For those who read my blog posts this might sound repetitive because it's happening in slow-motion but it's happening all the same. Aside from my usual sarcasm, Elon Musk is right; he's just a little late to the party.
"The explosion in the cost of living is a predictable consequence of money printing. Since the outbreak of the Covid hysteria, the Federal Reserve has printed more money than it has for the entire existence of the US. From the founding of the US, it took over 227 years to print its first $6 trillion. But in just a matter of months recently, the US government printed more than $6 trillion."
What all of us are experiencing right now are the inevitable consequences of unrestrained money printing. No one needs to guess how this movie ends just look at Venezuela, Argentina or in more extreme cases...Zimbabwe.
"For further perspective, the daily economic output of all 331 million people in the US is about $58 billion. At the push of a button, the Fed was creating more dollars out of thin air than the economic output of the entire country. In short, the Fed’s actions amounted to the biggest monetary explosion that has ever occurred in the US."
THIS is what I've been saying for months - "borrow at fixed rates and buy stuff with it" - Your cash does nothing but lose value while it sits in your account because the printing presses in DC are full-on.
Restaurants are coping by adding "temporary inflation surcharge" - there's that word "temporary" again lol!!
Restaurants Add New Fees to Your Check to Counter Inflation Checks now come chock-full of fees for everything from ‘kitchen appreciation’ to ‘wellness’
Other industries are enjoying increased demand but costs have skyrocketed and supplies are sporadic making delivery longer and more costly. Using borrowed capital right now makes sense but only for companies who have demand and are able to get supplies with regularity. Using debt to cover operating expenses should be avoided if possible.
Sudden shocks can't be ruled out so it's good to have extra capital. How much? I think 90 days of operating expenses without anything coming in is a good rule of thumb to follow.
If there are projects that require immediate funding call me right away for an offer. For now rates have remained stable but that will change guaranteed! I'm certain the combination of rate increases from the Fed along with the higher risk in the small business environment will eventually "trickle up" to short term funding rates.
"When someone gives you access to capital, take it!"
I think Elon is on to something!