Tag: inflation

Inflation’s Assault on the Family

Inflation’s Assault on the Family

“The homemaker has the ultimate career. All other careers exist for one purpose only – and that is to support the ultimate career.” – C.S. Lewis


I moved aside and watched our twelve-year-old van pull into the driveway. My wife opened the door, smiled, and told me she got the job. Putting the basketball down, I hugged her and told her I was proud. The job was a part-time evening and weekend position at the local country health food store – a good fit considering my wife’s interests. But deep down, a sense of sadness and partial defeat rolled over me. The ten-year period leading up to this moment had found my wife solely focused on homemaking and homeschooling our three children. A responsibility so demanding that few ever attempt it – even fewer see it through. But there we stood, eleven years into our marriage, resigned to the fact my single income was starting to fall short. Not due to any pay decrease, change in spending habits, or some major unforeseen event – but the result of government lockdowns and central banking monetary policies. I wanted blood.

To bathe in lament would be wrong. My wife and I have been and continue to be abundantly blessed. Our decision to have my wife stay home beyond her initial maternity leave led to a second and third child and an eventual decision to homeschool. All this, on a single income stretched by a string of small sacrifices: being a single used vehicle family, refraining from taking exotic family vacations, and thrift shopping whenever it met our requirements, to name a few. These disciplines afforded us the ability to own a home – a mortgage that is, and more importantly, to homeschool our three children.

Detailing our reasons for homeschooling would overwhelm the subject at hand, so I’ll exercise brevity. Public schools are no longer safe. Teachers no longer have the authority to maintain order and hold students to account; respect hit the offramp several exits ago. Large classrooms don’t afford teachers the ability to better know their students or offer them flexibility based on individual learning styles. Not that academics seem to matter anymore. Then there’s the indiscriminate spewing of left ideologies with little tolerance for pushback. No, thank you – we covet our kids too much, more than a new vehicle, second vehicle, picturesque vacation, and yes, even more than Gap Kids.

I was fortunate enough to receive an annual salary increase two years running, both of which outpaced official inflation numbers. An astute budgeter, I know we haven’t expanded our lifestyle to include more comforts or upgrades. So, we should be getting ahead, but we’re not. Given a choice between working six days a week or having my wife pick up some part-time work, we decided on the latter. This affords our kids more one-on-one time with dad instead of less, hopefully reducing any feelings of guilt, regret or resentment down the road. And needless to say, mom benefits from a bit of time spent away from home. So, what happened? How did we go from building savings every month to relying on those savings just to cover expenses?

Rising consumer prices, aka price inflation, resulting from central bank increases to the money supply, aka monetary inflation. For added depth, we turn to “Monetary Inflation and Price Inflation,” an article published on Mises.org, which is part of economist Robert P. Murphy’s series entitled “Understanding Money Mechanics.” Murphy begins by including the following excerpt from Ludwig von Mises’ “Economic Freedom And Interventionism: An Anthology of Articles and Essays,” which highlights the importance of differentiating between price and monetary inflation,

“There is nowadays a very reprehensible, even dangerous, semantic confusion that makes it extremely difficult for the non-expert to grasp the true state of affairs. Inflation, as this term was always used everywhere and especially in this country [the United States], means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term “inflation” to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. It follows that nobody cares about inflation in the traditional sense of the term. As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil.”

In the absence of any graphs or balance sheets depicting current monetary inflation rates, I recommend anyone interested visit the Federal Reserve Economic Data (FRED) site and access their many tutorials to get started. Verifications aside, none of the following should come as a shock to those following government responses to Covid-19. Having limited economic activity through lockdowns, global governments have turned to their central banks to bail out their citizens and businesses alike. Growing government reliance on central bank monetary policies was evident long before this “pandemic.” Still, many have only recently become aware of the staggering rate at which the money supply has increased. To reiterate, this increase in money supply is what we call “monetary inflation” or simply “inflation.” What does history teach us about this topic?

Murphy’s article demonstrates the dangerous effects by referencing three historical examples of hyperinflation, the US Civil War, the Weimar Republic, and more recently, Zimbabwe, which experienced unimaginable price inflation. Regarding the latter, he writes,

“A more recent (and severe) hyperinflation occurred in Zimbabwe, from 2007 to 2009. In the worst month, November 2008, prices increased more than 79 billion percent, or 98 percent per day. As with other hyperinflations, in Zimbabwe too the connection between monetary and price inflation was evident.”

But how does increasing the quantity of money cause consumer prices to rise?

In his book “What You Should Know About Inflation,” the famous business and economics journalist Henry Hazlitt explained their relationship like this,

“Let us see what happens under inflation, and why it happens. When the supply of money is increased, people have more money to offer for goods. If the supply of goods does not increase — or does not increase as much as the supply of money — then the prices of goods will go up. Each individual dollar becomes less valuable because there are more dollars. Therefore more of them will be offered against, say, a pair of shoes or a hundred bushels of wheat than before. A ‘price’ is an exchange ratio between a dollar and a unit of goods. When people have more dollars, they value each dollar less. Goods then rise in price, not because goods are scarcer than before, but because dollars are more abundant.”

In the era of global lockdowns, we’ve seen increasing supplies of money, decreasing supplies of goods, and governments financing their citizens to forgo work and stay home. Fewer workers produce fewer goods, and as we’ve just learned, fewer supplied goods with increasing supplies of money lead to higher prices.

Although we haven’t experienced anything remotely close to Murphy’s earlier precedents, many families are being squeezed. Fortunately, avenues do exist, which lead to improved financial outlooks. Living within one’s means, avoiding “bad” debt, implementing a budget, and substituting goods when specific prices soar, to name a few. Sadly, authoritarian governments bridled with central banking policies minimize the positive effects of making responsible personal choices. In my family’s case, having exhausted all other options, increasing our revenue stream was the only card left to play.

I can’t say enough about my wife – she’s a rock. Together, we know what we want for our family despite where the rest of the world may be heading. We knew there would be challenges, and we would need to make sacrifices along the way – but it’s been worth every last one of them. We’re raising our children and leaving little to the state. We won’t shelter them from opposing views – that wouldn’t be right. Instead, we will introduce distinct topics and worldviews on our terms and will encourage our kids to think critically. Some say our aspirations will fail, and perhaps they’re right – God only knows. Until then, you’ll find us here in our home, building up our legacy – inflationary policies be damned.

Towards liberty,

OA

Inflation Resistance: A Comprehensive List

Inflation Resistance: A Comprehensive List

“It does not do to leave a live dragon out of your calculations, if you live near one.” – J.R.R. Tolkien

Jordan Taylor Swaim is a social service worker, podcaster and producer out of Calgary, Alberta, where he resides with his wife Janelle, and son TJ. Check out his podcast, The Peaceful Way, and learn the concepts, ideas, and strategies behind making a more peaceful and nonviolent world.

This article was originally published on Medium.com. Read the original article.


The SARS-Cov-2 pandemic has skyrocketed international government spending and stimulus to unimaginable proportions. Dwarfing the 2008 financial crisis, worldwide government debt soared orders of magnitude higher in 2020 and shows no signs of slowing down in 2021. Nearly 24% of all dollars in existence in the US were printed in the year 2020 alone, while many other countries are well over that 20% mark. Fears over a sovereign debt crisis loom, while there is very little political appetite for austerity measures.

Anecdotally, I see evidence of the economic chickens already coming home to roost. All sorts of general consumer goods, from groceries to textiles, are rapidly rising in price. The stock market appears to be a stimulus-fuelled bubble, and stores of value like real estate and bitcoin are witnessing record levels of trading volume. Inflation, unlike the west has ever seen before, seems highly probable if not inevitable. Central banks globally are rushing to inject liquidity to artificially prop up the economy until it can become productive once again. As the meme lords so eloquently put it: “money printer go brrrr.”

So the question is, how do you protect yourself against it? Well, what I want to do here is create a comprehensive and routinely updated list of products, services, and ideas that can protect your financial situation from being eaten away by the falling value of your dollar. To be clear, this is not investment advice, merely a reference/resource, and there is certainly no silver bullet to protecting against inflation.

A disclaimer, this may not help you in a total economic collapse; in that case, you will need guns – lots of guns. Furthermore, for every example of an inflation hedge I give, there will always be an exception to the rule. Like everything in life, you are taking a risk.

Precious Metals

Let’s start with the most obvious hedges against inflation, precious metals. I am not covering every metal, but rather the most prominent ones.

Gold: The gold standard in stores value, literally. Used as currency for 5000+ years of civilization, it is hard to go wrong with the shiny yellow metal. It‘s difficult to imagine a future where gold would not hold its value, and if you have a decades-long time horizon, there are potential profits to be made.

Pros: – low volatility – valuable everywhere on earth – has industrial uses – a very small amount of gold can be very valuable, making it easy to store and transport – privacy.

Cons: – not easily divisible – you need to spend money on securing your gold either through a personal vault or holding it at a financial institution.

Silver: The little brother to gold, silver has been a humanity mainstay in terms of value for millennia. Industrial uses for the metal have skyrocketed over the last few years and only added to its demand and value. Many believe that the value of silver will leapfrog gold in terms of percentages over the next few years.

Pros: – low volatility – valuable everywhere on earth – much more affordable than gold but has a similar upside – industrial uses.

Cons: – not easily divisible – money spent on securing your silver – can get heavy and difficult to transport with even a modest investment – holds value everywhere.

Copper: Though neglected by many precious metal collectors, the price of copper has nearly doubled in the last year. Not only that, being the primary material used in electrical wiring, it’s here to stay. Commercial real estate landlords have even had problems with copper thieves pulling copper wiring out of their buildings in recent years.

Pros: – high industrial use – affordable – global demand is on the rise, which means its price could be on the rise

Cons: – heavy and difficult to store and transport substantial amounts.

Platinum: A bit cheaper than gold, platinum bullion is available to collect and use as a hedge against inflation. Platinum is a far more rare metal than gold or silver but also has fewer industrial uses. Primarily used in engines.

Pros: – low volatility – rare – a small amount can be very valuable, making it easier to store and transport.

Cons: – difficult to find retail vendors due to low trading volume – costs associated with security – fewer industrial uses than other precious metals.

Real Estate

Like precious metals, real estate is as close to a sure thing as you can get in terms of parking your money. Though there can be large market pullbacks every decade or two in the real estate market, it has always remained one of the most liquid markets in the world. For the purposes of this article, real estate is a longer-term hold, not house flipping or trying to buy low and sell high. You may not make a substantial profit in real estate, but on a long enough time horizon, you most likely aren’t going to lose money as you would to inflation. Though there are many categories of real estate, I am only going to cover two very broad ones:

Residential: People will always need a place to live. Residential real estate, particularly in big cities, tends to be a pretty safe bet. The other benefit is that you can live in and use your investment, so I like owning a home for the pure practicality of it.

Pros: – you can live in it – you can use it as an income property – statistically very good at retaining value.

Cons: – upkeep can be costly in terms of time and money – Can be a rather large commitment – is not a very flexible investment.

Commercial: Though a lot riskier than residential, commercial real estate can have huge upsides. The trick is picking an industry that will remain relatively stable for the long term; retailers and shopping malls are probably a bad bet. However, some commercial investments like RV parking and storage lots show a lot of future promise and have been a booming industry for years.

Pros: – potentially a high income earning asset – has some flexibility in terms of what kind of business can be operated (E.g., the old Kmart gets converted into a trampoline park.)

Cons: – more volatile than residential – upkeep can be costly in terms of time and money.

Cryptocurrency

If you haven’t been paying attention, the digital financial revolution is happening right under your nose. Starting in 2009, and in response to the 2008 financial crisis, the bitcoin white paper was unleashed into the world. A peer-to-peer permissionless currency that cannot be controlled by a cabal of central banks, governmental, and corporate interests. Whether or not BTC ends up the dominant blockchain token, in the end, remains to be seen, but what is a near certainty is that cryptocurrency is here to stay. As institutional investors pile on, the value continues to rise to new all-time highs. Some even believe Bitcoin to be replacing gold as a store of value. Though I doubt it will replace gold, it will certainly compete with it in that regard. 2020/21 seems to be an indicator of where people are putting their cash to protect against an onslaught of inflation. Though there are still detractors claiming it to be a scam, they will most likely be forgotten in the dustbin of history; there is no putting this cat back in the bag.

I will not be covering specific cryptos here (as there are thousands of them). I would recommend learning about Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and XRP for those new to the topic.

Pros: – open distributed ledger making it impossible to forge or fudge numbers – Massive potential across hundreds of industries – easy to store on a computer or hardware wallet.

Cons: – highly volatile – it can be easy to lose your assets on a computer or hard drive.

Human Capital

A too often ignored aspect of fighting off the debasement of the currency is you. Building your own human capital can be one of the most effective tools to avoid the worst effects of a high inflationary environment. The way I like to define HC: it is the combination of your skills and knowledge, having both a theoretical and practical component to it. What you know and what you know how to do can be invaluable assets in bad economic times. There will always be some service or knowledge that other people will need and are willing to pay for that you can provide. It’s also never been easier to grow your human capital. You can learn how to change your oil by watching a youtube video, day trading through a Udemy.com class, and there are all kinds of online forums and communities that can give you free and usable advice on almost any topic or problem you can imagine. Personally, I try to constantly be reading as well as a goal to do one online class a month.

I would also add that physical and mental health are very important in terms of protecting your human capital. If you are sick or having a mental breakdown during a crisis, it can make economic problems exponentially worse for you and your family.

Pros: – relatively cheap – time flexibility (you can work on it at your own pace and convenience) – high upside – knowledge and skill go everywhere with you.

Cons: There is almost no downside to building human capital. The only word of caution would be not putting all your eggs in one basket in terms of what you can do and what you know. Spending your time learning to be a long-haul trucker, for example, maybe a bad time investment due to automation.

Okay, so now that we have covered the big ones, let’s talk about some more obscure stores of value that may not have immediately crossed your mind.

Guns & Ammo

It’s time to put a *pew pew* into that inflation killing your monetary gains. Firearms can be an excellent store of value. With a little bit of love and care, they can potentially be fully operational for decades and even centuries. Guns also track like a can of coke with inflation. They can also be fun toys and useful tools. Whether it’s for shooting at a range, hunting, or personal defense, there will always be a demand for guns.

The market for ammo fluctuates pretty drastically every few years, and a lot of private citizens will even stockpile ammo while it’s cheap and sell it when demand picks up. However, ammunition does not have the same shelf life as guns and can be damaged by rust or oxidization if not stored properly. They will still degrade even in the best of environments; though it could take years, it is going to be a much shorter time period than a firearm.

A final point on guns and ammo, depending on where you live, there can be extremely onerous regulations. This can make it very difficult, and in some cases impossible, to own guns. If your jurisdiction allows you to keep non-registered firearms, there is far less risk of losing them because of gun laws, though the financial risk is mitigated as most countries will do gun buybacks in the event of a ban.

Pros: – can last a very long time – always in demand – low volatility.

Cons: – difficult to store and transport (depending on where you live, there are storage requirement laws) – the risk of being regulated.

Honourable mentions: Compact bows, crossbows, and knives.

Collectibles

This category is vast and somewhat complicated in regards to being a hedge. Many collectibles fall in and out of favour over the years. If they become really popular like sports cards in the 90s, they get so mass-produced and plentiful that when demand dries up, they aren’t even worth the paper they are printed on. If you want to get into collectibles, you have to have very specific knowledge of the niche in which you are collecting; lukewarm investors will spend too much money on items that don’t have any long-term value. However, if you know what to look for, it can be extremely lucrative. Generally, when collecting, you are looking for pieces that have historical significance, like a signed Jackie Robinson card or a first issue of Action Comics.

Here is a list of examples of collectibles:

  • sports cards 
  • comic books
  • toys
  • retro video games
  • antiques (furniture, glassware, books, etc.)
  • sports memorabilia (signed ball, jerseys, etc.) 
  • cars
  • art
  • war artifacts
  • Coca-Cola collections

Pros: – fun and interesting for hobbyists – Great for displaying – preserves history/culture.

Cons: – risky investment with low information – many collectibles require expensive restoration or protection – vulnerable to theft, fire, and flood.

Musical Instruments

I got my first guitar when I was 14, a cherry red Fender Strat made in Mexico. It was purchased for under $500 CDN 18 years ago and now retails for anywhere between $750–$1000, tracking close with inflation. If kept in good condition, instruments of all kinds, from brass to wood to string, have great resale value. If you take care of them properly, they can easily last for decades, and it’s actually relatively simple to repair minor damage. Anytime I have had to get a guitar repaired, it always cost me under $100.

If you already play and love music, this one is a no-brainer but may not work for the non-musically inclined. As with all of these ideas, it’s optimal to find an inflation hedge that you can use and enjoy rather than just leave it to collect dust in an attic. And let’s not forget gear like pedals, cases, straps. These items can also solidly retain their value.

A caveat to this is old stand-up pianos. These instruments are hard to give away for free for the simple fact that they are abundant, hard to move, and take up a lot of space. Grand pianos and a Nord-Stage are safer bets.

Pros: – low volatility – high utility for musicians – minimal maintenance – stable demand.

Cons: – they take up space and may require storage – vulnerable to rapid climate changes and humidity levels – vulnerable to theft, fire, and flood.

Shure SM58

I thought about including this in the Musical Instruments section, but honestly, this mic is in a category all its own. If there was a fictional universe in which musicians controlled the monetary system, they would most definitely make the Shure SM58 Dynamic Microphone the reserve currency of the world. All your dollars would be backed by SM 58’s, and for good reason. This mic has hardly changed since its inception in the ’60s because there’s literally no reason to. It’s affordable, durable, and gives quality vocal and instrumental recording. I personally use SM 58’s for all podcasting and vocal needs. Is it the greatest mic in the world? No, but it does not need to be. You can find it in virtually every professional recording studio around the world, and almost all touring musicians have it in their repertoire. They last forever and are easy to repair. There are youtube videos of people using the mic as a hammer, baton, and even dropping it in water then using it with no issues. Purchase 20 of these mics, leave them in your basement for 30 years, and they will most certainly work perfectly. Not only that, you will be able to sell them for nearly what you bought them for (adjusted for inflation); try looking for them in used markets, and they are 10% less than retail at most.

Even if you know nothing about instruments or microphones, take it from me; you would not go wrong purchasing an SM 58.

Pros: – always in demand – very durable – easy to maintain.

Cons: – heavy – requires storage space.

Tools

This may be obscure, but power tools, and tools in general, hold their value exceptionally well. To be fair, you are probably never going to resell a tool and get what you paid for it. Still, as inflation rises, consumer goods like power tools will rise in price with them, so if you are looking to get rid of some extra cash, this is not a bad option. If you use or need tools, now may be a good time to invest in that table saw you have been humming and hawing about. If you get a good brand, it can last for years, perhaps even decades, and it can often take a beating. The motors in power tools are also fairly easy to fix. They use simple electrical schemes making soldering severed wires a relatively simple job.

It should be noted, I am talking about household tools, not work tools. The amount of mileage put on work tools will wear them out much faster. However, you will most likely use home tools a fraction of the amount you would use work tools, and therefore they should last orders of magnitude longer. A hammer you bought for ten dollars twenty years ago is probably as good as new and would cost you 20–30 dollars today. It will pay in the long run to spend a few hundred dollars getting high-quality tools that you would generally use around the house.

Pros: – always handy and useful – low volatility – a lot of upsides, and there is always a market for used tools if you ever needed to offload them.

Cons: – electric tools may not last more than 10 years – storage space required – theft risk – tools degrade faster in humid environments.

Livestock

As with many items on this list, this may not be for everyone; however, if you have an acreage or even a large enough yard, livestock holds their value very well. There is always a demand for them, or you can use them for your own consumption. Cattle and horses might be for more experienced ranchers and can be more expensive, but animals like sheep, goats, chickens, and even rabbits are relatively easy to raise and maintain. You can use their eggs, meat, milk, and fur. Depending on municipal regulations, you can sometimes get away with raising small game like chicken or rabbits.

Pros: – recurring resource – high utility – can be lucrative.

Cons: – high upfront costs in building habitat and purchasing animals – costs for food and medicine/veterinarian – high commitment.

Jordan S.