Prices for everything are rising, things that all of us need to get by. It’s harder to make it through the month on a fixed income, and there’s no immediate solution in sight.
It can be easy to assume that inflation is a universal negative. Even if there are some folks who are rich enough to survive it without much trouble, we’d like to think nobody “wins” in times like these.
It’s easier to think that cause it feels fairer.
Unfortunately, it isn’t true.
I read an article that talks about who the winners of inflation really are, and I thought it’d be interesting to chat about.
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The article I read was pretty interesting. This is it if you want to check it out.
One of the points he made that I thought was intriguing is about how the global supply chain used to be deflationary, because it allowed us to get the cheapest goods and cheapest labor from around the world.
But now that there is a shipping crisis, and no one is equipped to make their own goods because we’re so dependant on globalism, that same supply chain is now the key factor driving inflation higher.
On top of that, the old logic that said shortages couldn’t permanently drive inflation because there would always be substitutes (i.e. if beef got too expensive, you could buy chicken) didn’t account for shortages in things that can’t really be replaced, like oil and natural gas.
Thought those were some interesting points about why we’re in the situation we’re in.
Now, for the important info: who wins from all this?
Interestingly, he highlights service workers and farmers as two of the big winners.
There is a scarcity of plumbers, as one example, and the Federal Reserve can’t just “print” more, so folks like that, therapists, electricians, etc. are able to pretty much control their own wage.
Meanwhile, farmers, who are in constant competition with import costs they can’t beat, suddenly have a chance to gain some ground. We talked earlier this week about Florida’s orange shortages. The folks who can supply oranges will surely benefit!
Ultimately, he concludes, “The clear winners in inflation are those who require little from global supply chains, the frugal, and those who own their own labor, skills, and enterprises in sectors with relatively inelastic supply and demand.”
By “inelastic supply and demand,” he means sectors that can’t easily generate more supply, like the plumbers and farmers mentioned earlier, or fertilizer producers.
It’s kind of cool to see a story that isn’t all about the rich getting richer for once.
This time, inflation could actually benefit folks in service jobs and hardworking folks who do an honest job other people aren’t trained for.
Inflation still stinks, but maybe this makes it stink a little less.
Jeffry Turnmire and InvestPub do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.
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