I was speaking with several young graduating economists from George Mason University last week, and they had some interesting predictions that I thought I would recount.
We all know that the government has been printing an enormous amount of money lately considering the economic stimulus plan, the bailouts and the loan guarantees. Of course, this is money that we don’t have lying around or sitting in a savings account somewhere. If that were the case, it would have been eroded months ago. Rather, it is being created by the Feds based on the belief that it will be paid back when the economy recovers.
The problem is that the amount of borrowed cash that is floating into our economy now is unprecedented. According to the young economists from George Mason University, hyperinflation will follow. There will be too much cash, and costs will begin to skyrocket.
For those old enough to remember, do you recall how bad inflation was after the Vietnam War? President Ford ran on a platform of WIN, or “Whip Inflation Now.” Interest rates were in the neighborhood of 20%! Most of America went into a recession until the rates were brought under control.
The best way to counter this coming era of hyperinflation is to buy your stuff now while cash is king. Have you gone shopping lately? Everything from survey trucks to hardware and equipment is on sale and deeply discounted. Check with local suppliers, and you will see a glut of excellent equipment that you can pick up for a song.
If you have cash, now is the time to invest it wisely. Perhaps the best investment is in the tools of the trade.
What do you think? Please post your comments below.