Just as I have warned for the last few months it's now official: Inflation is here to stay and definitely NOT TRANSITORY.
It's good to be vindicated but I'm certainly not happy about being right on this point because it means we're all in for some difficult times ahead. Inflation is the tip of the financial iceberg, just wait until real purchasing power starts to disintegrate and more folks realize that the $15/hr minimum wage they successfully won can't buy squat anymore. See how that works?
"Here's a nice raise but you can't buy anything with it because we just devalued money"
Some of this is by design: As I pointed out in October, small businesses are being targeted for destruction because they create independence from the establishment. Small business owners don't rely on government hand outs and therefore aren't easily controlled and manipulated. Most of the reason however is due to decades of misguided money-printing.
Fact: 40% of all dollars in existence were "created" in the last 12 months. Read that again.
In order to deal with the problem Fed chairman Jay Powell suggested burying the word "transitory" as if that will make it all better lol!
"In a testimony before the Senate Banking Committee he pledged to bury the term “transitory” and instead recommends Fed policy makers to consider explaining more clearly what the Fed thinks/means when it is talking about inflation." - So, let's just "bury" our heads in the sand and maybe Mr. bad inflation will go away then?
As business owners we don't have the luxury of a printing press that makes dollar bills. We can't afford to wait for policy makers to figure it out while they experiment with our money supply either. Running a business has a MUCH higher mortality rate than covid-19 which is why over 80% of all new business fail in the first 5 years even during the best of times. Waiting is not an option.
Having capital now on hand at affordable rates is one of the best weapons against uncontrolled dollar destruction. The cost of borrowing right now is WAY lower than the price increases on just about everything. Consider this: Every merchant I funded this year Jan-May now has more pricing power that the rate they're paying me. That is, they're actually making a profit on the money I funded them with.
Call me for a quote, the rate you pay now stays the same for the entire term of the loan but the price of everything you can buy with it will most definitely be higher by the time the term is up, just saying.
That why I say: RIP Team "transitory"! Long live Team "You ain't seen nothing yet" !!