Hedge fund giant Elliott Management just told clients the global economy is in an “extremely challenging” situation which could lead to hyperinflation, which could in turn lead to “global societal collapse and civil or international strife.” (See this article for more details.)
That’s the first time I’ve seen a respected financial organization tie our current economic situation to the hyperinflation and potential societal collapse. It should be a wake-up call to anyone who isn’t prepping or is still early in their prepping journey.
Evidence We Moving towards Hyperinflation
The government reports inflation of just over 8 percent per year but admits the food-made-at-home category is experiencing 13 percent annual inflation. That’s uncomfortably high, but it’s not hyperinflation high. The problem is the government numbers are not accurate. The government method of inflation reporting waters down the effect of inflation. This is because they do not want to alarm the public. It also keeps cost-of-living increases for social security and other inflation-linked expenses from rising. That means more money in the government’s pockets and less in yours.
Here’s an example of the discrepancy: Yesterday, the Wall Street Journal reported that inflation is driving up the cost of school lunches. “Many districts across the country have raised prices for school food by as much as 50 cents a meal this year as they face ingredient prices that have risen by 50% or more.” The price increase comes despite the government giving schools 68-cents more per lunch.
One school district is paying 55 percent more for flour while another is paying 53 percent more for tortilla chips.
If schools are reporting 50 percent inflation in the cost to make school lunches at the cafeteria, how come the government thinks the cost of lunch made at home has only increased by 13 percent?
Thanksgiving Price Cuts
Grocery store Aldi announced a “Thanksgiving price rewind” and are discounting Thanksgiving grocery items by 30 percent to return to 2019 prices. Walmart announced a similar plan to offer “This year’s meal at last year’s prices.” Walmart’s discounts include 50 percent off whole turkeys.
These stores have calculated food inflation is between 30 and 50 percent. You know what? I trust their data more than I trust the government’s figures.
Let’s imagine your grocery bill in 2021 was $150 per week. At 13 percent inflation, you would spend $169.50 to buy the same amount of food. If inflation is 30 percent, those groceries would now cost you $195. If inflation is 50 percent, you’d be paying $225 for the same groceries.
Think about your grocery bill. Is it closer to 13 percent or 50 percent more than it was in 2021? We expect you’ll agree with us (and Walmart and the school districts) that inflation in the grocery store is far higher than 13 percent.
Let’s take that $225 grocery bill and see what happens if inflation continues at the same 50 percent rate: your groceries will cost $337.50 next year. Want to hear something scary? If inflation stays at that rate, those same groceries will cost $1139 in 2026.
Meanwhile, folks who get social security or disability payments will see their payments go up 8 percent. Your standard deduction on your taxes will increase 8 percent. And your wages sure as heck won’t increase 50 percent each year.
This makes it pretty obvious why those hedge fund guys and people like me are worried about a global societal collapse and civil unrest. People will rebel and blood will run in the streets before they accept paying seven or eight times more to feed their family.
Are you prepared for that?
More on Hyperinflation
Here is an article from our library that might be of interest: What is Hyperinflation and How to Survive it. This detailed post provides examples of what to expect during hyperinflation, how to manage your money, and strategies for how to live with hyperinflation.
Here’s a link to all our prior articles on hyperinflation.