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HOT TOPIC Hyperinflation starting? What's happening in your area? Post your ground reports.

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YanC

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Currently doing a huge (for me) rehab on an apartment building (6 units), plumber said we had to quickly decide which equipments (water heaters...) we would be using as suppliers were raising their prices significantly and he needed to order ASAP (this is in France).
 

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whyphilip

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Interesting question. I spent a year abroad in 2017 and when I came back I saw restaurant prices had gone up considerably, but not much since then.

I've been reading a lot of RE news this past year. Big story is that since the pandemic granted so many people the ability to work remotely (not just from home, but in another state) there has a been widespread migration to suburbs. That's where the RE markets are hot. Even LA has heated up as people moved down from northern CA.

The places that have taken the biggest hit are luxury condos/apartments in downtown metros where people didn't feel safe from the virus (or crime). Manhattan, DTLA, SF, etc. There was already a lot of new luxury construction (and backlash about a lack of affordable housing). You can see histories on Zillow that show both rents and prices have been pretty stable there. Everywhere else has gone up. My personal home search spreadsheets from 2018 confirm only ~10% rise in DTLA.

I'm curious what markets will appreciate the fastest and my guess is:

* Orlando
* Las Vegas

They were hit hard from a lack of tourists and I know many people who are champing at the bit to visit them after they are vaxinated.

I'm less positive about places like SF/SV bouncing back because many tech companies (Microsoft, Facebook, Twitter, etc.) made WFH permanent. They will save on both office space and salaries.
 

SammyGlick

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Talking to the factory I work with in China, the prices for raw plastics are increasing significantly. I'm told that prices are increasing so quickly that suppliers are unwilling to guarantee prices more than a few weeks out.

What is interesting is that the factory owner (who has 30 years in the business) says that for the first time, he does not understand what is driving the price increases. Obviously, there are lots of factors that could be short-term and C0VlD related but he does not believe they explain what he is seeing. Fortunately raw plastic constitutes a small fraction of the final price of the injected moulded parts that I buy. However, it still all adds up.

Most of the other items I purchase (primarily batteries, alternators and electronic components) do not seem to be rising in price significantly once you allow for the change in the value of the RMB relative to the USD. Although, labour costs are still rising year on year and I do agree with an earlier post that I think the days of China being a reliable venue for cheap manufacturing are numbered.

The most disturbing inflation I have seen is in freight prices. While this could simply be blamed on a short-term mismatch of demand and supply, my sense is that carriers have realised they can get away with these higher prices and that it will be a long time before they return to pre-C0VlD levels.

In short - based on what I have seen, I definitely think inflation is on the way. I don't know enough about economics to speculate as to whether hyper-inflation in consumer goods is likely (as others have noted hyper-inflation of assets has been happening for a while!) but I think the days of 0-2% inflation are over. Printing money combined with interest as zero must have economic consequences?
 

Zaratustra

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1 USD was 2.3 GEL (Georgian Lari) a year ago, today it's somewhere around 3.5, but price of goods did not rise as much as currency has dipped in comparison to USD, therefore by far USD has been deflating here. Almost same in Armenia and Turkey.

Eventually prices will adjust and an inflation of USD will probably double-inflate local currencies of small countries, especially ones that have been printing money throughout 2020-2021, or vice versa, If people see USD inflating too fast, they might convert it into local currencies, which will further inflate USD.

Extremely curious what happens.
 

Losspost

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To be honest. Here in Germany I haven't seen any major changes except in gas prices, through this is probably caused by the reduction of production and the CO2 tax.

Food hasn't change a lot.

Well the house markets here is crazy as well. Not as crazy as you are telling but still quite expensive
 

awsamro

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As someone who lived a fair share of time in South America, I've seen this happen. I've also seen what 40-50% inflation means.
This is EXACTLY how it goes down. They just scratch a bunch of zeroes from the former currency, call the new one a fancier name and, of course, profit from all the suckers that were holding either the currency or any kind of credit denominated in it.
Which goes again to what we were discussing above: as long as you are able to hold anything different than the devaluated currency, then you'll be a winner. If you had outrageous levels of debt in said currency, you'll also be a winner as you will be able to pay it back at a heavy discount.
For eg. If you had 1000 sh*t coins at 1 USD, you now have 1M Ameridollars and if you had a debt for 1000 USD, you now only owe 1 Ameridollar, which should be relatively easy to pay with your sh*t coins.
You'll also be able to buy A LOT of defaulted assets from people, as not all debt is denominated in the now defunct currency and not all interest rates are fixed (specially inflation adjusted loans will be FUBAR).

Having said all of the above, inflation at the beginning always boosts the financial markets, as people try to park their money anywhere other than their wallets. Eventually it hurts companies, as there is no real growth and they start 'underperforming' expectations.

Guess we'll have to wait and see. As the saying goes: markets can remain irrational longer than you can remain solvent.
Im a mortgage broker in Canada. The real estate market here is nuts. Properties are selling for hundreds of thousands above asking. I bought a property myself in December 2020 for $526,000. Another property that is the same exact model sold in Feb for $720,000. My question is:
What shall I park my money in other than real estate? Gold? Crypto?
 

lludwig

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Saw this article a few days ago. Of course no mention of the true cause. It is as if the media either are A. too stupid or B. trying to support a narrative.

Hmmm...
 

lludwig

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IMO gold hasnt really moved in 10 years.

If currency does get hyper inflated, however, it would be prudent to own at least some of it.
Oh I agree at some level you should have some.
 

mdot

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Semiconductor and microcontroller/microprocessor prices are up and supply chain issues are insane. Some previously common parts have multimonth-long lead times. I've heard that companies are hoarding supply to ensure they'll have enough material to cover at least the year (or as long as they can). As a hobbyist or small company you would usually order your circuit boards and components at the same time. Nowadays, you order whatever components you can find in stock en masse and design your board around that.

If you were "unlucky" enough to have an in-production product containing critical components with few suitable substitutes, your whole product line could halt if those components go out of stock. Ask me how I know...

The rare / hard to find / obsolete part market is golden right now - at the company I work for a $2 connector we needed went out of stock everywhere just before a deadline. Only place we could find them charged us $20 a pop for an obsolete but compatible version of it and we had to eat the cost.
 

Rob Tennant

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I'm no economist, but I would be cautious looking at CPI as THE inflation rate metric. To me, its just a cherry picked basket of bs, where assets are specifically omitted. In my area, real estate is out of control, including most other scare assets.. Food, gas, most services kind of remaining flat.

Looks like the higher the energy cost to build/make an asset, the more its being affected by inflation. Extremes would be a digital product that one could scale to infinity with little/no additional energy cost (netflix). Then, take a home, where there is high variable material costs, tons of manpower, in other words massive energy costs.

Assets in limited supply, with a lot more money floating around = increase in costs.

True inflation probably 10%, conservatively, which if the gov were to admit, wouldn't they have to increase wages and social sec?..

Looks like another massive wealth transfer from poor to rich, again, via the shadow tax that is inflation. I do not touch gold anymore. I'm of the mindset that a certain crypto will over throw gold totally, given enough time.

Take all this with a grain of salt, as I only really started paying attn to macro economics the past year or so. Just my observations.
 

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Lyinx

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Currently building my dream home.... it has become a nightmare since the builder is beside himself dealing with price increases and of course wants/has to pass it onto us. Problem is that the contract was signed months ago... We are now renegotiating everything and he's pulling pricing to prove the increase is justified. Yes, hyperinflation here. You don't just print trillions and not expect hyperinflation.
we have a builder that offers 2 options, contract rate or cost +10%

we have gone with the cost +10% option and he gave me an invoice with totals with lines for each vendor, even gave me a refund check because they rebilled and saved him $30 buckls :)
 

Lyinx

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Just got fired today.
The same week that government jobkeeper payments ended.

Coincidence?

I think not!

Everything just got really inflated!

hows that for a FTM?
time to start creating value!
 

Timmy C

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I'm sorry to hear that. Is that your equivalent of the furlough scheme?

I donno what that is, to be honest.

It's basically governments allowing businesses to keep employees.
I got laid off initially then rehired.
Now, fired again that it's ended.

I ain't even mad, I ain't even upset.
I couldn't care less right now, to be honest.

I am excited for what's next.
 

Lyinx

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It's the stock market!

We are experiencing a market that is no longer based on fundamentals. We are witnessing a stock market that is disconnected from reality.
Yeah, stock market is nuts.

My situation (Boots on the ground)
Housing:
under contract within a few days, plus % on top of asking price. Heard of one owner that had the property up for sale for a few years, wasn't really committed, finally got an offer large enough that he took it.
Food: not tracking
Wages: 4 yrs ago, you could get good help for $18/hour without a problem (was top of the line wages), now, you can barely find anyone for less than $23/hr for starting wages. Top starting wage (for labor that already knows the basics) was $27/hr.
4 yrs ago you could hire some starting people (15 yr olds for sweeping the floor, that kind of thing) for min wage $7.25/hr but now you can't get them unless they really want to work in your industry... or you could pay $18/hr...

We have learned to give a higher wage upfront, and then increase quickly, or they might leave. thankfully, we have an enviable job position, which allows us a bit less price fighting/competition (location/type of work/etc..) otherwise we would also have to pay $27+ for starting wages

Wages2:Local companies can put ads out for 3 months and never get a single phone call, there are 10 or 20 pages of help wanted ads in a local paper that we get..
 

Lyinx

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Currently doing a huge (for me) rehab on an apartment building (6 units), plumber said we had to quickly decide which equipments (water heaters...) we would be using as suppliers were raising their prices significantly and he needed to order ASAP (this is in France).
few months ago (last fall) I was looking at an alternate source of heat (propane) and needed to order a heater. they said I might as well get the order in and I could always cancel it. at that time they were expecting it to arrive end of December.
Project has been put back for mid-summer due to other problems(easier to put in propane lines in middle of summer) but I'll probably pay dearly for it.
 

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Ing

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May be I did really care about inflation, but I really have to think about it.

heating Oil is a bit more expensive than last year. But not extraordinary.
Lumber rose from 300 to 400€ the last months.
Food: we allways buy quality food, so I don’t feel a difference.
Gas: the tax rose about 7% on 1.1.21
My slowlane salary rose about 10% the last 2 years. That point I love. ;) maybe they felt my longing for more....
 

Dark Knight

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I live in Poland - Warsaw. The government reports that inflation is officially 3% and it is really over 7%. The costs of services become very expensive - especially hairdressers, dentists and construction costs.
People in Poland are afraid that there may be a repeat of what was here 30 years ago where money lost its value and everyone was a "millionaire" and bread cost 100,000.

Unfortunately, socialists rule here, as in the rest of Western Europe.

I have savings of about 50,000 dollars (a lot of money in Poland, earnings 5 times less than in the US) and I have no idea what to do with it.
 

Brrr

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Keep in mind that supply chain issues are very different from cost-push inflation, which is what (I assume) is the topic of this thread.

I would argue that most price increases we're seeing today are supply chain issues (as I mentioned earlier in the thread).

Do you not think that, supply chain or not being the main reason, prices are still unlikely to correct downwards vs general pricing adjusting to match. It would seem that a temporary supply chain problems may be the trigger for inflation, but monetary supply increase is the fuel, and fear of inflation itself the catalyst.

My feeling is that shit is going to hit the fan with prices at some point and governments will have no choice but to pull the interest rate hand brake on things. That's what I'm expecting the next crash is likely to look like. But I'm not a macro expert so may just be talking out my rear. Thoughts?
 

23Infinity

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If you plan on holding Gold or Silver, PHYSICAL ONLY! Anything else is fantasy because you own NOTHING! It's akin to holding Cryptocurrencies on Robinhood or Webull (i.e. you don't "hold" anything).

Got it - but in your opinion would something like this MNT.TO also qualify as 'physical' where you own an 'exchange traded receipt' - Canadian Gold Reserves - Canadian Silver Reserves - Royal Canadian Mint | Réserve d'or canadienne - Réserve d'argent canadienne - Monnaie royale canadienne ?

My only concern with holding physical gold / silver is the risk of a black swan event of a break-in or such - guess I could get a bank safe deposit box as well though.
 

RadicalShift

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Given that there are still supply chain issues with global oil, and also given the spike in demand over the past few months, this isn't surprising. I'm actually surprised it's not higher. Which is likely the result of many countries focused on renewable energy sources over the past 12 months (I have no data to support this assertion, but I think it's a reasonable hypothesis)...
Do you really think it's supply chain issues? And spike in demand? In the US, that doesn't start to happen until...like now. I don't want to turn this political but the RAPID increase in gas/oil prices is a direct result of shutting down the Keystone pipeline, imo.

Where prices are going over the next 6 to 12 months is anyone's guess.
 

tylerwilkinson

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Any ammo purchased a year ago has grown in value by 200-300%. Online or in stores.

“Affordable” used car prices are up by a similar margin for private party sales. There are almost no DECENT 15-20 year old used pickup trucks under $3000. Mechanics specials are also way up. You can sell a non running vehicle for repair only for what a good daily beater cost a year ago.

And my house has apparently gone up in value by 30+%.
 

jpl

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Well the house markets here is crazy as well. Not as crazy as you are telling but still quite expensive
Guess in Germany it depends on your area then. A friend of mine bought his house for 300k two years ago. He is now selling due to some private issues and got offers at over 500k...

Based on that (sorry for not understanding economics too much just yet) would it still be a smart move to buy fair priced real estate using low interest loans? If you technically owe less once hyperinflation and a currency exchange hits? I know this is rather speculative but I’m kind of in need of more living space (got kids) and there’s nothing up for rent which would be either affordable or big enough.
 
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RadicalShift

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Got it - but in your opinion would something like this MNT.TO also qualify as 'physical' where you own an 'exchange traded receipt' - Canadian Gold Reserves - Canadian Silver Reserves - Royal Canadian Mint | Réserve d'or canadienne - Réserve d'argent canadienne - Monnaie royale canadienne ?

My only concern with holding physical gold / silver is the risk of a black swan event of a break-in or such - guess I could get a bank safe deposit box as well though.
If you can't hold it in your hands, you don't own it. I wouldn't trust this or any other ETF that "acts" as a custodian/holder of your metals.


And I wouldn't trust any bank safety deposit boxes whatsoever! In a SHTF scenario, they could easily raid the boxes and leave IOU's for their "funny money". Safety deposit boxes aren't so safe.

Get a safe.
 

Marigold

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If you can't hold it in your hands, you don't own it. I wouldn't trust this or any other ETF that "acts" as a custodian/holder of your metals.


And I wouldn't trust any bank safety deposit boxes whatsoever! In a SHTF scenario, they could easily raid the boxes and leave IOU's for their "funny money". Safety deposit boxes aren't so safe.

Get a safe.
And a gun! :)
 

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