 5 or so years, though I won’t guarantee that it won’t be slightly less or a whole lot worse.