WEBVTT - Will Inflation Wreck Your Finances? #359 0:00:00.120 --> 0:00:03.120 Welcome to How the Money. I'm Joel and I am Matt, 0:00:03.320 --> 0:00:07.200 and today we're asking the question will inflation wreck your finances? 0:00:26.160 --> 0:00:27.760 Do you know that we have kids? Anytime I hear 0:00:27.800 --> 0:00:30.280 the word wreck that makes me think of wreck It Ralph, 0:00:31.160 --> 0:00:33.440 because that's a movie that I've seen, and that's when 0:00:33.440 --> 0:00:35.880 I think of when I hear wreck it. But still 0:00:35.880 --> 0:00:37.880 I would say wreck it Ralph. Or Ralph Breaks the 0:00:37.920 --> 0:00:40.600 Internet is probably one of the greatest Disney movies ever made. Dude, 0:00:40.800 --> 0:00:43.840 Sarah Silverman, She's the little Girl. Yeah, I'm a big 0:00:43.840 --> 0:00:45.199 fan of those movies. I feel like there's some of 0:00:45.200 --> 0:00:47.839 the better ones out there today. But yes, inflation, that 0:00:47.960 --> 0:00:49.920 is what we're talking about today. We you know, we've 0:00:49.920 --> 0:00:53.360 touched on inflation before, we've specifically when we've talked about investing. 0:00:53.920 --> 0:00:57.360 Inflation is a big reason why it is that we 0:00:57.360 --> 0:00:59.520 we do invest. But we're gonna talk about the ways 0:00:59.520 --> 0:01:02.680 that inflation impacts our money today. Different things that the 0:01:02.680 --> 0:01:04.520 government can do and things that we can do as 0:01:04.560 --> 0:01:07.880 individuals as well to make sure that inflation doesn't wreck 0:01:07.959 --> 0:01:10.440 our finances. That's right, Yeah, there are steps you can 0:01:10.480 --> 0:01:13.960 take to make sure inflation, Uh, isn't you know taking 0:01:13.959 --> 0:01:16.920 a chunk essentially out of your savings. We'll talk about 0:01:16.920 --> 0:01:18.760 that today on the show. But before we get to that, Matt, 0:01:18.760 --> 0:01:21.120 before we talk about inflation, I want to talk about pizza. 0:01:21.400 --> 0:01:23.640 Everyone likes pizza. I do. I like pizza more than 0:01:23.680 --> 0:01:27.240 that like inflation. I'll tell you that, uh, because inflation 0:01:27.280 --> 0:01:30.240 is like, yeah, we're gonna talk about the good side 0:01:30.240 --> 0:01:32.600 of inflation too, So yeah that there are some positives. 0:01:32.640 --> 0:01:35.080 But but pizzas is even better. Even though inflation has, 0:01:35.160 --> 0:01:37.840 you know, it's it's positive benefits, pizza has, you know, 0:01:37.880 --> 0:01:40.679 a bigger upside, I would say. But the question I 0:01:40.720 --> 0:01:42.320 had recently, you know, my wife and I were like 0:01:42.360 --> 0:01:44.760 talking about whether we should get like two medium pizzas 0:01:44.800 --> 0:01:46.760 or two large pizzas. You know, obviously if we get 0:01:46.760 --> 0:01:49.400 two large pizzas, we're probably gonna have leftovers. And then 0:01:49.400 --> 0:01:51.200 there's this one place that that I like to get 0:01:51.200 --> 0:01:53.000 pizza in town. I know you like it too. It 0:01:53.040 --> 0:01:55.520 has twenty inch pies and so like these are like 0:01:55.600 --> 0:01:59.680 extra large pizzas essentially so good. And I was like, Okay, well, 0:01:59.680 --> 0:02:03.440 now I'm curious what is the the price per per 0:02:03.600 --> 0:02:07.360 like square inch difference or whatever on pizza and I 0:02:07.400 --> 0:02:09.079 know that's kind of maybe a nerdy thing to think, 0:02:09.080 --> 0:02:10.359 but like I want to get I want to give 0:02:10.360 --> 0:02:11.919 my moneys where these are the kind of things we've 0:02:11.919 --> 0:02:15.080 we've thought about, dude, and we've had these discussions as well. Specifically, 0:02:15.080 --> 0:02:18.000 I remember talking to you about the sitting outside of Midway, 0:02:18.040 --> 0:02:20.480 which is a local restaurant. And remember we talked about 0:02:20.520 --> 0:02:23.359 the beer per dollar kind of like the value where 0:02:23.400 --> 0:02:24.919 like there needs to be an app where you can 0:02:24.919 --> 0:02:28.240 punch in the quantity of beer, the price of the beer, 0:02:28.280 --> 0:02:30.000 maybe the A B V as well. That way you 0:02:30.040 --> 0:02:32.200 can compare apples to apples when it comes to these beers. 0:02:32.200 --> 0:02:34.520 But yeah, you're talking about doing that now with pizza. Yeah, 0:02:34.639 --> 0:02:37.040 I'm still waiting on you to develop that app. But 0:02:37.040 --> 0:02:40.120 but somebody has developed a calculator when it comes to pizza, 0:02:40.280 --> 0:02:42.480 and so you can plug in like how many pizzas 0:02:42.520 --> 0:02:46.120 you're getting, you know, the inch size, the diameter essentially 0:02:46.520 --> 0:02:50.000 of the pizza, and then you you figure out the 0:02:50.000 --> 0:02:52.000 price per square inch and so you can figure out, 0:02:52.120 --> 0:02:54.440 all right, if I'm getting should I get to sixteen 0:02:54.520 --> 0:02:56.639 or should I get a twenty inch pizza? Or should 0:02:56.639 --> 0:03:01.160 I get like you know or Yeah, but it's interesting 0:03:01.240 --> 0:03:03.880 because it's almost always better from what I can tell, 0:03:04.240 --> 0:03:05.880 to go with the bigger pizza and then eat the 0:03:05.919 --> 0:03:09.160 leftovers because you're gonna be paying less money per square inch. 0:03:09.280 --> 0:03:11.280 But we'll link to that calculator in the show notes. 0:03:11.480 --> 0:03:13.640 If you're wondering, you know what, what's the better deals 0:03:13.639 --> 0:03:15.679 trying to get the medium or the large, and you 0:03:15.720 --> 0:03:17.679 want to actually run the numbers as opposed to just 0:03:17.760 --> 0:03:20.080 kind of buy blind faith order to order the medium 0:03:20.120 --> 0:03:22.240 or large, then yeah, check this calculator. And I know 0:03:22.320 --> 0:03:24.200 we've got listeners out there who do want to run 0:03:24.200 --> 0:03:26.400 the numbers. You're nerds just like we are. But it 0:03:26.480 --> 0:03:28.280 makes me think of all the pizza lately we've been 0:03:28.280 --> 0:03:31.280 getting the they've got a sixteen inch. Um, it's like 0:03:31.320 --> 0:03:33.799 the taking bake. It's like not frozen, it's in the 0:03:33.840 --> 0:03:35.600 refrigerated section. You take it home, pop in love and 0:03:35.600 --> 0:03:37.120 it's like the five bucks or the rising Crust. You 0:03:37.160 --> 0:03:39.120 have five or six bucks. It's really good, dude, we 0:03:39.440 --> 0:03:41.800 uh we hit that up last Friday. Really really good. 0:03:41.880 --> 0:03:44.200 Might being over sell dude, No, for the money, you 0:03:44.240 --> 0:03:46.760 can't beat it for the money. It's not good. It's 0:03:46.800 --> 0:03:50.160 not great. That plus some greens from from from our 0:03:50.160 --> 0:03:52.640 garden some you know some Salgreen's. Uh, that's that's a 0:03:52.680 --> 0:03:55.280 really cheap Friday night if if you're looking to save 0:03:55.360 --> 0:03:58.040 some money. We did that last Friday, so sticking good. 0:03:58.040 --> 0:03:59.800 I was just I don't know, I was just so happy. 0:03:59.800 --> 0:04:02.440 So they're eating everything. I was like, this was basically free. 0:04:02.480 --> 0:04:06.320 This pizza costs virtually nothing. I'm the happy man. Yeah, 0:04:06.320 --> 0:04:10.080 I know. Sometimes I'm willing to sacrifice quality for price, 0:04:10.320 --> 0:04:12.080 you know, like it doesn't always have to be the 0:04:12.080 --> 0:04:14.400 best value. Sometimes you just want the five dollar all 0:04:14.400 --> 0:04:15.880 the pizza because want pizza and you don't want to 0:04:15.880 --> 0:04:17.560 spend much money. Yes, it's not. And again it's not 0:04:17.600 --> 0:04:20.080 like it's they're like the pizza bagel bites or whatever. 0:04:20.120 --> 0:04:22.359 It's not like tostinos or what is it called, like 0:04:22.400 --> 0:04:25.720 the ones that used to get like you used to 0:04:25.800 --> 0:04:28.280 leave or whatever, Like those things are terrible. But when 0:04:28.320 --> 0:04:29.599 you get it fresh like that and they you know, 0:04:29.640 --> 0:04:32.000 they haven't been frozen, they're sitting there in the refrigerator section, 0:04:32.320 --> 0:04:34.440 I think those are really good. I ate so many 0:04:34.440 --> 0:04:37.320 of those totinos pizzas in college, and uh, I've grown 0:04:37.360 --> 0:04:38.800 up since then. I'm matured a little b I'm glad 0:04:38.800 --> 0:04:40.719 I don't eat those anymore. Matt. Let's move on to 0:04:40.720 --> 0:04:43.440 the beer. Yes, this one's called be Easy. It's by 0:04:43.440 --> 0:04:45.719 Monday Night Brewing right down the street. This is a 0:04:45.839 --> 0:04:48.520 Citra I p A. Looking forward to having this hop 0:04:48.600 --> 0:04:50.560 heavy beer on on the show today. Man, Yeah, We've 0:04:50.560 --> 0:04:52.440 had a lot of different beers from different breweries on 0:04:52.480 --> 0:04:54.560 the show, but with these last two that we've had 0:04:54.560 --> 0:04:56.800 on the shows. On Monday's episode, we had that sour 0:04:57.120 --> 0:04:59.080 and now we're having this I p A. I think 0:04:59.120 --> 0:05:01.159 with these two beers they easily take the lead on 0:05:01.279 --> 0:05:03.800 the most number of beers from a specific brewery. But 0:05:03.839 --> 0:05:05.359 there's a good reason for that, and we'll share our 0:05:05.400 --> 0:05:06.799 thoughts on this one at the end of the episode. 0:05:06.880 --> 0:05:08.839 Sounds good, but for now, let's let's move on to 0:05:09.000 --> 0:05:11.440 the subject at hand. We're asking the question will inflation 0:05:11.480 --> 0:05:14.800 wreck your finances? And Matt, as we're like preparing for 0:05:14.839 --> 0:05:16.640 this episode, I'm trying to think, like, what's a good 0:05:16.680 --> 0:05:20.560 analogy for inflation, like a pizza analogy. When it comes 0:05:20.600 --> 0:05:23.920 to no pizza analogy, it made me think of electricity 0:05:24.080 --> 0:05:27.039 because I personally don't think about electricity much. I just 0:05:27.040 --> 0:05:30.000 flipped switch, the lights come on, and I'm happy, right, 0:05:30.279 --> 0:05:33.400 But what's going on behind the scenes, it would seem 0:05:33.560 --> 0:05:36.680 is quite complex to get the electricity. You know, all 0:05:37.040 --> 0:05:40.080 the things I don't understand. It makes me fearful of it. 0:05:40.800 --> 0:05:42.920 I don't want to mess with electricity exactly. Yeah, that's 0:05:42.920 --> 0:05:44.480 the one thing I hear a lot of people who 0:05:44.520 --> 0:05:46.800 are d I y folks. They're like, I'll do anything 0:05:47.080 --> 0:05:50.080 except for electricity, right, and but like, I'm not going 0:05:50.120 --> 0:05:53.799 to go into all the details of how electricity is generated. Uh. Plus, 0:05:53.839 --> 0:05:55.640 you probably don't know. I don't really know. That's the 0:05:55.640 --> 0:05:58.120 main reason. Why not because you know, I'm I don't 0:05:58.160 --> 0:06:00.640 want to go into bore you with all the aplicated details. 0:06:00.640 --> 0:06:03.080 It's mostly because I don't know them. But yeah, your 0:06:03.120 --> 0:06:06.800 lights go on percent of the time without fail. But 0:06:07.040 --> 0:06:10.680 electricity and inflation have something in common. Neither is something 0:06:10.680 --> 0:06:13.240 that we talk about all that much, but both are 0:06:13.320 --> 0:06:16.279 constantly humming in the background, and they affect our everyday lives. 0:06:16.440 --> 0:06:20.000 And we only really think about either of them when 0:06:20.040 --> 0:06:22.960 some sort of massive tectonic shift occurs, right like a 0:06:22.960 --> 0:06:25.200 tree falling down on your power line outside the house. 0:06:25.360 --> 0:06:27.200 You know, I think it was Halloween this past year, 0:06:27.240 --> 0:06:28.600 that our power was out for like a day and 0:06:28.640 --> 0:06:31.360 a half in our neighborhood. Three different instances where when 0:06:31.400 --> 0:06:33.520 the power went out and for a bunch of city boys, 0:06:33.600 --> 0:06:35.720 like that's unheard of, you know, we didn't know what 0:06:35.760 --> 0:06:37.640 to do with That's true. And then I think the 0:06:37.720 --> 0:06:39.760 only time you actually think about inflation is when there's 0:06:39.800 --> 0:06:43.000 like headlines all over the place suggesting that inflation is 0:06:43.000 --> 0:06:45.880 going to become a major problem. But that begs the question, 0:06:45.920 --> 0:06:47.760 like is it going to become a major problem and 0:06:47.800 --> 0:06:50.960 if so, how can we prepare for that possibility in 0:06:51.000 --> 0:06:53.839 our own personal financial lives. This episode is going to 0:06:54.240 --> 0:06:57.040 be like that generator full to the brim of gas, 0:06:57.040 --> 0:06:59.920 like to help you overcome that power shortage, right, like 0:07:00.200 --> 0:07:02.800 you actually had a generator. I borrowed your generator when 0:07:02.880 --> 0:07:04.919 when the lights were off in our neighborhood, uh, for 0:07:05.080 --> 0:07:06.560 for a timing, because I think my power is out 0:07:06.560 --> 0:07:09.240 longer than yours. That's right, and it really comes in 0:07:09.279 --> 0:07:11.960 handy to have something like that. So, yeah, this episode, 0:07:11.960 --> 0:07:15.120 we're gonna talk about your money and inflation and how 0:07:15.160 --> 0:07:17.640 you should be responding. Except okay, so here's the thing. 0:07:17.840 --> 0:07:20.280 A generator kind of fixes the electricity, and so we're 0:07:20.280 --> 0:07:24.120 not going to fix inflation. Though it's maybe like maybe 0:07:24.240 --> 0:07:25.800 I feel like a better way to maybe think about 0:07:25.800 --> 0:07:27.600 it is like we're kind of like electricians, like we 0:07:27.680 --> 0:07:30.560 are your electrician friends, but we're in a different state, 0:07:30.640 --> 0:07:32.400 and so we can't fix your electricity, but we can 0:07:32.440 --> 0:07:35.120 help you to know what to do maybe what not 0:07:35.200 --> 0:07:38.160 to do. Yeah, exactly, at least to help you tonight 0:07:38.160 --> 0:07:41.600 get electric, cutd right and do this. True, though, inflation 0:07:41.720 --> 0:07:44.280 worries are seriously making the headlines these days. We've seen 0:07:44.280 --> 0:07:47.920 commodities shortages, UH, they're causing prices to climb higher. And 0:07:48.040 --> 0:07:50.640 Warren Buffett he even talked about it at the annual 0:07:50.640 --> 0:07:52.800 Berkshire Hathaway Meeting. This sheep called me ahead of time. 0:07:52.800 --> 0:07:54.920 He's like, should I talk about inflation? Joel? I was like, Warren, 0:07:55.040 --> 0:07:57.360 go for it, dude. Warren and Charles Munger have kind 0:07:57.360 --> 0:07:59.600 of fallen out of favor with how they're treating bitcoin 0:07:59.640 --> 0:08:02.280 these days. True, we won't get into that, um, but 0:08:02.600 --> 0:08:05.400 he said warm Buffet. He said that inflation is substantial 0:08:05.480 --> 0:08:08.160 right now and that companies that he owns UH and 0:08:08.160 --> 0:08:11.160 others that those companies do business with, that they are 0:08:11.200 --> 0:08:14.200 all raising prices, and this is something we haven't had 0:08:14.240 --> 0:08:16.640 to even think about in uh in recent years, you know, 0:08:16.800 --> 0:08:19.120 like this is something that you heard about, like back 0:08:19.200 --> 0:08:22.680 during the Cold War era, like back in the seventies 0:08:22.680 --> 0:08:25.840 and like the eighties inflation top ten percent. Yeah, yeah, 0:08:25.840 --> 0:08:28.400 we're like, oh, wait, inflation, it's still a real thing, dude, Yeah, 0:08:28.440 --> 0:08:31.040 it is, uh, And right now it's it's been sitting 0:08:31.080 --> 0:08:33.120 at roughly like one and a half percent over the 0:08:33.160 --> 0:08:37.040 last ten years. It's been fairly predictable, pretty low as well. 0:08:37.400 --> 0:08:39.360 And so because of that, we haven't had to give 0:08:39.360 --> 0:08:43.360 it much thoughts. But that's clearly changing. Uh, And so 0:08:43.440 --> 0:08:45.280 that's what we're gonna talk about today, like what's happening 0:08:45.320 --> 0:08:48.439 with inflation and how will it impact you? Yeah, but 0:08:48.480 --> 0:08:51.400 first let's give a definition. Let's talk about what inflation means. 0:08:51.840 --> 0:08:55.760 And so, Yeah, simply put, inflation is essentially when prices 0:08:55.880 --> 0:08:58.600 go up, when things cost more, or an even better 0:08:58.600 --> 0:09:02.760 definition might be when the purchasing power of your currency 0:09:03.160 --> 0:09:07.360 goes down. So examples of basic inflation could be something 0:09:07.400 --> 0:09:10.280 like the cost of a postage stamp or a gallon 0:09:10.320 --> 0:09:13.719 of milk, right, just basic things that we use. Well, 0:09:13.760 --> 0:09:16.520 I don't know not we use postage stamps anymore. Let's 0:09:16.600 --> 0:09:18.920 let's just say you're mailing letters. I have the same 0:09:19.080 --> 0:09:21.320 booklet of stamps that that I bought like a year ago, 0:09:21.400 --> 0:09:23.160 and I think I've used like two of them. Actually, 0:09:23.160 --> 0:09:25.400 you know, the only reason I use them now pretty 0:09:25.480 --> 0:09:27.640 much is to send Like there's one I R S 0:09:27.679 --> 0:09:29.240 form that we have to have to mail in like 0:09:29.320 --> 0:09:32.880 every every quarter for our business. And they require you 0:09:32.960 --> 0:09:35.600 to mail this form in of course they do. Yeah, 0:09:35.840 --> 0:09:37.800 that's the I R S. Right. Then there they go. 0:09:38.559 --> 0:09:41.920 Not not in the business of customer service, but but yeah, 0:09:41.920 --> 0:09:45.199 both of those things, uh, postage stamps and gallons of 0:09:45.240 --> 0:09:50.080 milk cost about more now than they did. And have 0:09:50.160 --> 0:09:52.360 you ever heard maybe your grandma talked about how she 0:09:52.400 --> 0:09:54.880 could get a candy bar for nickel or how you know, 0:09:55.000 --> 0:09:57.360 I don't know, can of coke cost ten cents at 0:09:57.360 --> 0:09:59.000 bottle of coke I guess back then. Yeah, like you 0:09:59.000 --> 0:10:01.079 would even see like if you go to like antique stores, 0:10:01.080 --> 0:10:03.440 it's printed on the bottle. Yeah, like like and you're like, 0:10:03.480 --> 0:10:06.120 wait a minute, it used to cost that much. It 0:10:06.120 --> 0:10:07.920 makes you think about too, like the chips, what's that 0:10:07.960 --> 0:10:09.880 one brand of tortilla chips in the store, and they 0:10:09.920 --> 0:10:13.000 literally put the price like printed on the bag of chips, 0:10:13.000 --> 0:10:15.200 and so they can't actually change the price, Like the 0:10:15.200 --> 0:10:17.960 stores can't mark it up because it's just printed on there. 0:10:17.960 --> 0:10:19.360 You know what I'm talking about, Like that white bag 0:10:19.440 --> 0:10:22.240 of white white corn. It's like it's even more noticeable. 0:10:22.240 --> 0:10:25.480 I guess if they raise their prices, new price tag 0:10:25.520 --> 0:10:29.120 stamped on the bag. But yeah, like even something as 0:10:29.120 --> 0:10:32.079 big as like a house. Maybe you heard your grandma say, man, 0:10:32.080 --> 0:10:34.000 but when when I bought my house, I specifically remember 0:10:34.040 --> 0:10:37.120 talking to my grandma Matt. I swear she in Montana. 0:10:37.240 --> 0:10:40.400 She bought her house for something right around twenty dollars, 0:10:40.760 --> 0:10:44.360 and I was kind of like, uh, don't, grandma. I mean, 0:10:44.360 --> 0:10:46.320 I'm happy for you, grandma, that you paid that that 0:10:46.320 --> 0:10:49.080 that little amount of money for that home, but also 0:10:49.679 --> 0:10:52.040 let's not talk about it anymorecause bumming me out. But yet, 0:10:52.200 --> 0:10:54.240 the one thing that your grandma doesn't mention in that 0:10:54.280 --> 0:10:57.160 conversation though, or mind didn't at least, is what the 0:10:57.200 --> 0:11:00.640 average salary was back then, right, I mean, seventy seven 0:11:00.640 --> 0:11:04.280 percent of households in nineteen fifty, we're earning less than 0:11:04.320 --> 0:11:08.080 five thousand dollars a year, and that's a market difference 0:11:08.120 --> 0:11:10.120 from what people are today. That's back when a million 0:11:10.200 --> 0:11:12.240 dollars was like a ton of money, you know, like 0:11:12.280 --> 0:11:14.280 today millionaires or it's just kind of like, oh, it 0:11:14.280 --> 0:11:16.360 sounds like everyone's kind of like a millionaire, but but 0:11:16.559 --> 0:11:18.760 back then that was a rare thing. I mean, not 0:11:18.800 --> 0:11:21.240 everyone's a million well no, but like there's more millionaires 0:11:21.280 --> 0:11:23.000 today then, oh yeah, for sure, for sure. And that's 0:11:23.000 --> 0:11:25.800 partly because of inflation, right, And and the reason that 0:11:25.920 --> 0:11:27.920 wages were so low back then and there's so much 0:11:28.000 --> 0:11:30.480 higher now, well, that's because inflation has been doing this 0:11:30.600 --> 0:11:32.640 thing behind the scenes, and it's had an impact not 0:11:32.720 --> 0:11:34.640 just on prices, not just on what you pay for 0:11:34.720 --> 0:11:37.800 milk or a house or postage stamps, but it's also 0:11:38.120 --> 0:11:40.800 had an impact on what you're able to earn at 0:11:40.840 --> 0:11:42.920 your job. Yeah, that's right, But but how long does 0:11:42.960 --> 0:11:46.120 it take for inflation to impact the purchasing power of 0:11:46.160 --> 0:11:48.199 your money? You know? And and that depends on the 0:11:48.320 --> 0:11:51.000 rate of inflation. And so if inflation is at two 0:11:51.000 --> 0:11:53.760 percent that's roughly what we've seen in recent years, that 0:11:53.800 --> 0:11:55.839 will cut the value of your money in half over 0:11:55.840 --> 0:11:59.360 the course of thirty five years. If we see inflation 0:11:59.480 --> 0:12:01.920 rates to to let's say three percent, that means your 0:12:01.920 --> 0:12:04.839 money gets cut in half after just twenty three years. 0:12:05.000 --> 0:12:06.760 You bump that up to four percent, that means that 0:12:06.760 --> 0:12:08.680 you would see the value of your money had in 0:12:08.800 --> 0:12:12.600 just seventeen years. And and so that's why sticking your money, 0:12:12.880 --> 0:12:15.000 you know, say, under your mattress or burying it in 0:12:15.040 --> 0:12:18.200 your backyard is such a bad idea. Uh right, If 0:12:18.240 --> 0:12:20.280 if you do, inflation is gonna just cause way more 0:12:20.320 --> 0:12:23.160 harm than the earthworms, maybe even more harm than you 0:12:23.280 --> 0:12:25.360 not being able to find that money. That the moisture 0:12:25.400 --> 0:12:28.040 would be a problem. I know that, like double bagg 0:12:28.040 --> 0:12:30.120 of double bagget yes, exactly, if you're gonna do that, 0:12:30.120 --> 0:12:32.640 but yeah, we would suggest you avoid that because inflation 0:12:32.720 --> 0:12:34.640 is going to be worse for you. But like, yeah, 0:12:34.640 --> 0:12:37.600 short term or temporary inflation is a legit thing too. 0:12:37.760 --> 0:12:40.160 That's kind of one of the things that that people 0:12:40.160 --> 0:12:42.840 are talking about right now. Lumber, for example, has seen 0:12:42.960 --> 0:12:46.400 traumatic price increases because of the pandemic as supply chain 0:12:46.440 --> 0:12:49.880 problems coincided with higher demand. People putting more money into 0:12:49.920 --> 0:12:51.720 their home because they have been in their home a 0:12:51.720 --> 0:12:54.720 whole lot more and will lumber prices go back down 0:12:54.920 --> 0:12:57.439 to pre pandemic prices. We don't really know. That's yet 0:12:57.440 --> 0:13:00.400 to be seen. But there is a distinction, I would say, 0:13:00.400 --> 0:13:04.520 between short term inflation, which is small term disruptions in 0:13:04.600 --> 0:13:08.160 price over for a particular good or service, and long 0:13:08.280 --> 0:13:10.360 term inflation, And it can be hard to tell in 0:13:10.400 --> 0:13:12.200 the moment, like in the here and now, as people 0:13:12.240 --> 0:13:15.000 are predicting different things, how much of an impact that 0:13:15.040 --> 0:13:17.920 these short term price bikes are going to have on 0:13:18.000 --> 0:13:21.000 like the long term rate of inflation? Yeah, you know, honestly, 0:13:21.040 --> 0:13:23.440 due this makes me think about like catching a common cold, 0:13:23.600 --> 0:13:26.400 or or like having allergies, which which I do luckily, 0:13:26.440 --> 0:13:28.320 I feel like I'm completely out of the woods at 0:13:28.320 --> 0:13:30.680 this point, not dealing with my sinus issues. But a 0:13:30.679 --> 0:13:33.160 lot of folks who reacted to the pollen like I 0:13:33.200 --> 0:13:35.439 did back in the spring might have been concerned that 0:13:35.480 --> 0:13:37.400 they had COVID right like they maybe even gone to 0:13:37.400 --> 0:13:40.000 get tested, because when the symptoms kick in, it's hard 0:13:40.040 --> 0:13:42.760 to decipher you know, what you are actually dealing with, 0:13:43.000 --> 0:13:47.080 And so similarly noticeable rising prices might cause us to 0:13:47.160 --> 0:13:49.760 think that inflation is out of control, right and that 0:13:49.800 --> 0:13:51.800 it's about to wreck everything, But when it comes to 0:13:51.800 --> 0:13:55.560 these shortages, the Federal Reserve cited COVID related disruptions in 0:13:55.600 --> 0:13:59.480 production and supply chain logistics as the reasons for these 0:13:59.520 --> 0:14:02.200 shortages in these price spikes, and so this has had 0:14:02.280 --> 0:14:04.680 a pretty massive impact on everything from you know, building 0:14:04.720 --> 0:14:07.959 materials to cleaning products and microchips. A bump and prices 0:14:08.040 --> 0:14:09.520 now or you know, even for the rest of the 0:14:09.600 --> 0:14:13.960 year doesn't necessarily mean that inflation is spiraling out of control. 0:14:14.080 --> 0:14:16.439 That's true, but it also doesn't mean that it isn't. 0:14:16.600 --> 0:14:19.360 Although that's true, I would tend to believe that it's not, 0:14:19.600 --> 0:14:21.880 and and maybe some of these issues are more short 0:14:22.000 --> 0:14:24.760 term that remains to be seen. And luckily there are 0:14:24.800 --> 0:14:27.160 a lot of really smart economists out there who are 0:14:27.160 --> 0:14:30.560 who are watching inflation in our country closely. But that 0:14:30.640 --> 0:14:33.280 doesn't mean that you and I as individuals are completely 0:14:33.320 --> 0:14:35.560 off the hook. There are steps that our government can 0:14:35.640 --> 0:14:38.880 and does take to ensure that inflation doesn't get out 0:14:38.880 --> 0:14:41.360 of whack, doesn't get out of control, and there are 0:14:41.840 --> 0:14:43.920 things that we can do as individuals to lessen the 0:14:43.960 --> 0:14:46.720 negative impacts of inflation on our lives and on our 0:14:46.760 --> 0:14:49.960 personal finances. Will get to all of that right after 0:14:50.000 --> 0:15:00.960 this break. All all right, man, we are back to 0:15:01.000 --> 0:15:03.160 the right. We're talking about inflation, and specifically we're trying 0:15:03.160 --> 0:15:06.120 to figure out how to make inflation sexy or tough 0:15:06.160 --> 0:15:08.840 task right there, buddy, it is, but I have faith 0:15:08.840 --> 0:15:11.240 and you and me we're gonna do it. Uh. So 0:15:11.320 --> 0:15:13.880 before we talk about what to do about runaway inflation, 0:15:14.000 --> 0:15:16.160 you know, on a personal level, let's let's let's make 0:15:16.160 --> 0:15:20.000 it clear that inflation isn't necessarily a bad thing. So 0:15:20.080 --> 0:15:22.520 to you know, you mentioned the kind of electricity metaphor 0:15:22.600 --> 0:15:26.000 there earlier, to continue that thought from before the break, 0:15:26.320 --> 0:15:29.880 Proper inflation, just like the proper flow of electricity to 0:15:29.920 --> 0:15:33.000 your home, that is a good thing. The Federal Reserve 0:15:33.120 --> 0:15:35.880 wants inflation to happen, at at least within reason, and 0:15:35.880 --> 0:15:40.160 that's partly because following prices actually incentivized consumers to hold 0:15:40.240 --> 0:15:43.720 off on purchases, waiting for prices to fall even further, 0:15:43.960 --> 0:15:46.400 which harms the economy even more. Yeah. If I know 0:15:46.480 --> 0:15:49.240 that the price uh that tesla is going to in 0:15:49.240 --> 0:15:52.000 all likelihood fall by a few thousand dollars, like I'm 0:15:52.040 --> 0:15:55.320 just gonna keep keep waiting keep the bank. Why would 0:15:55.360 --> 0:15:57.080 you spend that money now when you know you can 0:15:57.080 --> 0:15:59.320 spend less a little bit later down the road. Right. 0:15:59.760 --> 0:16:03.200 So that's the theory from British economist John Maynard Keynes anyway. 0:16:03.240 --> 0:16:06.240 But the problem is when inflation ramps up and speeds 0:16:06.280 --> 0:16:08.800 out of control. Uh, just like a surge of electricity 0:16:08.840 --> 0:16:11.520 to your household electronics, that's when things get fried, and 0:16:11.560 --> 0:16:13.600 that's when things don't work like they're supposed to. The 0:16:13.640 --> 0:16:17.080 proper flow is good. Spikes and swings in electricity, that's 0:16:17.120 --> 0:16:19.120 bad news, that's true. So I think it is too 0:16:19.200 --> 0:16:21.080 really important to mention that this is one of those 0:16:21.120 --> 0:16:25.040 areas where a lot of really smart people disagree. Some people, 0:16:25.280 --> 0:16:27.400 you know, think that inflation is bound to become a 0:16:27.440 --> 0:16:30.200 major issue in the years to come. They're almost convinced 0:16:30.240 --> 0:16:33.120 of it. And others believe that it's not in all 0:16:33.160 --> 0:16:36.000 likelihood going to be much of concern, and that there 0:16:36.040 --> 0:16:39.160 are ways to fight inflation if it gets too out 0:16:39.200 --> 0:16:42.640 of control. You know. And Matt and I are not economists, 0:16:42.640 --> 0:16:44.480 Like we're not making any predictions here, Just I just 0:16:44.520 --> 0:16:47.120 want to like say that too, we're not gonna like 0:16:47.400 --> 0:16:49.880 inflation is all and not likelihood gonna happen at a 0:16:49.960 --> 0:16:51.640 rate of three point two percent this year. Like, we're 0:16:51.680 --> 0:16:54.040 not making any predictions like that, but let's talk about, 0:16:54.080 --> 0:16:56.280 Matt some of the tools in the tool belt of 0:16:56.280 --> 0:16:59.720 the federal government to combat inflation when they need to. 0:17:00.480 --> 0:17:02.960 Another reason I think that that some are concerned that 0:17:03.040 --> 0:17:06.639 inflation will ramp up is is because of government spending. 0:17:06.680 --> 0:17:09.359 Actually due to the trillions of dollars that the government 0:17:09.400 --> 0:17:13.560 has spent to combat the effects of COVID, especially putting 0:17:13.560 --> 0:17:16.120 more money into the pockets of individuals. You know, more 0:17:16.119 --> 0:17:19.160 money to spend means people are spending more, and prices 0:17:19.200 --> 0:17:22.080 often go up in tandem. The more money that's in circulation, 0:17:22.080 --> 0:17:24.119 that decreases the value of the money that's already there. Man, 0:17:24.119 --> 0:17:26.439 it's right. Yeah, So this is one of the reasons 0:17:26.440 --> 0:17:29.280 that people are worried that the economy is overheating. Like 0:17:29.320 --> 0:17:33.800 we've never actually seen government spending like this before, especially 0:17:33.800 --> 0:17:36.680 direct payments to individuals. Mp Are actually said it well, 0:17:36.720 --> 0:17:39.080 I think, and they helped put that massive amount of 0:17:39.119 --> 0:17:41.760 money in context. They said, if the amount of money 0:17:41.920 --> 0:17:44.879 that the federal government spent fighting COVID, if that amount 0:17:44.880 --> 0:17:48.760 alone were the GDP of any nation, that nation would 0:17:48.760 --> 0:17:51.240 have the fourth or fifth fifth largest economy in the world. 0:17:51.240 --> 0:17:53.840 This past year's insane. Yeah, so obviously, Yeah, putting that 0:17:53.840 --> 0:17:55.600 in context, that's a ton of money that was spent 0:17:56.000 --> 0:17:59.480 in those few bills alone. So we are seeing things 0:17:59.480 --> 0:18:02.880 heat up, and different economists and Federal Reserve officials are 0:18:02.960 --> 0:18:05.600 expecting the surge in prices. But if the search continues 0:18:05.920 --> 0:18:08.280 for more than a few months, then that might be 0:18:08.440 --> 0:18:11.679 a reason for concern and for yes, some fiscal policy 0:18:11.720 --> 0:18:13.720 and some intervention. Yeah, it's okay to see things heating 0:18:13.760 --> 0:18:15.840 up a little bit, right, I mean, think about where 0:18:15.880 --> 0:18:18.320 things have been since last March. Right, not not March 0:18:18.400 --> 0:18:21.040 this year, but March last year, when things completely came 0:18:21.080 --> 0:18:24.080 to a grinding halt. And so to see things pick up, yeah, 0:18:24.119 --> 0:18:26.280