posted on Oct, 22 2009 @ 11:51 AM
Hyperinflation is upon us folks.
Everywhere I look I see price increases as the dollar loses steam. But fear not! Unless you are just an employee or own stock in credit card
Why is this?
Well let's look at what happens with Hyperinflation...
Typically, prices go up first... and then slowly, eventually, salaries catch up as well...
Remember when you were a kid and mowed a yard for $5.00 and then bought a coke for .50 cents and some elder said "I remember when coke was a
nickel!". You didn't feel the pain of inflation because you jumped in the market at the point when what you got paid was already adjusted for
But... if what you are getting paid is not adjusted for inflation, this can be a serious problem and lead to a financial crunch in your household.
However, there are some silver linings here for the consumer... but some death knells for the credit companies.
Did anyone notice the post the other day about the 79% apr credit card? What's that about? I'll tell you... they are trying to recoup their losses
due to inflation.
Let's say you owe on a $100,000 mortgage with a fixed interest rate. Well you got things working in your favor, because as hyperinflation makes what
used to be $100,000 turn into $150k or $200k, your mortgage stays the same... as long as you can handle that mortgage until your income catches up
with inflation you are fine and better off.
But if you have a lot of credit card debt or an adjustable rate mortgage.. watch out and run for cover... get rid of those as soon as possible because
the owners of that debt will jack up the rates to compensate for inflation and there is nothing you can do about it... though the gov has passed a law
to slow some of this...
The crux of the issue though is where your income is coming from... If you are a salaried employee or an hourly wage earner, there is someone else who
is trying to adjust their own finances for inflation which will slow yours even more... and that is your employer.
The only way to be ahead of the game, (unless you have a good amount of savings), is to own your own business or in some other way deal directly with
the source of your income without someone in between. Even then... you will have to find the right markets.... corporations will always have more
money to spend than individuals... so aim your service at the SMB markets.
In the end, you can turn this sows ear into a silk purse... If you borrow money always do so on a fixed rate, and always make sure that you control
your earnings potential and not some employer who is going to pay you the same regardless of how much you work. Because Labor will ultimately pay the
cost for hyperinflation.