The Coming Inflation Crisis in America

Today I heard on cable there is a rush to inflation fighting ETFs and Bonds. It looks like the smart money is moving in early to park their wealth until the inflation or the fear of it is over.

Now I’m about to make a statement that is a cut off your nose to spite your face moment. By this I mean that I have just read a book by Henry Hazlitt called “The Inflation Crisis And How to Resolve It“. After you read this book you will understand why inflation will come.

“In 1977, when Henry Hazlitt set about to write this volume and send it on its way,

  • The US Dollar was losing purchasing power at a double digit rate
  • Gold was selling at $550 an oz and rising
  • Interest rates were soaring
  • The World Dollar Standard was quaking and quivering in its Federal Reserve moorings”

Do you see any similarities to what is happening today? Okay we don’t have high interest rates yet. If you see the parallels then reading this book may enlighten you as to some of the fallacies about inflation that might help you make the right decision in order to protect your Nest Egg and avoid large losses due to inflation.

This is a nose cutting moment  because if you are not for free markets and small government you should know Henry Hazlitt is one of the major opponents to Keynesian economics. As you may know Bernanke is in part a Keynesian believer and has supported policies like the stimulus package in accordance with Keynesian economic theory.

It really doesn’t matter whether you agree with President Obama’s policies or not, or what Ben Bernanke is doing or not, your first duty is to protect your Nest Egg for your retirement. How can you distribute your wealth if it has been destroyed by inflation 😉

There has been a lot of talk about educating the poor investor (Baby Boomer) because you have all made terrible decisions and lost a significant portion of your nest egg. Remember it is your fault for not making wise decisions.

They want to educate you in how to invest your money in their managed funds for their benefit not yours. It’s the economy stupid! That’s what you should try to understand.

The education you really need to is understand key economic activity that can change the investment climate. What is the likely effect of printing trillions of dollars for instance? This is far more important than knowing the difference between an index fund and a managed fund in my view.

Henry Hazlitt’s book begins by defining inflation. That’s a good start because even the economists don’t appear to know. He defines inflation as follows;

“Inflation is the increase in the supply of money and credit.”

How much money is being created. Take a look at the Glenn Beck’s video. Again I know he is a polarizing figure but take a look at what he presents and decide for yourself whether you believe it and if it can help you protect your nest egg.

Glenn Beck on printing Money” does a good job of showing us just how much money is being created.

I believe you must understand what inflation really is, and how it occurs and know the fallacies out there about it. This knowledge will help you cut through the political-speak and the economic mumbo-jumbo and be able to make rational decisions about how to invest your nest egg if or when inflation hits.

By the way Henry Hazlitt has a chapter on “Can You Beat Inflation?”, which is a great read. That chapter alone is worth downloading the eBook for. It is an easy read too.

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