Inflation has been on nearly everyone’s mind for months, and it seems every metric in place verifies growing concerns.
In August, the Federal Reserve’s favored inflation gauge rose to a 30-year high of 4.3%.Thirty years ago was long, long before there was anything like social media, which often shapes consumer beliefs and ideas. To learn how social media can be use to benefit a business, check out the services offered by this Miami social media agency.
Jack Dorsey, the billionaire tech entrepreneur and CEO of Twitter, recently took to his own social media platform to note his belief that “Hyperinflation is going to change everything. It’s happening.”
Dorsey may have been staggered by his most recent grocery bill (although I doubt he does his own shopping). However, his use of the term “hyperinflation” is – for now – an exaggeration. Hyperinflation is defined as an increase in prices anywhere from 50% per month to 1000% a year.
While we’re observing some of the highest inflation rates in decades, we haven’t yet seen anything that approaches 1000%.
Steve Hanke, a Johns Hopkins economist, responded on Twitter, saying “There have been 62 certified hyperinflations in world history. At present, no country is experiencing hyperinflation. @jack should know better than to tweet irresponsible public statements.”
Hanke may be critical of Dorsey’s comments, yet Hanke endorsed the platform where the comments were made by responding on Twitter.
While America has seen inflation before – it reached double-digits as recently as 1980 – this is our nation’s first experience with significant inflation where the population communicates through social media.
Andre Kostolany, a stock market investor who made his fortune in the 1940’s, said, “Facts only account for 10% of the reactions in the stock market; everything else is psychology.”
Couple Kostolany’s comments with studies indicating that social media use may be related to signs and symptoms of depression, anxiety and stress, we are living in truly extraordinary times.
Perhaps the best path for you, if you have inflation concerns, is to avoid the social media “economists” and become an expert in what you own, and why. It’s a simple challenge – but it isn’t easy. I regularly run into people who have a significant amount of wealth but who lack genuine clarity in what they own.
For example, until you review the holdings of your mutual funds, you don’t really have a firm grasp on what you own. And that lack of knowledge could present problems during inflationary times.
An often-ignored part of the process is asking “why do I own this?”
It may be you were subject to a convincing sales pitch, or influenced by a headline in the past. Now is an excellent time to assess, and if necessary, act, to prepare for these unique times.
If the task is too daunting, find an advisor you can trust – hopefully one who isn’t going to put you through another sales pitch – who can help. Advice from a trusted partner will always last longer than the slings and arrows of “likes.”