Warning: Inflation Ahead, Proceed with Caution
This article from Wolfgang Hammes outlines the risks of an impending inflation crisis.
Lot of things have happened over the past two weeks. If you follow me, you probably have read my extensive posts on Silicon Valley Bank and other bank failures.
I don’t want to repeat what I wrote in my posts: Just this: Nothing was surprising.
It is much more interesting to look into the future and this will be disturbing for those who do not invest into understanding how inflation works. More specifically, you must understand …
Inflation Economics (how it impacts financial measures)
Inflation Mechanics (how inflation works and its higher order consequences)
Inflation Dynamics (how it works over time creating different risks and opportunities.
Warren Buffett is and was a master of inflation management. Just a reminder of his superb outperformance during the 1970s inflation crisis. This is motivation for anybody to invest in inflation training (or to face the consequences if not).
No alt text provided for this image
My 2016 book (which is still one of the top selling inflation books!) explains this in great detail. However, my new workshop THE WORLD OF TOMORROW (which I will also offer for sale to non-clients as a self-study program) will go into much more detail. It will provide a road map for the time between 2023 and 2030. (My book covered 2016-2023).
Times ahead will be dangerous. The most important activity is to DITCH YOUR MICROSCOPE and ADOPT A MACROSCOPIC PERSPECTIVE.
Companies and investors need to look at the big picture. For example, every country will be differently impacted by inflation. THE WORLD OF TOMORROW offers a framework with over 25 country vulnerability criteria to assess a country’s vulnerability to inflation.
In general, the developed world faces very severe challenges. Within the developed world, Germany seems extremely vulnerable. In fact, Germany can face a similar decline as Venezuela did over the past three decades. Germans don’t like to hear this (I am German!), but in almost all country vulnerability criteria, Germany scores a red flag. Keep in mind that Venezuela used to be the top performing and wealthiest country in South America. Mistakes over two decades led to a tragic collapse of the country.
Key points include:
- Vulnerability criteria
- The inflation calamity chain
- The 1970s inflation roller coaster ride
Read the full article, THIS IS JUST THE BEGINNING …, on LinkedIn.