How I learned To Stop Worrying And Love Inflation
Currently, 77% of americans are concerned about inflation. Consistently rising month over month in polls https://www.axios.com/inflation-consumers-survey-1932e8d0-b01b-4c39-8fb4-4fdb9a96958d.html
Prices are rising across the board. The money printer is printing trillions of dollars in funny money every year. And the national debt is going parabolic, approaching $30 trillion
The biggest lie currently effecting the markets is that inflation can be reigned in easily. In the 80’s, when inflation was significantly less of a concern than it is today, Fed Chairman Paul Volckear raised interest rates 20% in order to reign in inflation. Today, an interest rate raise of 1% causes a recession.
The fed cannot tame inflation. And they only pretend to do so because they fear that if people worry about inflation, it will make the problem worse. So they posture about how inflation is transitory, they’ll handle it eventually, etc. We are now at the end of 2021 and we still haven’t gotten a single taper. Let alone a rate hike.
Most retail realizes this, so we see a mass exodus for the doors. But they also don’t know where to put their money in times of inflation, so we run into the issue of retail going cash gang, realizing cash is worthless, fomo’ing back into growth tech, realizing growth tech is topped, and going back into cash gang. Repeating the process
How to break the cycle
In times of inflation, you want to store your cash in anything that has a limited supply. Food, commodities like steel or microchips, shipping containers. Anything that the free money being given to everyone will be bidding on. Unfortunately, in 2021, even with all of this speculative future tech, we still haven’t figured out a way to eat US dollars to survive
Almost every one of these sectors is currently nearing their lows. So risk is small, and upside is significant if inflation does not play out the way the fed claims it will, where we enter massive deflation and everything goes back to normal for no reason.
I firmly believe that these sectors are undervalued because the vast majority of retail has no idea what they’re doing, and they only know how to invest in tech, but they also know inflation is a problem. If retail had a better understanding of inflation hedges, we would see much more rational movement across the markets
via r/wallstreetbets https://ift.tt/3qhG8Zq
September 29, 2021 at 09:30AM