Inflation Is HERE
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We are in Inflationary times. No one has been prepared! No one has any experience dealing with it. It is entirely different from the devastating 20% inflation of the ’70s (before many of us were born).  

Let us see the difference. There is the Russian Ukraine war, materials and chip shortages, the China Covid situation, skyrocketing energy prices, and wage increases. 

Everyone, full-timer, or part-timer, will be negatively affected. Let us be vigilant about what is coming. 

  1. The Fed has fumbled. Now it is making aggressive moves to stop the money supply and to increase interest rates more frequently and possibly to 3% by the end of 2023.
     
  2. Nobel Prize winner Ken Rogoff says the chances of recession are increasing by the day. My interviews with CEOs indicate we could have it in early 2024. Part-timers be prepared. In a downturn consultants and contractors are asked to go first. We will begin to see downsizing, particularly in Europe by the end of the year.
     
  3. Now, how about some universal truths about what inflation does. These are basics, left unchecked they eat into the fabric of the society. Hyperinflation nearly destroyed Brazil. 
Ram Black & White
    • Cash is king. Cash is the lifeblood of a company, and it takes much more cash to deliver the same physical volume. Those who have too much debt, personal or corporate, are vulnerable to sudden shocks such as it has been with shortages and the Russia Ukraine war.

    • Money will become tighter. Its cost will be much higher. Borrow now. Expand the duration of your debt to at least 7 years. It will take a long time to break inflation. 

    • Middle managers!  You are really needed now. Get price increases pronto from your customers despite the fact the company has fixed-price contracts – an unpleasant task, to say the least. Or collect cash from recalcitrant customers who are laggards in payments by as many as 100 days, (They do not have the money). This is a period of opportunity also for enhancing your career. What you can do to help the company in dealing with inflation is superb execution and fast. Anticipating new trends and competition. Suggesting practical ideas. 

    • Watch the psychology of people all over the place. No one wants to be caught. There is fear of not having what you will need when you need it and most likely of inflationary prices. How do you cope with this uncertainty!
       
    • Middle managers that are aspiring to move up in their company should be preparing now for what is coming. Search what other leading companies and industries are doing. Search websites of innovators. Search what the Fed is doing and announcing.  Who are ahead regardless of the industry!  You will be recognized, and they will see potential in you as a leader and you will be in the running for a higher rung on the ladder.

    • We are a part of our community. The least we can do is to educate our community in the knowledge of Inflation and the few things community members need to do. 

Finally, be realistic! Optimism is human nature. Inflation will not go away easily, it will take a minimum of three years.

Later be prepared to seize opportunities during the aftermath of inflation.  The best things to read are FT, the Economist, and the cash flow forecast of your company. Be alert!

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