Invest in Inflation

17 Jul

Invest in Inflation

It was a line from the American humorist Will Rogers a long time ago:

“Invest in inflation.  It’s the only thing that’s going up!”

According to the Bureau of Labor Statistics, after several months of decline, the June Consumer Price Index took a big jump in June.  It climbed .06 percent.  

 Annualize that!  

The June number was the biggest CPI increase since 2012.  Does this mean inflation is back?

Well, no.  It can’t be “back.” It never left.

We think the public’s confusion about these matters can be blamed on journalists, many of whom are too lazy or not smart enough to make meaningful intellectual distinctions.  

They help dumb down the public conversation.  

In this case, their lack of precision over a couple of generations has led the public to think that “inflation” refers to things like grocery prices and other everyday purchases.  

But the economists of old used the term “inflation” to refer to an increase in the amount of money and credit.  Because governments and their crony banksters, especially in a fractional reserve system, are always eager to increase the supply of money and credit, inflation is a constant in our economy.

It’s just that it doesn’t always manifest itself in everyday consumer prices.  So now journalists, who corrupted the term to begin with, make statements like “there is no inflation.”

But our economy is made of millions of people making individual choices, choices that depend on countless factors:  the stages of their lives, the political and policy environment, the needs of their families, the security of their jobs and income, and countless other personal preferences.  It is for that reason that the effects of inflation, an increase in the supply of money and credit, show up in different places at different times.  In the late 90’s it showed up in dot com stocks.  In the early years of the new millennium it showed up in the housing market.

Both of those bubbles burst.  But the Fed keeps inflating right along.  For some time this has been showing up in the stock market.  Some believe the June numbers suggest it may start showing up in everyday consumer prices.

It can show up in unexpected places or in many places at once.  We don’t know.  But we’ve been warning about what happens when governments print money.  

And it is printing money more aggressively than ever now.

No matter which items get more expensive the fastest, remember that you are actually seeing the value of your money, your savings, your cash, your dollars going down.  

The government and its crony banks never stop trying to inflate conditions in the economy.  It is not real growth.  Big government has killed real economic growth.  Its money printing is a substitute for real growth.  It is an attempt to paper over the real problems in the economy.

The price of gold tells us that the Fed is doing something very dangerous.

They won’t stop inflating.  When they don’t get the effects they wish, they will inflate more.  

You can invest in inflation by buying gold.  

It is going up.