When you take a look at the current problems we’re dealing with as a collective society, it’ll quickly become clear that they’re often suspiciously divided into only 2 sides.
Outside thought is discouraged, and we become wired to recite the same tired reasons for why “that won’t work”. You’ll notice that logical, valid arguments are discarded by the consumers of large political media sources without hardly any consideration. Opponents of such arguments will be found quoting their own preferred opinion piece media as a “factual source”, and tend to be quite difficult to reason with.
Political cult behavior is not the fault of the individual, as they are often being manipulated by their own sources. No one should be blamed for this unfortunate series of events. If we all end up blaming each other, nothing gets accomplished. We all want to be good people, never forget it (especially before writing an angry email).
Unfortunately, today’s topic is somewhat emotionally charged, and prone to the phenomenon mentioned above. Please bear with me, keep an open mind, and submit all questions/comments to submissions.feelgoodfinance@gmail.com. We love to hear from you!
Let’s get to it.
The term “Greedflation” was coined in the past few decades to reflect a very specific form of currency inflation. The word is most often used to describe inflation caused by rising C-Suite payouts. Traditional inflation is typically seen during an increased demand and reduced supply of goods and services, as well as any time a federal or state government drastically increases the money supply, or injects new capital into a system. It’s quite a deep economic topic, and my definition doesn’t truly do it justice, but for our purposes today it’ll serve.
You can do a deeper dive of the topic here.
Anyone with internet service knows that nearly every political or “business” news source on the planet is talking about currency inflation right now. It brings in views. It gets the people going. Some sources claim that it’s caused due to Greedflation spreading throughout large corporations. Some claim it’s a failing mix of monetary and fiscal policy.
I’m here to tell you there’s really no easy answer.
Now, there’s absolutely no question that we’ve broken our currency, and created a ruling class that’s so far out of touch with the general public, they barely speak the same language anymore. Economists, investors, accountants, and bankers alike are all shaking their heads and shrugging when asked the terrible question, “so what do you think is going to happen?” At least, the honest ones are. If someone tells you they have all the answers, you should probably be running.
The Blame Game is ever present in America these days, everyone seems to have the best answer as to who we need to crucify for screwing things up. The tough answer is… It might be everyone’s fault.
Let’s back up for a minute…
Money is simply a semi-democratic way of deciding how to divide up our limited labor and resources among a population with unlimited wants and needs.
Multiplying the “amount” of money in a system has no real effect on the amount of true resources and labor that exist within that current economy. Worth noting; adding money (responsibly) CAN create new labor by adding incentive for people to work. It’s a slippery slope, as politicians want to get re-elected, and nobody ever gets cheered on for shrinking the money supply.
It sure seems like everyone has become an expert on interest rates in the last 3 months following Jerome Powell’s decisions to raise them. In a beautiful turn of irony, most folks I’ve spoken with have no clue what a T-Bill is, but they sure are upset/worried/mad about those damn interest rates! In fairness to Mr. Powell, trying to direct the economy of the Earth’s most popular exchange currency using only interest rates, money supply, and press releases is sort of like steering an aircraft carrier down the Mississippi River.
Interest rates and prices have an inverse reaction to each other by nature. For the sake of this discussion, all you need to know is when one increases, the other decreases, and vice versa.
If interest rates rise on a certain product, prices for that same item should fall.
That seems like it would be a solution to our big issues, right?? It’s sadly not that simple.
As of writing this, interest rates are roughly about where they were in 2018. I may have experienced it differently than you, but around 2018 business was booming. Investors were still optimistic, and “recession” wasn’t even in our vocabulary yet.
What’s changed in that time? The obvious (and semi-incorrect) answer is 2020. The world shuts down, the Fed begins printing money at a historic pace, and the government passes it out to everyone and themselves like Halloween candy. Fundamentals go out the window, and everyone loses their collective minds.
The newly increased money supply did not change the amount of goods and services within the system. It simply acted as a shiny object to distract and divide people. Supply and Demand steamrolled over shortsighted policies, creating shortages, chaos, and uncertainty.
Here’s the point… Interest rates returning to “normal” levels aren’t going to be the thing that drags America into hard times. The pure insanity of ignoring logical economics will. The issue should become clear when you hear about the State of California handing out money to solve a problem that was created by handing out money.
There are a few tried and true principles that will keep you afloat, even in the deepest waters.
Avoid personal debt at *nearly* any cost.
I understand everyone wants to become a homeowner, and that we all start the race in different places, you know your situation better than anyone.
Commercial debt is different, and deserves a standalone post… Being willing to take on debt (risk) and create a business using leverage and smart decisions is what this country was built on.
If you’re consistently producing more value for others than you’re consuming, the universe has a way of making things work out.
Invest in assets with physical products or tangible services.
It can be maddening to watch 16 year olds buy Lamborghinis with Bitcoin money, but please let it comfort you to know most of them are having to hand them back by now as the exuberance of an insane market cycle fades.
If your mother (or any other parental figure) is undyingly loyal to a specific brand, it might be safe to invest in that parent company. Your folks have better taste than you think.
Stop listening to the news!!
I say it EVERY chance I get… their job is to get you riled up. When emotions are high, smart money decisions go out the window first.
Good investors don’t sell good investment advice, they’re in Maui trying to keep their strategies as quiet as possible for as long as possible.
Yes, I see the irony as an internet publication telling you to stop listening to publications.
Gain leverage.
Write, record, create. You’ll meet a ton of amazing people throughout the way, and might stumble into something amazing.
Life is short, finding something you get a kick out of doing every day that just so happens to make other people happy should be the ultimate goal.
Congrats! If you’ve made it this far without sending an angry tweet my way (@johnc4848 in case you’d like to do so now) you’ve done an excellent job, and I commend your attention span.
As always, I firmly stand by the idea that things are going to get better, the future is bright, and brilliant humans like yourself will be the reason for it.