MicroStrategy or a Massey Ferguson? — Inflation Accelerates Again

A small item in an English farming magazine tells us that:

Used County 1474 tractor sells for 196,000 pounds ($270,000) in “spectacular” auction…a record breaker.’

The ‘County’ is a ‘Ford conversion’ tractor sold in England. This tractor was built in 1983 and sold, new, for £20,597 (about US$28,500).

Now, it’s a ‘classic’. Even adjusted for inflation, the latest price represents a gain of about US$200,000.

What to make of it? Why would a used tractor be worth so much money? Can you protect yourself from inflation with tractors?

The news brought us hope. We have several old tractors, still labouring in the fields and vineyards after years of service. Maybe one of them is worth something?

Broken records

We don’t know, but prices are on the rise almost everywhere.

In England, inflation is running at about 2.5% annually — the highest level in three years.

And here in Ireland, a young woman we met in Dublin yesterday told us that she and her husband were unable to buy a house because ‘prices have just gone crazy’.

Small rowhouses in decent, but not deluxe, neighbourhoods sell for more than £1 million.

In the US too…inflation is working its way through the vintage record shops…leaving plenty of broken vinyl on the floor.

Asked and answered

This morning, a headline story at The Hill tells us all we need to know: ‘Democrats reach deal on $3.5T price tag for infrastructure bill’.

Whee!

You understand…this has little to do with ‘infrastructure’ — which is a local matter — and everything to do with bribing the voters and rewarding the elite special interests that control the government. The Hill continues its report:

“Every major program that President Biden has asked us for is funded in a robust way.” [Senate Majority Leader Charles Schumer (D-N.Y.)]

The deal will also include funding for expanding Medicare to cover dental, vision and hearing and addressing climate change key asks from progressives, including [Vermont Senator] Sanders.

Right! The ‘key asks’ will get answers. Three and a half trillion of them. And that money, unlike the Federal Reserve’s Wall Street payoffs, will go directly into the consumer economy.

For many years, Wall Street has broken records. Now it’s time for Main Street to crack a few.

Is the Australian economy in danger of a Japanese-like economic winter?

Inflation update

Which is why we are confident that our major forecast is correct: Like the heat of a summer’s day, inflation readings will rise. Then, expect some severe storms.

Here’s the latest from The Wall Street Journal…‘Inflation Accelerates Again in June as Economic Recovery Continues’:

The Labor Department said last month’s consumer-price index increased 5.4% from a year ago, the highest 12-month rate since August 2008. The so-called core price index, which excludes the often-volatile categories of food and energy, rose 4.5% from a year before.

The WSJ is talking about the year-to-year rate. The actual increase from May to June was 0.9% — the biggest one-month increase in 13 years.

If that were to continue, it would put the inflation rate over 10% for the year.

Consumer pays the price

Globally, most stuff moves around on ships. The Harpex Index tracks the cost of moving it on container ships. The Harpex is normally in the 300–500 range.

A year ago, it was at 450. But today, it’s more than 2,600, after going up 290 points in a single week.

These costs need to be passed along to consumers. Breitbart describes what happens next:

A record share of small businesses say they are raising prices, data released Tuesday showed.

The National Federation of Independent Business said that the net percent of small businesses that have raised prices rose seven points to 47 percent, the highest seasonally adjusted inflation since 1981.

Ultimately, all costs are passed along to consumers, as they are the source of all wealth…all output…and all consumption.

Wrong investment

But the path of true inflation never runs smooth. There will be ups and downs…broken records…shattered businesses…confusion…misunderstandings…cracked-up investments.

When the value of your money changes, you miscalculate. You make mistakes. You invest in the wrong things at the wrong times. You buy MicroStrategy, for example…or Tesla

…when you should have bought a Massey Ferguson!

Regards,

Dan Denning Signature

Bill Bonner,
For The Rum Rebellion

PS: The Rum Rebellion is a fantastic place to start your investment journey. We talk about the big trends driving the Australian Economy. Learn all about it here.


Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries.

A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally.

With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance.

Bill has been a weekly contributor to The Rum Rebellion.


The Rum Rebellion