Are You Prepared for The Mass Repricing of Goods And Services?
The comments below are an edited and abridged synopsis of an article by MN Gordon
Rising consumer price inflation is not going away. This is counter to the transitory argument made by Fed Chair Jay Powell earlier this year.
The effects of rising consumer prices are far ranging. It acts like a hefty tax, eroding already-stretched family budgets. In this ongoing stagflation, personal income gains lag far behind rising consumer prices.
Industrial materials and consumer goods are also feeling the pinch. Companies can pass on some rising prices to consumers and absorb some short-term price increases, but there are limits attached to that.
When input costs, including raw material and labour, push the cost of manufactured goods above what they can readily be sold for, the business motive breaks down. Halting operations makes the most business sense.
When raw materials and labour prices inflate, it becomes difficult to plan operations and production. Hedging strategies may help manage for rapid, short-term price spikes, but they cannot prohibit a long-term repricing of materials.
A long-term repricing of materials, goods and services is now underway. Prices will continue to rise and fall to meet supply and demand dynamics, but this will take place in a range that is being repriced higher.
Essentials have generally the same utility value they always have, yet the US dollar has been devalued. This great devaluation is the consequence of rampant dollar debasement policies executed in tandem between the Fed and Congress.
The recent debt ceiling histrionics in Congress—and the elevation of the debt limit for the 79th time since 1960—are just another milestone in the great dollar debasement saga.
Price inflation starts with expansion of the money supply. Today expansion of the money supply is conducted by the Fed and the Treasury. The Treasury sells new debt to the Fed, which the Fed buys using credit created out of thin air.
Congress, through debt ceiling increases, provides the Treasury with an unlimited tab. Congress puts the new money into the economy via spending programs. As it flows through the economy prices adjust higher, as the supply of money increases much faster than the supply of goods.
Through mass dollar debasement, we have entered the next stage of the mass repricing of goods and services. Just about everything will cost more over the next decade. Pre-pandemic prices are gone forever, and people’s savings, investments, retirement, purchasing power and quality of life will be shredded.