Dodging the Dollar's Devaluation

Shoot! While I was working on this piece, Bloomberg scooped me! They already released a comprehensive way to protect yourselves from the effects of inflation:

Take the bus and stop eating meat, plebe earning less than 300K! (Fun fact: Less than 2% of Americans make over $300,000 a year) Nobody said this would be fun, but we’re all in it together! And all joking aside, on what planet does it make economic sense to NOT buy in bulk? Maybe if you can’t possibly finish a half gallon of mayo before it goes bad, but otherwise……

And with the Biden administration continuing to pour gasoline on top of America’s inflation problem and your labor and savings being seriously devalued, it’s more important than ever to have a plan to protect your assets while the economy adjusts to the ‘new normal’ of trillions of extra dollars floating around. Of course, everybody’s situation is unique, and it’s very likely you’ll need to mix-and-match a solution that fits for you.

The most important — and universal — step is to reduce your spending. Think of this as an economic weight-loss program; it’s nearly impossible to outwork a bad diet — much easier to reduce your consumption and go from there. This likely requires an entire overhaul of your current budget. Start with unnecessary purchases from huge corporations. That $5 Starbucks coffee every morning really adds up. How many streaming services do you REALLY need? If you’re not sure about something, cut it. You can always add it back into your budget later if it turns out it WAS essential.

Once you minimize your spending, build an emergency fund with money to cover your bills for AT LEAST a month. Many people suggest a larger fund (3 to 6 months) if you can swing it. This should be your only cash-based savings. After you’ve established your cash emergency fund, do the same with storage-friendly food. (beans, rice, canned food, and frozen meats and veggies are all good choices) Don’t wait for prices to get even higher before you buy the stuff you’re going to eat anyway! What you do next really depends on how much cash you need to turn into not-cash.

If you’re rich, buy land, preferably farmland. As the saying goes, they aren’t making any more of it. But better do it quick before Bill Gates gets it all. Then again, if you’re rich you probably know all this stuff already.

If you’re like most of us and not rich enough to buy real estate, look into playing the stock market or invest in other financial instruments. Treasury Inflation Protected Securities (TIPS) are one option designed to handle high-inflation environments, as you get a semi-annual boost to your principle based on CPI numbers. In times like this of high inflation, newly created money tends to be handed out to the already-rich, so copying their investment strategy is also a pretty solid bet.

If, like me, you hate the financial sector, crypto (bitcoin specifically) is a great alternative. The ‘get rich quick’ days of crypto gains might be over, but we’re simply trying to beat 7% (or whatever) inflation is coming down the pike. Buying physical precious metals is another ‘anti-bank’ way to get your wealth into not-dollars. These options are also easily converted back into dollars if the need arises, unlike financial instruments which often have an ‘early exit’ penalty.

With Biden continuing to deny the effects of enormous monetary inflation, it’s extremely likely we’ll be feeling the effects of price inflation for some time — especially as the supply chain troubles continue or even worsen. The sooner you implement your personal plan to avoid the effects of inflation, the easier it will be. One way or another, you WILL be cutting back. Better to do it on your terms than Grandpa Brandon’s.