Inflation is the Word of The Year

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You are now seeing inflation present various parts of your life right now. From talk about inflation at the dinner table, to talk of it in earnings calls as they note the price increases over the next few months, and your neighbors are likely talking about as they go to the pump or to their local grocery stores. 

Have you heard about supply shortages in the pool cleaning supplies from chlorine to other essential items? The aspect of inflation is present in more ways than one.

What was seen as an illusive aspect is now appearing in everyday life.

When it comes to the pump, oil prices are at $64.91 at the time of this writing. Lumber prices are trending up, and commodities in general have been on a tear as well.

Meanwhile, gold is up slightly and is trading at $1831.60. The Dow is 34,642 and the S&P is at 4,223.0.

Bitcoin is still range bound from $50,000 to $60,000 while alternative coins from ethereum to others like dogecoin rally. In essence, you are seeing signs of a crazy market. If you have lunch with people who are invested in dogecoin and ask why dogecoin is going up, they’ll usually shrug and say they have no idea, I’ve tried it. Individuals are so sure that it will at least hit $1 and are along for the ride. They are along for the ride on a coin that is known as a joke meme coin.

In instances where caution is advised, you see recklessness and extreme issues.

The Federal Reserve Will Not Issue Clear Warnings On Inflation

While many individuals are lulled into a state of gamestop/dogecoin tranquility. Thinking that the overall situation is getting better, the general situation seems less pleasant. For instance, nonfarm payrolls, nonfarm private payrolls,  unemployment rates, wholesale inventory numbers came in at less than expected.

The expected number of nonfarm payrolls was 1 million, it came in at 266,000. Then, nonfarm private payrolls were 218,000 when the expected was 820,000.

But the Federal Reserve is in a tight spot. The institution can not acknowledge significant issues with inflation or the economy. If they do, they might spook investors and create general panic.

At the same time, if they note that there is a problem then investors will expect them to fix the issue. But to fix the issue of inflation, they will need to increase the interest rates, decrease the amount of federal asset purchases, and other activities to shrink the Federal Reserve Balance sheet.

But if it were to raise the interest rates to a certain level, that would also cause issues for investors as it would start to make debt more expensive. Now, recall that raising interest rates affects stocks, real estate, and even roaring digital assets like bitcoin and joke tokens like dogecoin.

Further, the current government spending and stimulus efforts are worthwhile if one can completely ignore the fact that stimulus efforts add to the currency base and adds to a form of inflation.

Warren Buffet Notes that Inflation Is Here and Berkshire is Adjusting For It

The legend of Omaha, or Warren Buffet noted that inflation is here and Berkshire is adjusting by raising prices. This point was crucial in Berkshire Hathaways’ recent annual virtual meeting. The leader of Berkshire noted that the inflation was coming from the red hot economy. At the same time, one can argue that supply shocks and other pandemic related issues are the causes behind the present nature of inflation. Further, one could note that several stimulus packages by nations around the world have added to inflationary pressures.

Experts are noting that individuals in the United States will have to adjust for higher prices. That means reigning in reckless spending, minimizing borrowing, and perhaps, even buying less than they normally would .