The Expert Podcast

the economy is seeing a double whammy both from inflation of cost and also deflation of capital. at the same time that prices are going up for everything home prices rose interest rates gasoline groceries insurance taxes. first of all people have less cash to spend on because incomes are reducing the no stimulus money anymore. but more important is the wealth effect is starting to hit consumers. a lot of times people would spend money even without income if they thought they had capital reserves like the four one K. fund was through the roof their cryptocurrency holdings were high our home value is high. and so for the last twelve to eighteen months people saw stock values go up their 401k account went up their crypto currency one up so they said well even if I don't make the income I can spend some money on home modification a new car clothes to going out to eat those kind of things. because I have more cash in the bank in my four oh one K. well now when the stock market crashing five trillion dollars has gone away from Americans wealth perspective. so everybody's less so that's when you start tightening your belt. what happens when consumers start to spend less at the same time that there is inflation. at the same time the gas six Bucks a gallon. what happens is the sellers of those items have even more problems because even though they've raised prices of things six Bucks for gas thirty dollars for a plate of wings whatever your selling you still have overhead you still have to pay your bills. and part of that price increase pays for their increased costs you know people have higher hourly wage now. there's more expenses for the business their cost of buying materials is higher and they price some of that into the cost of goods. however most resellers are manufacturers have not completely put all their costs into the new price meaning that if their costs went up fifty percent they might have only increased prices 30 percent because they didn't want to put too much into the retail price increase to try to keep business. figuring that they would have some valium to distribute their profit over their fixed expense. well now that the volume of sales is going lower that is backfiring. so now you have the retailers even companies like Walmart Amazon came Kmart there are they're gone
and target are now finding they're having less sales even with prices being higher. so their roots their revenues not gonna be enough to pay their expenses in fact there's already been some rumblings that the three cheap retailers target Walmart Amazon are gonna start cutting their expenses cutting employees cutting staff having less office space and retail space. because they're not making enough sales to cover that. here's the other thing if inflation has gone up let's say ten percent roughly and sales has gone down even two percent or even the sales still stay the same put it this way if inflation went up ten percent on prices and their sales for GDP was the same as it was before that means in actuality the volume of sales went down ten percent. the sales GPS is based on dollar value based on dollar transactions. so if the inflation rate made the dollar transactions be ten percent more then sales should one up ten percent just because of inflation. and if it didn't that mean sales are reducing already. it doesn't bode well for next two three years is a recession here who knows.
main thing is start reserving capital and inflation will continue so if there's any major purchases coming up and you can afford it maybe put the money into that now so you can have a better return on your money. look of inflation's going to be ten percent buying something that you would purchase anyways give you a ten percent return on that money that might be better than you get stocks let us know what you think.