Finance: What is Inflation: Adjusted, Hyper, Currency, Commodity?

What is inflation, and if we poke it with a pin, will it pop?

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Transcript

00:30

when inflation hits the fan yeah like that then commodity prices are usually [inflation hits ceiling fan]

00:36

the first to react commodities you know things like oil and electricity and [oil ships, light bulbs]

00:40

roundup weed killer and the price of generic picture frames on Amazon you [weed killer, picture frames on Amazon]

00:45

know those things all right well why does commodity pricing even matter well

00:49

let's talk about inflation for a sec inflation measures the rate at which

00:52

prices of goods and services are rising and they generally rise over time the

00:58

greater the level of inflation the lower the purchasing power of your currency

01:03

well in a world of inflation taking off going up up up and the Fed raising rates [house floating up with balloons]

01:08

hoping to tamp it down down down well equities or stocks and debt or bonds [house floating down]

01:14

will get crushed while commodities should just keep going on up up up in [air balloons rising]

01:18

lockstep with inflation rates because they're basically a store of cash and

01:22

you can turn them into cash so quickly and they don't really change that way in

01:25

essence commodities are a good balance to an investment portfolio highly

01:29

exposed to oh say the stock market well what else acts this way real estate yeah

01:34

it's kind of a commodity or at least it behaves like one in the grips of [air balloons rising]

01:37

inflation oil yep gold yep what about currencies commodity well yes and no [oil rig, gold ingots, paper money]

01:43

currencies react to other currencies generally on a relative basis but they

01:48

behave very much like commodities so then if you turbocharged inflation well [different world currencies]

01:53

yes you get then hyperinflation in most times the US dollar has been considered [house rocketing out of orbit]

01:58

a relatively stable bet like think Latin American debt in a historical frame that

02:03

is the countries were swimming in debt payable in their own currency in the [world map]

02:08

1980s and much to the chagrin of the Western countries who loaned them [bags of money in western countries]

02:12

billions and billions of dollars those latin-american countries decided to run

02:16

the Xerox machine all through the night and weekend printing more and more money [money being printed]

02:20

so hyperinflation would be created and the 18 kajillion dollars owed by

02:25

Venezuela would feel instead like only a few million bucks to that country and

02:29

while the West learned a big lesson about loaning people

02:33

irresponsible with her own currency oh and there was that other little one

02:37

lesson that the West learned about punitive war reparation rules check out [world map]

02:42

1930s vimar germany's hyperinflation currency issues this wheelbarrow full of [wheelbarrow full of money]

02:47

german marks yeah at the time this picture was taken it bought a loaf of

02:51

bread and only like two glasses of juice juice juice [two orange jews turn into orange juice]