Inflation is a silent killer

Inflation is a silent killer:

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Inflation is a silent killer.

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Let’s go over why this is so destructive to societies.

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Inflation erodes the value of your money.

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If you earn 10,000 dollars a year, a 10% inflation rate means you lose 10% of your purchasing power.

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Your salary may increase 5-6%, but if it’s not keeping pace with the inflation rate, your quality of life is decreasing.

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Imagine you have a 100 dollar grocery bill. That bill is now 110 - but likely higher.

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You can deal with that increase in cost for a little bit.

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But if it continues to go up, you have a problem.

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You can’t afford to spend on unnecessary things now.

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You have to spend on food, gas and shelter - the basics of life.

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That’s ok if you’re able to have a job, but what if prices increase in a recession where people are losing jobs?

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That’s a disaster economically.

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Yet it’s what is likely coming for America.

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The Federal Reserve printed too much money and kept interest rates too low for too long.

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Why?

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In the name of saving the stock market and asset values.

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You can print as much money as you want until you get inflation.

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It’s why people in the economics discipline who believe in modern monetary theory are foolish.

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The concept is you can print as much money as possible as long as your debts are in your currency.

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So theoretically you can just print money forever, right?

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Wrong.

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You get inflation.

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Then you’re screwed.

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America can likely get through it without a recession, but it’s disastrous in other countries.

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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.

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They continue to print currency because all the rich folks in that society are fine as their assets continue to increase in value.

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But when it trickles down to food and gas prices, normal people have a problem.

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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.

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Why? 

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Because you have nothing else to lose.

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The Arab spring at the beginning of the 2010s was a classic example.

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Food prices were last this high around then.

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People get fed up because they have nothing else.

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History tells us this happens every time.

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Charlie Munger said it recently - inflation is how democracies die.

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It’s what happened to Germany after the Great Depression and led to Hitler taking power.

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Populism increases in inflationary environments.

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Expect a lot more dictators to come to power this next decade.

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We’re seeing the early signs of regime changes and people protesting.

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Sri Lanka right now is becoming a disaster economically.

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Peru has instituted curfews.

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It’s a sign of things to come.

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The inflation genie is out of the bottle because of the Federal Reserve and it’s tough getting it back under control.

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Don’t expect this decade to be as peaceful as previous ones have been.

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We’re entering a new world order monetarily and economically. 

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Inflation is the silent killer that’s will kill the old system.

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