Why Inflation Rate is Going to Explode
Massive inflation is going to hit the United States and most of the western world. It’s unavoidable. Over the last few weeks, I’ve written all about what inflation is, how it works, who it hurts, who it helps, and how to prepare for it. You can read the other articles here in the inflation course.
The reason I’ve put the course together is simple: inflation is unavoidable. There’s no way around it. The dollar is going to get extremely weak over the next few years, and prices are going to be artificially high.
Understanding when inflation is going to hit is essential to being prepared. Below is a basic explanation of what’s happening, and a quick blip about how to prepare.
It’s Already Happening
Yesterday, in the article Food Riots in America, we talked about how food prices have already hit all-time highs. In the article Energy and Food Prices Up, we gave examples of how food and energy are up 20-40%.
In 2010, silver went up nearly 70% in value. That’s absolutely crazy. The prices of commodities, energy, and food are all exploding, and there’s a reason for it.
What’s Causing the Inflation Explosion
Inflation is an extremely controversial economic concept, as we talk about in Inflation 101.
- The Federal Reserve. They’re hell bent on destroying the dollar. They’re constantly announcing that they think inflation is too low. They’ve printed trillions of new dollars in the last two years. They’re not stopping anytime soon.
- Government Spending. Government spending, in the end, must be paid for with new dollars or taxes. Since raising taxes isn’t popular, it’ll most likely be paid for with new money.
- Investor Fear. People are worried — they’re trusting the dollar less. As time goes on, this will just get worse and worse. The less people trust a currency, the more of that currency it takes to purchase items.
Inflation is going to increase, period. There’s really no way around this. Even George Soros and Warren Buffet and Jim Rogers agree that inflation is going to hit. The only question is when, and how hard it’s going to hit, and what you can do to prepare.
How Bad Is It Going to Get
I typically try to stay away from exact predictions, because I’m not a believer in timing the market. That’s one of the reasons why I launched a website based on the Permanent Portfolio by Harry Browne.
I believe good economics and investing strategies are timeless, meaning you shouldn’t have to necessarily worry about day to day events when you have a strong investing plan, and making sure you take advantage of low interest rates to fight inflation.
In the end, the only thing we can be sure of is that inflation is already hitting, and it’s not anywhere close to being over. The stock market will probably benefit over the next year as inflation is used to siphon wealth from the rest of the nation into banks and publicly traded stocks.
But all artificial bubbles pop, and our governments haven’t learned their lessons yet. The real inflation rate is already at 5-7%, and it’s only going to get worse. My prediction is that the real inflation rate should be in the 10-15% over the next 5 or so years, though I won’t guarantee that it won’t be slightly less or a whole lot worse.
Either way, inflation is going to explode. Economics simply requires this to occur. There’s no way around it. Even if radical capitalists take over the government and decrease spending (which isn’t going to happen), the harm is done, and we’re going to pay for it — period.
To learn more about inflation, check out our inflation 101 course, and make sure to subscribe to our free newsletter. I’m in the middle of working on an ebook that explains inflation inside and out, and will be releasing it for free to all of our subscribers. You can also keep up with us at our Facebook page.
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