But on a less depressing note, I suggest paying less attention to the areas where people are “getting rich.” Money isn’t the measure of true value and you will rarely find a correlation between wealth and wisdom.
First, high inflation is good for holders of some financial assets (e.g. stocks) and bad for others (bonds). It's good for existing borrowers and bad for existing lenders. It's good for those in debt and bad for those who saved cash. Essentially, high inflation punishes financial frugality and rewards financial speculation.
Second, massive inflation-caused economic collapse is highly unlikely in any developed nation today. The more likely path is either 1) reasonable economic growth with high inflation (say 5% to 10%) or 2) economic stagnation similar to what Japan has experienced for the last few decades.
Be aware that the people predicting debt-fueled hyperinflation-style economic doom & gloom have been doing so for nearly half a century now. They have been saying it's a few years away for decades. Every recession they say "we were right, it'll just get worse!" They have been wrong every time for 40 years. Maybe they'll be right in the coming few decades... but I wouldn't bet my financial future on it.
My broader point is simply that the rich today are succeeding in a system which might not be stable in a few decades.
Oh, and debt levels are high because rates and inflation is low.
And as far as I know, millennials are economically worse off than their boomer parents.
People get richer but they optimize their tax burden. Remember, debt creates money. There is always enough money in the economy to repay all debts. Interest merely circulates a few times between bank and debtor which may require some inflation but not hyperinflation. There might not be enough tax revenue when those with enough money stop paying them. This causes an excessive tax burden on the working upper class, the middle class and below while Gates and Jeff Bezos earn money off of the appreciation of land which has a much lower tax burden.
People started measuring their wealth through the monopoly of land. Since land is in finite supply inefficient land use and speculation have become profitable because there is an underlying economic rent to be extorted out of people living on or near the land. Governments spend millions or billions on infrastructure only to see untaxed land values go up.
Work piling. Either you get a job or not. The threat of unemployment causes desperation and extreme competition for low skilled jobs while employers start demanding degrees for all the "good jobs" which are locked behind other forms of monopolies like college education and medical licensing. If work was shared among people then we could have a shorter working week like all those economists talking about a 15 hour work week (ok it would be 30 hours or more but still). This is especially pronounced because low skill workers not only compete with other Americans, they also compete with every low skill worker around the world. You need an unfair moat to compete in such a world.
It's the opposite. There half a dozen extremely serious economic problems at the root of the system that were papered over during the WW2 rebuilding of the economy (because growth is easy if you start from nothing) and all the things you worry about are merely their symptoms.
The best plan as far as I can tell is to be diversified in investments. A home + mortgage protects against inflation, a reasonable mix of stocks and bonds are solid financial investments, enough cash for a good emergency fund, and holding a small % of hard assets and crypto is not a bad idea.
In short, "nobody knows nothing" and we can just invest a little in everything and hope for the best :)
When things like national debt far outstrips GDP and everything is hyperleveraged, it seems the way out so far has been to create more.
High interest rates will devastate parts of the economy, but that's a different and more well known problem.
The Federal debt needs to be rolled over every now and then. At certain interest rates, the costs of servicing the debt become unacceptably high. Where is that 'breaking point'? If you see some serious analysis of this, please let me know.
But there is a higher bound to which the Fed can feasibly raise interest rates. So it is possible that the Fed will be forced to choose between keeping rates low, keep buying Treasuries and destroy the dollar through runaway inflation, or raise interest rates and bankrupt the US government.
The Fed sets a different rate, one that banks use to lend money to each other. It forms kind of a floor for lending. They raise it to reduce lending, and thus slowing down the economy in general (and thus reducing inflation).
They've kept the latter at nearly zero -- arguably for the not-great reason of propping up assets. If anything, raising that would make bonds more attractive relative to stocks, dropping the interest rate further. Instead, we've gotten inflation, but only in the asset markets, not consumer inflation.
They actually wanted consumer inflation to be higher, so that consumers would be forced to put their money in asset markets rather than holding it in cash. They've finally gotten their wish, though it's likely that it is due more to pandemic-related shutdowns than to monetary-based demand.
Short-term treasuries and the fed rate are also directly related. Increase the fed fund rate, and short-term treasury interest rates will have to go up as well to remain competitive.
Go back 40-50 years and you can find people that said the same thing then. Things looked a lot bleaker than today. Gas shortages in the 70s, interest rates of more than 15% in the 80s, cold war, etc.
A safety razor and a 1,000 pack of blades is a recent purchase. Properly maintained, it will last forever, which will come in handy when Schick razors are $25 each.
I’m not sure how that scales up to $50k or $100k but it’s a starting point.
This subreddit is a good place to get ideas: https://www.reddit.com/r/BuyItForLife/
The question is, how is that scenario supposed to happen and even if it did, why not just invest into farms? Is the government going to repossess all the land off the "white colonialists" and give it to native americans? If yes then the country didn't fall because of hyperinflation, hyperinflation was the symptom like every other country where the problems happened first and then the symptoms came.
Monopolists not only includes the rich but also average home owners whose land is appreciating absurdly quickly. The problem isn't with negative interest rates or inflation because those merely break the monopoly power of money.
I'm not sure this is true.
The problem with 'joining in with the fools' is that it relies on the 'greater fool theory' to make superior returns. And you could well end up being the 'greater fool'.