Most of us take a trip to the dollar store from time to time. To grab a cheap toothbrush, some party supplies, or a favorite candy of ours. It’s nice to know that some things stay the same. But do they? This summer, Dollar Tree stores announced their plan to raise prices to be able to continue offering a broad array of products for a bargain. Doesn’t this defeat the literal name of their game? This shift is in response to inflation that basically every business that offers a good is currently facing. What is inflation? And what does it mean for future prices, your money, and the economy? Jaspreet Singh, Financial YouTuber and founder and CEO of The Minority mindset (an incredible online resource for those of us who want to learn about finances), points out that inflation is an increase in prices of products due to the decreasing value of the dollar.
He says that we might be able to expect this inflation we’re seeing to continue on into the future, even though the government is saying it might be short-lived.
Okay so, why is this inflation happening in the first place? Well, Jaspreet has identified two major reasons for the current inflation we’re seeing. First of all, government officials are mostly blaming our inflation problems on supply chain issues.
What are those? Three major factors impact our current supply chain issues:
- Well, because of the Pandemic, major suppliers for US products had to shut down their operations, backing up the production of these products.
- On top of this, when the backed up products finally reach US ports, labor shortages cause the influx of products to wait on their ships for distribution to trucks.
- Next up, we have a truck driver shortage (part of the big-picture labor shortage) causing the products to be backed up even more at this point in their journey.
So, that’s the first factor that Jaspreet points out. This is the one that the government mainly points to as the problem, and predicts that once things are more “back to normal” for the supply world, inflation will decrease.
However, there’s one more thing to think about when we’re discussing inflation. Jaspreet taps into a huge bias that the US government has that causes them to print more money, and cause more inflation. Remember when we talked about how inflation was the value of the dollar going down? Well, the more supply of a product there is, the less it becomes worth to a consumer.
In other words, the more money that’s printed, the less it’s worth. The Pandemic caused a huge increase in money being “printed” (or sent out in Stimulus Check form), therefore totally contributing to overall inflation.
Why would the government benefit from this inflation they had direct control over? Well, that question leads us back to the national debt issue that most of us are aware of. The US government holds a growing $28 trillion in debt.
So, what does that have to do with inflation? The less an American dollar is worth, the less real debt the government will have to pay back. Catch the idea? This inflation causing the US dollar to lose value could be very helpful when future payments towards this debt are made.
In the end, it’s pretty apparent to Jaspreet Singh (and now the rest of us) that inflation is here to stay. It’s a product of the environment of the pandemic, as well as the huge bias our government has towards a decreasing dollar value. So, Jaspreet says we can expect for life to continue to get more expensive in 2022 and beyond.
Okay, so that’s the bad news. What can you do about it? Here’s the good news when it comes to inflation: there are several ways you can protect yourself and your wealth from inflation. Jaspreet recommends two main ways to combat inflation in your personal finances:
“Hedge” to protect yourself
By this, Jaspreet means that by diversifying where and what your money is held in, you can protect yourself from your money all slowly declining in value over time. Hedging used to be traditionally just investing in gold, but now there are more options (such as cryptocurrencies, stocks, bonds, and ETFs) to diversify your wealth. Jaspreet says we can’t predict the future, but we can control how diverse our investments are to ensure we don’t lose it all.
Educate yourself
Before you buy new investors seeking to diversify your options, make sure you educate yourself about its risks, benefits, and history. Check out the Minority Mindset YouTube Channel to gain knowledge on any investment option under the sun before you buy. Or, peruse through the free online resource that helps demystify the stock market so you can feel confident in your investments. When you have all the knowledge you need to make an informed decision, you’ll be less likely to go with the crowd and panic-sell or make the wrong choices when you’re under pressure.
In the end, we don’t need to be afraid of inflation. It provides challenges that Jaspreet says will follow us into the future, but it also provides opportunities that push us to make informed decisions with our money that will serve us well for a lifetime. So, take the Dollar Tree as an example of what’s happening in our economy, and prepare for the continuing of this inflation by hedging your money, and educating yourself for success.
