Dear Fellow Survivalist;
As we all know, inflation has been up ever since the COVID panic started winding down. That’s not so much due to the pandemic, as it is due to how Congress reacted to it. As usual, the reaction of our nation’s legislative body was to throw money at the problem and they outdid themselves this time. Between the six COVID-19 relief laws passed during 2020 and 2021, Congress spent about $4.6 trillion dollars of our money. They topped that spending spree off with an “infrastructure” bill that grossly redefined infrastructure of $1.2 trillion.
Regardless of whatever any of us might have learned about inflation in school, inflation isn’t caused by businesses raising prices due to the law of supply and demand or companies being greedy and charging more for their products. That’s actually second-order inflation, which happens because the government has devalued the nation’s money. They do that by creating money out of thin air, in an act known as “quantitative easing.” Those trillion-dollar laws that Congress passed are financed by the central bank issuing more money, without any corresponding increase in the nation’s economy. The money comes from diluting the value of the existing money pool. Materials that companies need to make their products cost them more, forcing them to raise prices.
But no matter what is actually causing inflation, for you and I the results are the same; our dollars don’t go as far. Worse than that, any savings we have becomes devalued, just like all the rest of the money out there. That has serious implications, especially in the context of retirement.
The normal hedge against our money losing value is to invest. People have retirement accounts, usually managed by some “money manager,” who invests their retirement money, along with a whole lot of other peoples’ in stocks and bonds. That generally manages to keep the money growing faster than inflation, ensuring that their money will be available for retirement.
That system works during normal times, at least in part because everyone involved in working the system is after the same goal, protecting their investment and making it grow. While the financial community, specifically Wall Street, may be fiercely competitive, they’re all in the same business and recognize that everyone has to make money for their way of life to continue.
There’s just one problem; that entire system of investments is tied into and dependent on the economy. That means that anything that happens to the economy is going to affect those investments. All we have to do is look back at the Great Depression, to see that a financial collapse hurts everyone who has invested in the stock market.
The only sure investment to use as a hedge against inflation is hard physical assets. That generally means investing in either precious metals or real estate. Some people, who have a lot to invest, add investment-grade gemstones to that list.
Ok, I know what you’re probably thinking – something along the lines of “I can’t afford any of that.” I get it. I’m in the same boat. Although I’ve invested slightly in silver, I don’t have enough money to make enough of an investment that it makes any difference. I need other options.
Since we’re talking about investing in physical assets, pretty much anything can qualify. All we need is something that we know we will use and will go up in cost. Gasoline would be a great example of that, except that gasoline doesn’t store well for a prolonged period of time. Another thing we know that we’ll need, which we also know will go up in value, if food. Not only do we need food, but it tends to go up in price faster than the inflation rate. As a somewhat extreme example, food rose in price 11% from 2021 to 2022.
What this means is that if we buy non-perishable food that we know that we will use, and save it, it will be worth more than if we had put that money in savings. Working the math out, if the inflation rate of food remained at 11% for five years, that food would be wroth 168% of what was invested in it. Even a more reasonable inflation rate of 8 years works out to 149% in five years. As long as food goes up faster than the inflation rate, it’s a good investment for those of us who don’t have much to invest.
Protecting our family means protecting them in all ways. Having food for them to eat and/or being able to afford food for them to eat is just as important as keeping our powder dry and our survival gear close at hand.