Trevor Gerszt: Gold and silver are not affected by shrinkflation
With inflation at its highest level in 40 years, American consumers are grappling with problems not seen on a large scale in decades. Below is shrinkage.
Shrinkflation occurs over time when inflation causes prices to rise. Companies that produce consumer goods are often reluctant to raise prices, so at first they secretly reduce the size of the goods.
In recent years this contraction has occurred regularly, but for most commodities only every few years. Now that inflation has skyrocketed and is staying high, more and more products seem to be doing the same.
The scourge of shrinkage
You may have noticed that the half gallon of orange juice you used to buy went from 64 ounces to 59 ounces a while back. But now many of those 59 ounce bottles have shrunk to 52 ounces.
Previously, these changes happened slowly over many years. Consumers weren’t happy when it happened, but they learned to adapt.
However, now that inflation is high, consumers are slowly starting to become more price conscious. You look at prices week by week and notice when prices go up. And they’re not happy about what’s happening with the contraction inflation they’re noticing more and more frequently.
Almost two-thirds of consumers today are rightly concerned about shrinkage. Suffering from higher inflation is one thing. But shrinkage inflation is a double whammy of kicking a man when he’s down. And in some cases, goods are not only getting smaller, but also more expensive.
Shrinkflation is also a reminder that inflation is something the average consumer has no control over. We are powerless to fight inflation or contraction and are being told to take it or leave it.
Many Americans have done just that, adjusting their consumption patterns in response to the downturn. They are more likely to buy off-brands than name brands, buy in bulk rather than smaller retail packages, or even stop buying things they used to. But no matter how many tactics you employ to adapt to the shrinkage, at some point you’ll have to face the reality that you’re paying more money to get less and less.
The Destruction of Inflation
That’s the problem with inflation. It undermines your standard of living by requiring you to pay more money for the same goods and services that you used to use. And if your income can’t keep up with those increased payments, you may have to lower your standard of living to survive.
Inflation is harmful and destructive, which is why so many people hate it. It punishes hard workers, savers and investors by devaluing the money they work so hard to acquire.
Interestingly, the most scathing condemnation of inflation comes from John Maynard Keynes, the economist who has most influenced Fed monetary policy over the past few decades. As Keynes remarked in 1919:
“Lenin is said to have declared that the best way to destroy the capitalist system is to corrupt the currency. A sustained inflationary process allows governments to secretly and undetected confiscate a significant portion of their citizens’ wealth. In this way they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some.
“Lenin was certainly right. There is no more subtle, no surer means of subverting the existing foundation of society than to corrupt currency. The process deploys all of the hidden forces of business law on the side of destruction and does so in a way that not one in a million people can diagnose.”
Just think of all the excuses we’ve heard as to why inflation is so high. It’s greedy companies, or Vladimir Putin, or tight supply chains. And the average man on the street who knows nothing about economics will nod his head and agree because he doesn’t know any better.
But all along, it was the Federal Reserve’s loose monetary policy that was responsible for inflation. Nobody wants to talk about how the trillions of dollars the Fed pumped into the economy in 2020 were bound to create inflation.
No one wants to talk about how the Fed tried to deny inflation, then claimed it was temporary, and now pretends it can fight inflation. And because Washington refuses to admit how this inflation started in the first place, it is doubtful that the anti-inflationary solutions will work.
Gold and silver as the best defense
Unlike most consumer goods, gold and silver are not subject to contraction. Yes, coin prices will increase as gold and silver prices increase, but that is the natural consequence of rising prices. Buying a 1 ounce coin will still give you an ounce of gold even if inflation goes up.
And it’s even better to already own gold or silver when inflation rises and the values of gold and silver also rise. A rising gold or silver price means your ounces of gold and silver are actually increasing in value and gaining purchasing power, as opposed to the dollars in your wallet, which lose purchasing power as inflation increases.
For this reason, gold and silver have been viewed for centuries as a hedge against inflation and a safe haven in times of economic turmoil. When fiat currencies depreciate, companies go bankrupt, and financial crises ravage a nation, gold and silver remain tangible physical stores of value that can help ensure financial stability.
Many Americans today want to protect their savings and are finding out about a Gold IRA or Silver IRA. These bullion IRAs are just like any other IRA account, except they hold physical gold and silver coins or bars. You can even fund your precious metals IRA with a tax-free rollover or transfer from an existing 401(k), 403(b), TSP, IRA, or similar retirement account.
With inflation at a 40-year high, can you afford to let the value and purchasing power of your savings and investments shrink as inflation entrenches? Or would you rather take steps to protect the value of the wealth you’ve worked so hard to protect?
Don’t let inflation take another bite out of your money. Call Goldco today to learn more about how you can benefit from owning gold and silver.
Trevor Gerszt is Founder and CEO of Goldco, a precious metals dealer in Los Angeles. For more than 20 years, Trevor has sought ways to help people build long-term wealth through the safety and stability of precious metals and other alternative assets. Goldco is rated A+ by the Better Business Bureau, a five-time INC 500 winner and has countless 5-star reviews for quality customer service, reliability and reputation.
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