When the Fed worries about “inflation” the stock market tumbles.
The news media wants you to think that inflation comes because of “rising prices” but really rising prices come because of inflation.
Why? The government prints money to cover it’s bills and makes the money in your bank account increasingly worthless.
That’s why people used to like the gold standard… every bill represented a fixed amount of precious metals.
That’s why government’s hate it… it keeps them from expanding willy nilly and having to live within a budget like ordinary mortals.
But since you’re an ordinary mortal being ruled by the masters of the universe who print money willy nilly, here’s some things you can do to attempt to mitigate the effects of the “hidden” tax of inflation.
So what can a small business do these days to try and weather this storm?
- Keep overhead low.
- Build cash reserves to buffer short term price increases that precede higher prices on your part.
- Watch your margins carefully. Worry about growing profits, not sales.
- Don’t lock into long-term contracts that have narrow margins with large customers.
- When inflation heats up even a little, be aggressive with frequent small price increases rather than waiting and trying to catch up at some point with one big jump.
- Pay down variable interest loans ASAP. As long as there is inflation, interest rates will keep going up.
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