Highly recommend the book “When Money Dies” about hyperinflation in the Weimar Republic. It digs into how the inflation grew and its effects on real people. Those who illegally transferred their savings to foreign currency early did the best, but many long term savers had their entire life savings wiped out.

Early in the process people were exuberant since the markets were rising and their paper net worth was increasing, so they were selling valuable assets like pianos for money that would quickly become worthless. Eventually the farmers became extremely powerful since they had the one thing everyone needed.

Also worth mentioning that Bitcoin’s volatility makes it a poor inflation hedge, but this is for different reasons than the author of the article suggests. It’s more because the Bitcoin ecosystem is highly manipulated and it’s still unclear what a fair price for Bitcoin looks like.

https://www.amazon.com/dp/1586489941/ref=cm_sw_r_cp_awdb_imm...

Inflation hysteria.

Ask yourself how much of current inflation is speculative (eg. Blackrock buying single-family homes, Glencore buying copper, Zhongda Group buying aluminum). Now ask yourself what these folks are doing as they watch Fed reserve rates climb, reverse-repos skyrocket, PBOC/CCP order reduced commodity speculation, and 4 months of declining US home sales, falling lumber prices. The inflation shock is/was temporary and could well be followed by a deflationary shock if the powers that be overreach (as they usually do).

Lead-times on goods remain long. This induced reversion to the mean won't happen overnight, but I believe it is well under way.

The author completely misunderstands the value proposition of both gold and Bitcoin. Neither of them is valuable because of “intrinsic value” - both derive approximately all of their value from monetization. If gold was only valuable for its physical uses, it would be worth a negligible fraction of its current value.

Also, comparing the price of gold to the rate of inflation doesn’t make any sense. The derivative of the price of gold should be compared with the rate of inflation, or the price of gold vs some adjusted value of a dollar.

Certain asset classes have inflated dramatically and may continue to do so. Further, we may indeed have a "blow off top" in inflation across all asset classes as policy makers desperately attempt to stave off deflation.

For that reason it is very difficult to hedge properly against short and medium term inflation rates.

Make no mistake, however - the world is in a massively deflationary state. Birth rates across the rich, global north have crashed - including the US, ex-immigration. The population of China will shrink by hundreds of millions over the next few decades. Further, it is the imperative of youth, globally, to pursue a "modern" life script of delaying and minimizing childbirth, etc.

In addition to these very long term, basic drivers of inflation there are now new and interesting factors like work-from-home that serve to further minimize resource use. When people stay home to netflix instead of going out to a movie, that's not inflationary.

Again, very difficult to gauge near-term (Don't Fight the Fed, etc.) but on a longer horizon (but within my own lifetime) I would expect to see significant deflation and/or wild economic gyrations stemming from desperate attempts to stave off said deflation.

Not sure I agree with the real estate conclusion in this market. I think there is a lot of uncertainty on how real estate values will change post-COVID as how we use places for shopping, working, and travel change (or dont)

Lost me at lemonade stand "capital expenditure" being lemons... that's COGS, not capital.

The best performing assets used to be Lego:

https://www.cnet.com/news/lego-bricks-outshine-gold-bars-as-...

Many assets such as real estate, stocks, bitcoin are overvalued. So they can return to a fair value and make a loss against inflation.

> Unproductive assets like gold and commodities are not like Bitcoin for a simple reason: they have intrinsic, underlying value. There are industrial uses for gold

I don't understand how this guy is going to claim that the value of gold is strongly based on its industrial utility with a straight face. My take-seriously-o-meter went from 60 to 0 on this one.

Not all government bonds are worthless against inflation!

You can purchase up to $10k in Series I bonds every year that carry a fixed rate (currently 0) + a variable rate set by inflation (CPI) that is adjusted semi-annually. I bonds purchased right now are yielding 3.5% (due to recent CPI data) for the next 6 months. They are an excellent place to park some cash/emergency fund with some caveats (no redemption for 12 months, lose 3 months of interest if you redeem before holding for 5 years)

>Let's say you have a lemonade stand, and your capital expenditure is mostly lemons. In the first year, you buy 1,000$ lemons to produce 1,100$ worth of lemonade that you sell.

>That's a 10% margin on regular days. Next year, you can choose to reinvest and expand your business, buying 1,100$ worth of lemons to sell 1,210$ of lemonade.

>This is an oversimplification

Of course it is!

haha, what the ... 10% margin on lemonade?

I'd say that lemonade margin (in restaurant) is closer to something like 700-1000%

He spelled SaaS as SASS..?

No mention of federal I Bonds, which would be a decent low risk investment if inflation actually does get high for the first time in 40 or so years. I guess TIPS work roughly the same way.

'Best performing assets against inflation'

...here's a list of things that don't work.