Inflation in the marketplace.
In 1991 my younger brother Mark and I ventured out into what for us was a brave new world – we were going to be post frame (pole) building contractors. Having spent the decade of the 1980’s selling post frame building kit packages, we had over 6000 buildings of experience behind us.
The internet not being what it is today, we used newspaper advertising to promote a 24’ x 30’ two car garage, built on your clear level site in the Spokane, Washington area for $2995.
This included a 16 foot wide insulated steel overhead door and an insulated steel entry door in aluminum jambs.
In today’s world – it wouldn’t be much of a building (and I will explain why in tomorrow’s article), however in 1991 it was a heck of a buy.
My real point of this article is inflation, tomorrow I’ll share today’s price on a two car garage (albeit with some improvements) and what you can do about inflation in the post frame building industry.
Inflation is a very deliberate and sustained form of theft.
When prices rise faster than income levels, they’re ultimately stealing from your standard of living.
But not just once.
Inflation steals from you month after month, year after year. It never stops.
This has long been a common tactic for financially desperate governments throughout history.
Think about it– if they sent gun-toting police to your house demanding 2% of your wealth, there would be rioting in the streets.
But if the government and central bank engineer 2% inflation, no one cares.
And this the really amazing thing about inflation: governments and academia have managed to convince people a little bit of inflation is totally normal.
They start early, even teaching students this garbage in high school economics classes.
Of course, they always forget to teach the part about how destructive inflation is over time.
2% inflation compounded year after year after year can have an explosive effect, doubling, tripling, and quadrupling prices.
The thing is, though, because inflation occurs so gradually, it feels ‘normal’.
Only when we look back to the past can we see how dramatically inflation has changed people’s lives.
The US Labor Department reports, for example, in the late 1960’s, fewer than half of households with children were dual income.
In other words, one parent supported the family on a single income.
Today in nearly 70% of households with children, BOTH parents have to work in order to make ends meet.
This trend is a prime example of how inflation steals from people over time.
Policymakers will always downplay inflation.
Back in 2011 Federal Reserve official Bill Dudley infamously responded to soaring food prices by citing the fact an iPad 2 was cheaper than an iPad 1.
(Prompting one reporter to say, “I can’t eat an iPad!”)
They may even reinvent the way they calculate inflation.
But despite the speeches and statistics, most of which focus on monthly or quarterly changes, the long-term effects of inflation are very much with us.
And they aren’t going away.
It would be foolish to assume the people who are causing this problem will suddenly fix it.
If anything, they’ll make it worse.
In fact, central bankers around the world have been concerned inflation isn’t high enough… as if a brief period of price stability is somehow a bad thing.
We should absolutely expect higher inflation.
Central bankers want inflation. Governments want inflation. And they’re the ones who have the power to make it happen.
See you tomorrow!