Inflation is Here, Now What?

A rising tide drowns all who are too close to shore.


The Bill comes Due

Inflation is rampant now. Now being called “Transitory”, in the latest Federal Reserve Chair meeting; previous they said that “it doesn't exist”. That it was a “Blip” on the radar. That should already be a tell, but we’ll continue regardless…

Is a three year chip shortage “transitory”? How about record high housing prices, but not just in America but, housing prices around the world? CPI has spiked to 5.4% the fastest since 08. No this is not transitory, it is here, it is real, and will be here for quite some time.

Those trying to down play it, saying it’s “just a supply chain issue” should have spoken about this months or even a year ago. After all since everything was disrupted surely the next logical thing would be to think about the supply chain. And yet, only now do we hear of this.

The Fed has once again decided to take a hands off approach.1 Punting the decision, as the Fed wants people to spend, and businesses to recover. It's why Governments decided to mostly open up in July. To get monetary velocity moving again. The Fed won’t consider any action until the fall. Which coincidentally is about the time they’ll consider another lockdown. Their reasoning is if it is a “blip” it should go away by itself. But inflation is a systemic issue and won’t just disappear.

But since the Fed is slow to act inflation will spiral out of control, the after affects of the money printer going burrrr. Nothing will fully known since they changed M1, M2 and M3 reporting. CPI will continue to jump.2

The Fed’s hand will be forced by inflation to raise interest rates. When people come back from their summer spending sprees and the government finds it hasn't done enough for the economy, as well as any potential new variant.3 The Government will be forced to act.

And thats when things go crazy.


Now if you are of the belief that we are entering an era of hyperinflation or stagflation and this is in-fact not transitory I have some bad news for you. Either phenomenon usually lasts a few years during the fall of a currency and the implementation of a new one. Four to six years is the general timeline between start and end of these circumstances. To say this is all doom and gloom would be fear mongering to you, there IS a major difference this time.

Given the Nature of the Fed’s willingness to accept, or at-least entertain the idea of a digital currency and with the EU going full steam ahead with it it is now certain that a digital nation-state currency is imminent. For the cash transaction market especially the smaller petty cash transaction market is several trillion dollars globally per annum. This is untaxed, untraceable, and the Government would like its cut. And if the currency is comprised, well, two birds, one printer.

Government moves at the speed of the Titanic, and since Cryptocurrency and inflation have already crashing into its hull it may be too late to avert catastrophe. As we both see the beginnings of rampant stagflation and hyperinflation already. Now since we are entering a period of currency crisis, it would be four to six years of disaster, except the World’s governments are slowly moving towards digital already. Instead we’ll cut that timeframe in half, as they're working on a solution.

Two to three years of more lingering crisis isn’t anything anyone wants, myself included. So let’s take stock of facts to ensure we aren't lead astray.:

  • 35% of all US dollars were printed last year.

  • Inflation the highest in 13 years

  • Record high asset prices

  • extremely low interest rates

  • unused corporate cash reserves

  • extremely high unemployment

  • Supply Chain issues

Decide for yourself.


If you can’t decide for yourself, discuss it with a friend.

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The Scramble

Suppose you see the inflation, and are worried about stagflation, hyperinflation etc. What happens globally?

Well, given the same team is in power as the 08’ Crash, I’d say it’s safe to say the same policies for America will rear their head. QE and if necessary raise rates. We’ve already seen the QE, but more could occur. Issue is both of those are can’t be done at the same time. The US will hold it together as long as possible, but the balance sheet of the Fed can only handle so much.

If anything were to happen Central Banks globally would initiate beggar thy neighbour policies. Currency and interest rate manipulation amongst the foremost ideas to get ahead and screw trade deficits/surpluses. Particularly the EU will be hampered considerably with any crisis given their monetary and fiscal chimera. Calls to leave the union will be much greater and if calamitous, expedited “Crash Outs” would happen.

Tariffs and domestic manufactured will be pushed heavily. Though to get those online once more would happen long after the crisis occurred. All foreign goods would rise dramatically. Luxury goods would be simultaneously cheap and expensive, as unpurchased items rise with inflation, but purchased items are pawned for necessities.

No one knows for certain if the global monetary system can handle the monetary injections central banks made over the past two years. Signs suggest no, but we’re in unprecedented territory.


Hedging Against Inflation

Irrespective of any theories, two years plus of hyperinflation/stagflation is considerable. We went through eighteen months of Pandemic and everything went to hell in a hand-basket within four months… Being prepared matters now more than ever.

Previously I mentioned the following in the paid subscriber post: You the Ark:

The best thing most people can do is go to their big box store such as Costco and buy essentials.

It’s the easiest, cheapest investment hedge with no downsides. The essentials will always be needed, and there is no speculation about it. No specialized knowledge or tools either, just purchase extra of what you normally use.4

There was a laundry list of things you can do, and I recommend you go and read that article if you haven’t it's quite relevant now. But if you aren’t a subscriber to summarize:


Most people have one or two sources income, a group of friends and belong to social media, but accurate information and analysis are becoming rarer by the day.

Hence one of the ways you are preparing yourself is by subscribing. This is not a ridiculous notion either, accurate information and analysis in these tumultuous times is more paramount than ever.

It is why I personally will be subscribing to more substacks etc once I get my new credit card. (living without one for a few months has been a considerable pain).

If you found this insightful or entertaining and want to be someone’s hero share it with a friend. (perhaps not the one who gives you stock tips though)

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1

Just like 07’ but hey what do you expect it’s the same plunge protection team…

2

It should be higher than 5.4% but they’ve never included housing since Reagan. All metrics are now a scam.

3

We’re at Lamda already so Minerva, Omega, or Zeta should have cropped up by then.

4

Once you’ve bought the essentials, it’s always the simple/minor luxuries that end up going for high prices: chocolate, soap, nail polish, needles and thread etc. Buy those next or things you’ll use regardless of crisis such as shirts and socks.