Inflation is things getting more expensive. It’s not because people are just charging more for whatever they do, companies or all the big companies are just deciding they want more profit, so they charge more, it’s not that at all. The simple fact is that whenever different things happen in the economy, it’s going to cause the cost of things to go up. If you think about the last several years, the different things that happened just led up to this, starting with COVID. The pandemic, really is what kind of helped spur it that well but there are a lot of different things that have just trickled down that have made this stair step to where we’re at now.
What exactly is inflation?
Inflation is the cost of things being more expensive. It’s just the common everyday things that we buy gas, fuel, food, utilities, and clothing, everything’s just getting to be more expensive.
What are some common effects of inflation?
Some common effects are, it becomes more expensive just to live, more expensive to drive your car, more expensive to buy clothes, and more expensive to buy food. It brings down the value of the dollar that you make, you still make the same amount of dollars, but they just don’t go as far as before, and your purchasing power is reduced. Everything like your auto and home insurance, just buying cars, a house, or having repairs done, all those things become more expensive.
Let me take you back a few years and you may not be aware of this but if you live in the south like Louisiana, Mississippi, Arkansas, Texas, Florida, and Alabama, you’re really aware of these different things. Five years ago, we started having a lot of hurricane activity and storms that came through these areas, and a lot of other areas all the way up through the Ohio and Mississippi river valleys, also had a lot of flooding because of the excessive amounts of rain that happened over the last five years. That caused a big influx in reconstruction costs, which caused supply chain issues with the building materials because all those different events that happened over that five-year period just really stretched. In the supply chains, we only have so many trees, we only produce so much lumber at one time, and we can only produce so much concrete at one time. Whenever those supply chains become constrained, they’ll start trying to figure out well, how do we produce more supplies? Well, that drives up the cost of those things and that leads to inflation.
I mentioned the pandemic earlier, well, a lot of businesses and economies around the world almost shut down. The government started pumping money into our people’s hands and our businesses to keep them afloat. Money isn’t just free, that money goes back from the taxpayers, and the taxpayers have to pay that back and that’s money that’s being recirculated. Remember the damages caused by hurricanes, storms, floods, and all other things, it greatly affected the supply chains. Whenever people aren’t working, that creates a supply chain issue, where there’s now just massive demand for these products and that makes everything more expensive because they just can’t figure out how to get the stuff out there.
The war in Ukraine is also because of fuel constraints, Russia is putting the squeeze on oil and natural gas coming out. We also tightened up on some of our regulations inside of the country where our oil production slowed down but we started doing different things to try to manage that. All that also has driven up the cost of products, the government is trying to get a hold on that, but it’s a difficult thing, it’s not just something, you can just say, “we’re going lower inflation” it just doesn’t happen like that. They’re doing different things to try to get the inflation rate down, but it’s going to take some time, and unfortunately, it’s going to be a little painful for us for a little while. We’re gonna continue to pay excessive amounts of money for products that we use to pay a lot less for but eventually, that will settle down.
Some other effects that I didn’t mention are, it doesn’t affect everybody the same like the more income that you make, the less of an impact that’s going to have on you. It’s just a law of numbers, the less money that you make, the more it’s going to affect you, and it drives a bigger wedge between the upper and the lower class. It’s not because anybody’s a bad person, it’s not because someone is deceitful or anything like that. It’s just the law of numbers, they have more, so it doesn’t affect them as much, but it still affects them but percentage-wise, it doesn’t affect them as much as it does lower-income families. This is a tragedy, and there’s not an easy solution for that but I’m going to try to give you a couple of tips that may help you out.
What can you do to protect yourself?
The sad thing is, there’s nothing you can do about inflation. Specifically, there are some things you can do to help hedge yourself. One of them is just making informed and smart decisions, and be careful about things that you buy. Spending on things that are more important, that are more long-term solutions for you and for your family, like education, better housing, different things like that, and it just makes more sense. Eating smarter also makes more sense because if you eat smarter, and you take better care of yourself, you’re gonna have fewer medical issues and fewer problematic issues with that. If you’re in a position where you can invest your money, maybe you can invest in real estate, that’s a better long-term safe solution. If you invest in the stock market, it’s still a good thing, but maybe you should diversify into different market segments, maybe you look at different things that are going to be a better long-term plan, rather than something that short-term. Maybe don’t invest in a very new company, invest in a company that’s been around for a really long time, it’s a really large company that has been incredibly stable and that’s going to continue to do well. These are just some different tips that may help you out.
A recession is one of the biggest financial disasters anyone can face, it will affect you in many ways and it’s almost unpredictable when it will happen. In this post, we will help you understand what a recession is and what can you do so that when a recession happens, you will be prepared.
I know that inflation and recession can be really scary but if you just make an informed decision, we’re going to ride this out. The United States has the biggest economy in the world and also, and it’s still the best economy in the world. We’re going to make it through this and we’re going get through the other side, just be patient and be smart about how you spend your money, and don’t let fear overtake you.
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Beaux Pilgrim, CEO