The “official” inflation rate has been so low, for so long, that I’m going out on a limb to warn readers about Inflation. Monetary inflation, the ballooning of the money supply, has become totally irrational during the Covid Crisis. We forecast higher inflation in this original article back on 9/26/2020… and here we are in September 2021 and we’re topping 5.3% “official” inflation again in August.
If you’ll give me a chance, I’ll lay out the facts on Inflation in the U.S. that could prove to be quite rewarding to you.
Definition: Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Inflation is Guaranteed When…
Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”— July 2, 2012
The Federal Reserve is currently engaged in proving it can control inflation… unfortunately they will encourage inflation to rise rapidly. The Fed Chair Jerome Powell formally announced he’s going to let inflation loose.
We just learned that the U.S Government printed more money in June 2020 than it did in the previous 203 year history of America. I know, we’re in a pandemic, so Washington must do something. And that something is to approve more than $3.6 Trillion Dollars in Covid stimulus.
Using all the Gutenberg printing presses in the world, it would be impossible to create $3.6 Trillion Dollars and spread hundred dollar bills across America in a couple of months. Thanks to technology, a few computer keystrokes can fill the banks, brokerages, the pharmaceutical industry involved in vaccines, and loans that don’t have to be paid back to hundreds of thousands small businesses.
With great confidence I can predict INFLATION IS COMING WITH A VENGANCE. The Federal Reserve says they want inflation, they expect inflation, and they will do nothing to stop it. After all, inflation is a secret tax used to steal money without shame or pity.
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
– John Maynard Keynes, (1919) “The Economic Consequences of the Peace”
My opinion about inflation really does not matter. When the Federal Reserve chairman says inflation is coming— you should begin to build a wall of defense around your assets. Buy Gold, buy Silver, buy Stocks that benefit from inflation, avoid most long-term Bonds.
Worry About inflation Now
If the U.S. government can shut down businesses for months and simply replace that forever lost Gross Domestic Production by creating money out of thin air— well we’re all for it! But, why do any of us need to go to work? That’s not the way the world works.
When 200 years’ worth of paper U.S. Dollars are printed in a brief few months, the impact is shocking. This total distortion of the free market economy will boomerang back as years of uncontrolled inflation.
Take a peek and you’ll see U.S. Stocks have been soaring, real estate is on fire thanks to nearly interest free loans, Gold has traded to all time highs, Silver spiked 18% higher in August alone.
Inflation is just beginning to echo through the grocery stores with higher meat prices and fresh vegetables. Blame on Covid but the higher prices are here.
Amazon prices seem higher to me lately. Walmart, Costco, and Target are creating tremendous profits due to increased sales and higher prices. But this is just a tiny taste of what’s likely to come.
It’s not that inflation hasn’t already been around— it’s just that the pandemic offers cover to Washington politicians. When inflation pops to 5% in coming months, then creeps toward 10% thereafter, the question that faces us— can the Federal Reserve stop it from becoming an inflation disaster?
Let’s face facts— a $3.6 Trillion Dollar injection into the economy may end in a disaster of Jimmy Carter type proportions. If you weren’t around back in the 1980s or you’re too old to remember, check out the graph above.
Inflation Loves Gold and Silver
Now, let’s look a year or two into the future. The impact of COVID19 physically, mentally, and economically will continue to cast a shadow over our nation’s confidence. It will take many months still to vaccinate 328 million Americans including anti-vaxers and children.
My point is simple: The Covid19 pandemic will last longer than two years and require more stimulus programs— Washington is talking about ANOTHER $3 Trillion Dollars. Every dime of the so-called infrastructure bill is money created out of thin air. Ultimately, monetary inflation threatens to produce not just temporary inflation like the Fed predicts, but waves of inflation.
All of that new money sloshing around is already inflationary. We’re seeing it in the markets – Stocks are trading near all-time highs and the housing markets are on fire. Meanwhile, small businesses, restaurants, bars, the travel industry are in a deep depression that or uses to get worse as the next Covid Wave crosses the country.
This may be the first time you’ve thought about inflation in years. Think carefully of the long-term consequences of inflation on your portfolio and your retirement plans
With inflation coming, the U.S. Dollar will decline, major sectors of the U.S Stock Market will correct down from nosebleed levels, Gold will be much more expensive to hoard, Silver prices may double,
What Not To Do About Inflation
Despite our optimism for inflation driving up Gold and Silver, do not go out and sell every Stock you own and buy up precious metals. Neither should you sell Stocks and head to Zales to buy a big Gold ring and Silver bracelets for the gals in your life.
Buy Gold Bullion, buy it cheap. Buy Silver Dollars, preferably American Eagles. Buy from a coin dealer everyone trusts, a firm that’s been in the business for 30 years— and is honest as the day is long.
We recommend Austin Rare Coins & Bullion. Margins are narrow, the BBB has given them A+ approval ratings for decades, and you can sell your Gold Coins and Silver Dollars anytime you are ready in the future. Visit them online at AustinCoins.Com