Cont.

"Tips For

Fighting

Inflation"

By Evelyn (Evie) Preston, The Money Lady

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Q: If we produced more of our needs “at home,” we wouldn’t have all that supply chain stuff that makes it hard to receive the things we need and the prices wouldn’t go up so much.


Yes and No. U.S. companies were producing an abundance of gas and oil for our own needs, even to sell. When Government policy changed, we needed to purchase energy from abroad just when world supplies hit the winds of war and unreliable markets—prices soared.


What we forget is that fuel supplies are the lifeline of transportation, especially trucking, that carries all our daily needs (shoes, drugs, auto parts, etc.) to stores and outlets from ports, rail cars and “Made in America” factories—those connections I mentioned.

If UPS pays more for fuel, from jets to delivery trucks, their rates creep up. When Walmart, Safeway or corner stores pay more to stock shelves, they must charge more. At the same time, wages rise in order

to retain workers impacted by these same pressures.


Plus, every extra Government printed Covid dollar devalued its worth so, the same dollar now buys much less. And if there’s less produced or shipped, there’s more demand with a weaker dollar. Put all this together, it spells inflation!


Q: Besides price hikes, what other changes erode our finances?


Consumers can’t help but notice “shrinkage.”

Coffee production encounters many “growing pains,” and now a several ounce diet trimmed the old 12 oz. package no matter the brand.


Ditto for potato chips, same price, same bag but less…can’t count ‘em.


And so it goes from candy bars to soap. “Don’t even try to wash this,” my daughter warns about a well-designed but iffy-fabric blouse. With cost-cutting everywhere, even high-end clothes, furniture, etc. aren’t what they used to be.





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Q: I understand rising fuel costs but why have airline tickets exceeded inflation rates and more than doubled?


Double trouble, indeed. Complete Covid travel bans forced staff layoffs and retirements. Now, with high fuel costs, new equity hiring rules and fewer experienced pilots--instead of a swift travel industry comeback--the public gets sticker-shock, inconvenient routes and endless cancellations.


Q: What happened to my investments that plunged just when I need them more than ever?


That 7% average growth in a respected mutual fund got erased by the amount of inflation. Jill Schlesinger, CBS News Analyst, reminds us that this has happened before and fear is always a deterrent to clear thinking.


Add the Ukraine war, interest rate rise and the bear market tumble and we must think more clearly than ever. 


While over time, many factors cause the natural

highs and lows of investing, as losses result from inflation, confidence crumbles, people panic.


They sell low (a “no no”) which creates a downward spiral. They don’t invest. “What if things get worse? How much longer will it last? What about rising rents, college costs?”


When people or companies stop all investing or spending, there can be slow growth and a weakened economy…and uncertainty…which markets do not like!


There’s a timely story in the WSJ about the Government in years 1777-’80 when the economy was in such disarray that the State issued 6% bonds payable in beef, wool and shoe leather vs. unstable money.


African tribes long have calculated their wealth in heads of cattle; the term “capital” comes from the Greek word for “head.” So, according to the Journal, in order to get some real answers as to the state of our economy, maybe the main question Americans should be asking our Government is…


“Where’s the beef?”

 

Evelyn (Evie) Preston is a financial columnist for A050 and worked as a financial advisor for over 25 years. Reach her at Evierp100@yahoo.com.

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