So I don't usually comment on financial news and current affairs, Inflation or any of that stuff, but the CPI data came out today and I've had a lot of conversations with people over the last couple of days about what they think is happening in the first quarter of 2022. And I can, I can tell you what I'm dealing with. If you don't know, I own a hotel in Lincoln Nebraska and I'm having some supply chain issues and that kind of plays into this entire chaotic mess of what I think March is going to have a big,
All right. So this is just a, a real quick, deep dive into why march is going to be madness. Why? I think it's going to be a really interesting time to invest. If you liked this stuff, leave a comment down below. If I said step away to chaotically, let me know leave a like, and please subscribe to the channel.
If you're not an active investor, and maybe you stumble upon this channel or your watch this, because you like to see the renovation of my main hotel, I'm just going to break down some key things for you.
CPI just means consumer price index. And basically what it's showing is how much a basket of the goods is each year. And if it's going up or going down in real dollars, it is our way of gauging inflation.
if you don't know what inflation is, it's how much of a certain good your money can actually still buy. I'm sure you're hearing this buzz word going around a lot. Inflation, inflation, inflation. The reason why a lot of us that are focused on the couple of dollars you can make extra from an investment care about inflation.
Inflation Means Less Purchase power
If inflation is high, that's great for me. Normally that's great for people like me that invest in those large properties, because it means that I'm repaying that debt with cheaper money the debt stays the same and I'm continuing to pay that down.
So normally that's a great thing for investors that leveraged debt for savers, for people to put their money in a savings. Or they're just trying to get from, from day to day, inflation's really bad because it means you're probably still getting paid 15 bucks an hour, but the cheeseburger now costs $2 instead of a dollar.
You notice the thumbnail on my video was the ides of March. If you don't know the history of what the ides of M
arch are, it's the 74th day back in the old Roman empire.
I should say the Roman republic it was the 74th day of their calendar where they had to settle up on all their debts, . And the irony here is Julius Caesar actually died on the 15th of March, the Ida March.
Irony being that he had to pay for his debts . It also marks a point where Rome no longer was Republican. They became an empire. Why is that important to us? We're entering a very interesting point in, in history of America, right?
CPI is continuing to rise
If you look at the orange line (I extended it out assuming inflation stays the same and doesn’t continue its tren
d of going up in 2022. ) If you look at the line you can see we are already facing a significant amount of inflation compared to previous years.
This point isn’t missed by Jerome Powell. In January he was explicit that with inflation high and for now and apparently getting worse, the Fed this year plans to steadily clamp down on credit and end the extraordinary support it has provided to the U.S. economy during the coronavirus pandemic.
The fed has
finally said that they recognize that there is inflation, December and January, we did not have the greatest of numbers when it comes to the CPI index. Jerome Powell finally admitted that we have inflation coming and he finally admitted that we need to do something to curb that inflation and with today's numbers, it is just double down the fact that they're going to raise interest rates
we're already planning on doing it four times in 2022, which. If it costs me more to borrow money, it means that I'm less likely to buy more properties. That means it's less likely that banks are willing to lend. It just changes the entire map.
Now, if you're in the hotel world, you know that there's March madness, especially for bars and entertainment facilities? There's always games going on. There's always things coming back and forth and people are spending money like crazy in March. It's a chaotic, but very profitable part of the year.
this year might not be as great as normal though, because all the people that were on unemployment for various reasons through the pandemic and chaoticness that, that came from that.
Some of them may not have said takeout taxes. That money is still taxable. Others might actually have owing taxes. So, what usually lights the fire of March madness, this large amount of money coming into the economy, this large amount of money coming into Lincoln Nebraska might not be there.
We might not have that catalyst. So, people that normally would be getting a $10,000 tax refund might find that they're only getting a thousand bucks, they might owe money.
Supply Chain Shortages
Combined with the supply chain shortage is that we're all dealing with. I'm personally waiting on sheets. Interesting. I'm having this issue. Can't find sheets or lamps. And I never thought that I would care as much about sheets or lamps I found a company that's able to take care of my hotel. He doesn't have any sheets right now. At the same time, I'm having problems getting lamps because the people that make the lamps are overseas and trying to get here, the cost of shipping is costing more than the lamps. So it doesn't make sense for me to go and spend 10,000.
This is not even a joke, $10,000 on lamps. I'm going to have to, if I'm going to open, but. Even if I'm willing to pay the $10,000 for lamps because of this inflated cost of moving stuff into the United States, and then moving it from the coast to the middle of Nebraska. Now I have to deal with, can they actually get it to me?
And that supply chain issue is not willing to adjust me.
So the march madness, the debts coming due, the supply chain issues, the rise of inflation. It’s all going to make for a very interesting first quarter of 2022. As investors we enjoyed the easy money, as savers we worry about the parabolic inflation and if we can continue to charge enough to stay in business. And as observers we must wonder if this is all part of a bigger plan. Just wondering how we can look at continuously tripled inflation numbers and not question why its being allowed to happen.
If you got value from this video please leave a like and subscribe and please share your thoughts in the comment section. How are you investing in 2022?
I like talking about financial stuff, financial news, financial, current affairs, financial invest in investing in something or other. I think I've gotten a little bit bored of my never ending hotel project. So I, I might start doing more, more videos like this
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