Inflation is a silent killer:
Inflation is a silent killer.
Let’s go over why this is so destructive to societies.
Inflation erodes the value of your money.
If you earn 10,000 dollars a year, a 10% inflation rate means you lose 10% of your purchasing power.
Your salary may increase 5-6%, but if it’s not keeping pace with the inflation rate, your quality of life is decreasing.
Imagine you have a 100 dollar grocery bill. That bill is now 110 - but likely higher.
You can deal with that increase in cost for a little bit.
But if it continues to go up, you have a problem.
You can’t afford to spend on unnecessary things now.
You have to spend on food, gas and shelter - the basics of life.
That’s ok if you’re able to have a job, but what if prices increase in a recession where people are losing jobs?
That’s a disaster economically.
Yet it’s what is likely coming for America.
The Federal Reserve printed too much money and kept interest rates too low for too long.
Why?
In the name of saving the stock market and asset values.
You can print as much money as you want until you get inflation.
It’s why people in the economics discipline who believe in modern monetary theory are foolish.
The concept is you can print as much money as possible as long as your debts are in your currency.
So theoretically you can just print money forever, right?
Wrong.
You get inflation.
Then you’re screwed.
America can likely get through it without a recession, but it’s disastrous in other countries.
Given what Covid did shutting down tourism in a lot of developing countries, they couldn’t sustain themselves. Then you get corrupt politicians and leaders who rob the people.
They continue to print currency because all the rich folks in that society are fine as their assets continue to increase in value.
But when it trickles down to food and gas prices, normal people have a problem.
When you can’t afford to eat and heat your house because you don’t earn enough money as your dollar got eroded due to inflation, you protest and revolt.
Why?
Because you have nothing else to lose.
The Arab spring at the beginning of the 2010s was a classic example.
Food prices were last this high around then.
People get fed up because they have nothing else.
History tells us this happens every time.
Charlie Munger said it recently - inflation is how democracies die.
It’s what happened to Germany after the Great Depression and led to Hitler taking power.
Populism increases in inflationary environments.
Expect a lot more dictators to come to power this next decade.
We’re seeing the early signs of regime changes and people protesting.
Sri Lanka right now is becoming a disaster economically.
Peru has instituted curfews.
It’s a sign of things to come.
The inflation genie is out of the bottle because of the Federal Reserve and it’s tough getting it back under control.
Don’t expect this decade to be as peaceful as previous ones have been.
We’re entering a new world order monetarily and economically.
Inflation is the silent killer that’s will kill the old system.
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