The cost of living has been rising quickly in the US, particularly since the beginning of the pandemic. Recent data suggests wholesale inflation is at 8.6%. Official consumer price inflation is in the neighborhood of 5.4%, but this official number is untrustworthy. Over the years, the methodology employed to arrive at this figure has changed to hide inflation. The figure would be about 9% if calculated using the methodology employed in 1990 and over 13% if calculated using the methodology employed in 1980, according to Shadowstats.
Here in Minneapolis, the price of groceries has been going up about 10% a year and my rent's gone up over 25% in two years. The cost of eating at a restaurant has increased much more sharply, with many establishments now tacking new pandemic surcharges to all bills. I've seen these new surcharges run as high as 18%.
Fortunately, my earnings have grown with the increases in my cost of living. Not everyone is so lucky. Those relying on social security for their income are seeing payment increases calculated using the artificially suppressed official CPI, and that figure is only about half of the real increase in the cost of living.
Inflation in the range of 10% means I'm not keeping any money in the bank. Instead, I'm looking for places to park funds with returns in excess of 10% annual, because anything less than that is a guaranteed loss. So I play around in the high risk world of crypto. That's been working out okay so far, but not everyone has the stomach for it.
The part I can't stop thinking about is all of those people with money in the bank who are currently watching the value of their savings shrink with every passing day. What are these people going to do when they realize what's going on? They're not going to buy bonds or other instruments with annual yields under 10%. They're unlikely to find promising deals in a real estate market that's both over bought and increasingly controlled by banking cartels. They're also not going to do nothing.
What will they do? I think they'll start taking more risks. Maybe big risks. Stocks. Crypto. Startups. Whatever they can get their money into.
Personally, I'm looking forward to seeing how all of this impacts the crypto space. Keeping in mind that I'm more of a hobbyist than a trader or investor, I fully expect the value of this space to 10x in under ten years. Does this mean I think bitcoin will hit $700k by 2031? Not really. But I do think hundreds of smaller tokens will keep experiencing rapid market cap growth. EOS, Solana, and Luna are my tentative favorites for the coming year.
EDIT: It should go without saying that Hive is also a favorite: )
(Feature image from Pixabay.)
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