Why Rapid Inflation is Here to Stay and How to Profit
“The Fed is the engine of inflation.” — Murray Rothbard
I have a special announcement below about our keynote celebrity speaker who was just censored at the South by Southwest Film Festival but won’t be muzzled at FreedomFest!
On Tuesday, I hosted a teleforum with my subscribers. Many of them asked about the sudden rise of inflation and wanted advice on how to protect themselves.
Last week, the government announced that the Consumer Price Index (CPI) rose at an annualized rate of 7.9% in February. And there seems to be no end in sight, given the supply-chain shortages.
Inflation Hits the Donut Shop
Recently, I went into my favorite donut shop here in California to buy a glazed donut. For years, the price was $0.95. I always gave them a dollar and said, “keep the change.”
During my most recent visit, the price had suddenly jumped to $1.25. This is a 32% increase in one day! I asked the clerk what the cause of the increase was, and she said, “Our costs have gone through the roof.”
Ben Franklin was famous for saying, “Nothing is certain in this world but death and taxes.” Let’s add “inflation” to his list.
Will inflation continue, and what investments are the best inflation hedges today?
Ron Baron Favors Inflation!
In his most recent quarterly report, mutual fund billionaire Ron Baron says inflation is good for investors. He wrote, “Inflation helps our economy grow faster… ‘a lot of good can come from 2% inflation’ is how a business executive explained it to me early in my career. Inflation historically accounts for about two-thirds the annual growth of our economy. Stock prices have grown significantly faster than inflation.”
He claimed that “inflation has always been and always will be present in our democracy… as it has been in virtually every democracy or any other form of government that has existed for more than 2,000 years.”
Why Inflation Became Permanent After World War II
Not quite, Ron. The truth is that inflation was not a long-term problem until after World War II, as the chart below demonstrates.
Prior to World War II, price inflation was a temporary phenomenon that occurred when the nation was at war. After the war, inflation stopped.
But that all changed after 1945. For the first time in American history, prices kept rising. Why?
I show this chart to my Chapman University students and ask them the following question:
“Why did the pattern of inflation change after World War II?”
A. Never-ending wars after 1945.
B. The creation of the Federal Reserve.
C. The adoption of Keynesian economics.
D. Going off the gold standard.
E. All of the above.
I answer that question in the new 4th ed. of “The Making of Modern Economics.” For those who have a copy, see pp. 417-418. The answer may surprise you!
Milton Friedman loved my book. He said, “All histories of economics are BS — before Skousen!”
‘Skousen’s Textbook is by Far the Best’
Speaking of my textbook, I received the following letter last week from Jeff Myers, president of Summit Ministries in Colorado Springs:
“My mission is to prepare students for the onslaught of socialistic and Marxist college educators. This involves reading a lot of textbooks so I can understand what they are facing in class. I’ve read the top textbooks in economics today and The Making of Modern Economics by Mark Skousen is by far the best. Honestly, there isn’t even a close second. Skousen’s book vibrantly brings history’s economic thinkers to life, coherently explains key economic concepts and builds a foundation for free thinking and economic flourishing.”
Get 50% Off by Ordering it from the Author
Routledge charges $54.95, plus shipping, but you can buy it directly from the author for only $35. Each copy is autographed, dated and mailed for no extra charge if mailed inside the United States.
To buy your copy, go to www.skousenbooks.com.
Why Inflation is Out of Control
The modern-day problem of inflation is discussed in chapter 15 of “The Making of Modern Economics,” which highlights the career of the monetarist and free-market economist Milton Friedman.
Friedman is famous for saying, “Inflation is everywhere a monetary phenomenon.”
Indeed, the broad-based money supply (M3) grew by 45% from 2018 until today. That alone can explain why inflation came back with a vengeance. Part of that inflation was due to the huge deficit spending by the Trump and Biden administrations during the pandemic.
It is hard to control inflation once it gets started. According to the great Austrian economist Friedrich Hayek, once inflation gets going, it’s like holding “a tiger by its tail,” and hard to control.
The Fed has a target of 2% inflation, but as we can see, it surpassed the 2% target pretty quickly. Inflation is now approaching double-digit percentages.
How to Profit and Survive the Inflationary Twenties
Traditionally, the best inflation hedges have proven themselves to be:
1. Treasury Inflation Protection Securities (TIPS) are long-term government securities where the principal rises with the CPI. TIPS can help you keep pace with inflation, but not beat it.The current yield is actually negative.
2. Dividend-paying growth stocks are a much better way to go. They tend to outperform the stock market indexes over the long run.
3. Commodities and commodity-based stocks and funds, such as oil, gold, silver, copper and other commodities, are in a long-term bull market and therefore serve as a decent inflation hedge. Mining and energy stocks may offer more leverage.
4. Bitcoin and cryptocurrencies have been popular inflation hedges recently, largely due to their limited supply. However, they are extremely volatile and hard to predict on a short-term basis.
I recommend options two, three and four in my newsletter, Forecasts & Strategies.
Surprise Celebrity Speaker: He Was ‘Canceled’ at the South by Southwest Film Festival But Won’t be Muzzled at FreedomFest
We have a great FreedomFest line-up this July, led by Kennedy from Fox News, who will be our emcee for all three days and plans to do her show from Vegas.
Now we’ve saved the best for last. FreedomFest is known for thinking out of the box when it comes to our celebrity speakers… provocative names who don’t appear at other freedom conferences.
They include William Shatner of “Star Trek” fame… George Foreman, heavy-weight boxer and entrepreneur… Kevin O’Leary from “Shark Tank”…
And this year, we are pleased to announce a speaker who has been called the most creative English actor, comedian, screenwriter and producer in the past 50 years.
The celebrated “Monty Python” and “A Fish Called Wanda” actor and writer John Cleese will appear on stage at this year’s FreedomFest.
He comes from British comedy royalty, having won numerous Emmy awards and an Academy Award-nominated screenwriter for his film, “A Fish Called Wanda.” He appeared in two James Bond films, “The World Is Not Enough” and “Die Another Day,” as well as the “Harry Potter” and “Shrek” series.
Cleese’s career in comedy spans seven decades, but he’s been risking it all to combat the recent trend in cancel culture, wokeism and political correctness. He’s going to tell us all about his fight for the future of freedom of expression when he speaks at FreedomFest July 15.
John Cleese is Canceled at South by Southwest Festival!
Update: John Cleese’s microphone was taken away at the South by Southwest film festival last week for joking about France and Italy owing the British people slave reparations for the Roman Empire and the Norman invasion of 1066.
Can’t anyone take a joke anymore? Well, John Cleese won’t be muzzled at FreedomFest. He will be free to speak his mind!
Cleese is also a successful business leader and a passionate advocate of the need to encourage creativity in life. He even wrote the book “Creativity: A Short and Cheerful Guide.” At FreedomFest, his talk will be called “What’s So Funny? Tips for Success in Education, Business and Relationships.”
Our Early-Bird Special Ends on March 31!
Other big-name speakers already confirmed include Steve Forbes, actor Ben Stein, economist Art Laffer, former congressman Justin Amash, reporter Glenn Greenwald and libertarian comedian Dave Smith (who was recently interviewed by Joe Rogan). We also have a great line-up of financial experts for our three-day investment conference at FreedomFest, including Oxford Club’s Alex Green and our own Eagle Financial investment guru Jim Woods, as well as foreign investment guru Adrian Day and coin expert Van Simmons. Plus, special guest star Jim Rogers will visit us from Singapore!
Don’t forget: The early-bird discount ends on March 31. You pay only $399 per person, and you can bring up to three guests for only $299 each. After April 1, the registration goes up to $499, and guests will cost $399 each.
Use the code EAGLE to get the early-bird discount of $399 for you, and $299 each for up to three guests. To register, go to www.freedomfest.com, or call Hayley at 1-855-850-3733, ext. 202.
Good investing, AEIOU,
Mark Skousen
You Blew It!
Is Florida’s New Law, Which Protects Children from Sex Indoctrination, ‘Hateful?’
“We in Florida showed a commitment to education, not to indoctrination, and I want to thank the Florida legislature for doing that. As the parent of three kids that are aged five and under, thank you for letting me and my wife be able to send our kids to kindergarten without them being sexualized.” — Governor Ron DeSantis
To show you how President Joe Biden is out of touch with America, consider his latest rant against the Florida Parental Rights in Education Bill, wherein he calls it “hateful.” Meanwhile, his press secretary, Jen Psaki, condemned the bill as “discriminatory, horrific and a form of bullying.” Democrats are calling it the “Don’t Say Gay” bill.
So, what is so “horrific” about this bill? It has two parts: A) The bill keeps schools from withholding information on changes in a child’s mental, emotional or physical well-being from parents. In short, parents must be given access to children’s health records. And B) It bans classroom instruction on sexual subjects for kids in kindergarten to third grade.
The bill does not ban the word “gay” from the classroom. But it does stop teachers and guest speakers from proselytizing their sexual agenda to five to eight-year-old children who should be taught the basics of reading, writing and arithmetic. It honors the rights of parents to teach their children about sex at such a young age.
The bill should be called “The Child Protection Act.” As one commentator put it: “Leave our eight-year-olds alone and stop confusing them with concepts they, by definition, are too young to understand. Just teach them their ABCs and stop bringing sexual indoctrination into the classroom!”
What is this country coming to?
I’m glad that Governor DeSantis is going to sign this bill. The sooner he does it, the better.
