Guest Post by Simon Black
It feels like it’s easily been two years since I’ve recorded a public podcast. But after yesterday’s article about inflation, I realized that I had so much more to say.
Inflation– which is essentially the slow destruction of a currency– is already a major issue that’s capturing headlines. But there are plenty of reasons why it could be far worse in the future.
This isn’t anything to be afraid of. But it’s definitely a topic to learn a lot more about.
Understanding inflation is critical to making sound, long-term financial decisions, and creating a great Plan B. But it’s a complicated topic.
To properly understand inflation, it’s imperative to first learn about how central banking works; for example, why does the Federal Reserve buy so many mortgage bonds? What’s the actual mechanism for ‘creating’ money, and how does this new money make its way into the economy?
(We talk about all of this in today’s podcast, including the absolutely ridiculous and infuriatingly cozy relationship between the Fed and the biggest commercial banks.)
More importantly, what are the long-term factors that could drive inflation a LOT higher?
We discuss some of the obvious ones, like the federal government’s insatiable appetite to spend money.
But there are a lot of other obscure reasons– like the fact that there are fewer farmers and fewer acres of farmland planted in the United States than at any other point in history going back to at least the late 1800s.
That last one could be a pretty big deal; US food imports have been doubling roughly every 10 years. So the US is going to reach a point where it has to import a large quantity of its food, and pay for it all with a rapidly depreciating currency.
You can probably imagine the impact that trend could have on future food prices.
There’s a LOT more to discover here– like why the Fed keeps supporting a housing market that’s totally on fire, what they actually mean when they say inflation is ‘transitory’, and what types of businesses might make solid investments in this environment.
We even walk through the details of the last financial crisis– and how the it mirrors what’s happening today.
It’s been so long since we published one of these, I had to ask our Sovereign Woman, Viktorija, to help me out and guide my comments in the right direction.
I sincerely hope you’re able to learn something from this and come away with a much better understanding of how to factor inflation into your own Plan B.
You can watch the video here:
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