|Four German marks would buy one dollar in 1921. By 1923, the exchange rate was four trillion marks to the dollar.|
- Deficit spending is inflationary.
- Tariffs are inflationary.
- Recessions/Depressions are deflationary.
Trump is flipping two inflation triggers at the same time.
His tariff wars against Europe, Canada, Mexico, China (the entire world except Russia) will cause the inflation of prices of imported goods and domestic goods built using imported materials. Also, by removing price competition, retailers will increase prices just because they can.
Trump's deficits will exceed $1 trillion a year by the end of his term. Double that if the US goes to war with Iran. Double it again if the Fed hikes interest rates to induce a recession.
There is one more rule of thumb that applies.
A bird in the hand is worth two in the bush.
If you need something, buy it now. Every day you wait the price will go up and the value of your savings will shrink.