It seems like everywhere I look these days I hear investors talking about hedging inflation. What does that even mean? We need to hedge inflation? Why, because inflation is something normal that we are supposed to hedge against? It's a very limited way to look at it.

Inflation isn't normal. We shouldn't even have inflation, we should have deflation. Inflation happens when there is an increase in the money supply. And when we have a government issued fiat money supply that has no basis in reality inflation is an arbitrary and pointless number. Inflation is whatever the government chooses, and the way they calculate inflation isn't accurate either.

Here is the inflation we've had since 1913:


This chart would be a lot cooler if we weren't becoming poorer as it goes up :(

When inflation happens things cost more. But why do things cost more? Things are supposed to cost less. Why do we pay more for stuff when the nature of markets is for prices to go down? When you build a business and do a good job costs for your product or service goes down. But why are prices for things going up?

Why do we think inflation is normal? Why isn't deflation normal? Wouldn't we all be more happy if things were cheaper? So why are we okay with inflation? Why do we act like we need to hedge for inflation when it isn't a normal thing?

If somebody steals $20 from you everyday are you going to work harder to make more money to hedge for the thief or are you going to stop the guy from stealing from you? Are you going to enable the parasite of inflation and just go by like it's okay or are you going to confront it?

There's only one thing we should be hedging.

 Filed under: Business, Investing, Inflation

About The Author

Quinton Figueroa

Quinton Figueroa

Facebook @slayerment YouTube

El Paso, Texas

I am an entrepreneur at heart. Throughout my whole life I have enjoyed building real businesses by solving real problems. Business is life itself. My goal with businesses is to help move the human ...

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