The universal truth about Inflation: It eats cash. So, it takes more cash for the same volume of business.
Now, Inflation has begun.
Europe is at 9%.
America is at 8.3%.
Investor psychology is driving this.
Corporations want to be ahead of the curve and increase prices.
Consumers have begun changing their habits, looking for value, and there is a decline in purchases of high-priced, premium goods.
Inflation is going to be here for a minimum of 3 to 4 years. The Federal Reserve will do what it can, but it is not enough.
They don’t control the shortages that are the consequences of political factors, like what is happening in regards to COVID’s effect on China and supply chain shortages.
Every company should be watching announcements for price changes in as many industries as possible.
This is because some industries often lead compared to others. You will see the early warning signals of where this is going.
In particular, watch the Federal Reserve’s operations of mopping up the excess supply of money.
They will announce increased interest rates that will affect demand for housing, credit, infrastructure investment, and so on.
That will not be enough. So, reduce your break-even point. Manage your cash. Be prepared for inflation.
You also need to pay close attention to personal investments and what the stock market does because the value of savings will decline a minimum of 20% over the next 4 years.
There is no doubt about that in my mind.