Another beautiful day here in Beverly Hills. But there is a lot of worry and fear on the table. In fact, I have not seen such a level of fear in everyday life ever in my existence. In “scattergram” fashion, I would like to express my humble opinion of some emerging problems. Bear in mind, predictions about the future are often wrong.
First, I know this is not wrong because it’s about the past. You must, must get as much education as possible. Whether it’s about roofing or statistics, whether it’s a law degree or skill in painting stucco, you must get education. I especially recommend any education that will get you a federal or state civil service job.
They pay well. They have incredible fringe benefits. They allow almost certain, automatic raises in pay year by year. I also recommend any job that has walls around it in terms of requiring state licensure. Otherwise you are just a manual laborer getting minimum wage or close to it. And you flatly cannot live on that.
A decent life requires capital, and free public education is the easiest and cheapest way to acquire it. Stay in school and get the taxpayers to donate a skill to you. That skill is indispensable.
Second, and this is a prediction: It would be unusual in the extreme if inflation ends quickly. It’s like a brush fire. It feeds on itself, and it does not stop readily at all. There basically is no such thing as “transitory” inflation.
It’s now clear that inflation built up because the government flooded the economy with money to prevent catastrophic damage from COVID. If I may say so, I did write over and over in The American Spectator that there were no signs of the disaster that Dr. Fauci and others were warning us about. It now develops that the government threw way too much fuel on the fire, and now letting that fire burn down will be a slow and painful process.
Wringing inflation out of the economy always hurts, and it probably will this time, too.
Three: It is essential, and I mean really, really essential, that you have savings. I mean real savings that can tide you over a prolonged period of disinflation. The ordinary citizen does not have much beyond week-to-week savings. That’s a terrible mistake. Whatever you have to do to make sure you have some meaningful money squirreled away, please do it. Mr. Buffett smartly says that the goal is not to spend and then save what you have left over.
It’s far better to save first and then spend what you absolutely need to spend. Savings will give you a far, far better feeling in the pit of your stomach when you get that pink slip than any trinket.
Finally, the housing market seems to me to be overheated by some degree thanks to inflation and inventory shortage. These bubbles never last. On the other hand, they rarely go to whatever they were before the bubble.
My own experience, for what it’s worth, is that it’s good to buy into real estate as soon as possible. The tax advantages are stupendous. Get in on them while you can.
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