When you hear us talk about the return of inflation, it’s not after consulting our local palm reader. We have actual reasons, not fake ones, to believe it’s going to happen and it goes something like this.
The economy has been scary lately. Between the reality of the slowdown and the frenzied rhetoric of the media talking heads, it’s no wonder Americans have been stashing money in what they consider to be “safe” places like Money Markets, CDs, Treasury Bonds, Savings Accounts, and even (gasp) cash. We’ll forget for a moment that these options result in a constant reduction of your purchasing power and focus on what will happen as the economy improves, thanks to low interest rates and the natural business cycle.
People have been putting off purchases throughout the down economy but, as they sense it strengthening, everyone is going to rush out to buy the stuff they want and need like:
• A new CD player to replace the one that only plays the 3rd song of every disc.
• A new lawn mower to replace the one that only massages the grass.
• A new washing machine to replace the one that prances around the room on the spin cycle.
But now the inventories of goods will have shrunk below the capacity to meet demand as the money comes out of the mayonnaise jar in the yard and is ready to be spent. Too much money. Too few goods. Result – classic inflation. Cure? Listen to The Creating Wealth Show with Jason Hartman.
The Platinum Team
