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Tags: inflation | shrinkflation | consumer discretionary spending | buying power | gold | silver | retirement income

Trevor Gerszt: Gold & Silver Aren't Impacted by Shrinkflation

Trevor Gerszt: Gold & Silver Aren't Impacted by Shrinkflation
(zerbor / 123RF Stock Photo)

Trevor Gerszt By Friday, 02 September 2022 11:24 AM EDT Current | Bio | Archive

With inflation at the highest levels we’ve seen in 40 years, American consumers are dealing with issues that they haven’t seen on a large scale in decades. Among those is shrinkflation.

Shrinkflation occurs over time as inflation causes prices to rise. Companies that produce consumer goods are often hesitant to raise prices, so they choose to stealthily decrease the sizes of goods first.

Over the past several years this shrinkflation has occurred regularly but for most goods only every few years. Now that inflation has skyrocketed and remains elevated, it seems to be happening to more and more products.

The Scourge of Shrinkflation

You may have noticed that the half-gallon of orange juice you used to buy went from 64 ounces to 59 ounces a while ago. But now many of those 59-ounce bottles have been shrunk to 52 ounces.

These changes used to happen slowly, over the course of many years. Consumers weren’t happy when it happened, but they learned to adjust.

Now that inflation is high, however, consumers are slowly starting to become more price-conscious. They look at prices week to week, and they’re noticing when prices increase. And they’re not happy about what’s happening with shrinkflation, which they notice occurring more and more regularly.

Nearly two-thirds of consumers today are worried about shrinkflation, and rightly so. Suffering from higher inflation is one thing. But shrinkflation is a double whammy, kicking a man when he’s down. And in some cases, not only do goods get smaller, but they get more expensive, too.

Shrinkflation is also a reminder that inflation is something over which the average consumer has no control. We’re powerless to combat inflation or shrinkflation, and we’re told we can either take it or leave it.

Many Americans have done just that, adjusting their consumption patterns as a result of shrinkflation. They’ll buy off-brands rather than name brands, buy in bulk rather than buy smaller retail packages, or even stop buying things they used to. But at some point, no matter how many tactics you adopt to adjust to shrinkflation, you’re going to have to face the reality that you’re paying more money to get less and less.

The Destruction of Inflation

That’s the problem with inflation. It erodes your standard of living by requiring you to pay more money for the same goods and services you used to enjoy. And if your income isn’t rising to match those increased payments, you may eventually have to lower your standard of living in order to survive.

Inflation is pernicious and destructive, which is why so many people hate it. It punishes hard workers, savers, and investors by devaluing the money they work so hard to acquire.

Interestingly enough, the most damning condemnation of inflation comes from John Maynard Keynes, the economist who has most influenced the Fed’s conduct of monetary policy over the past several decades. As Keynes observed in 1919:

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

“Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Just think of all the excuses we’ve heard for why inflation is so high. It’s greedy companies, or Vladimir Putin, or tight supply chains. And the average man on the street who has no knowledge of economics will nod his head and agree with it, because he doesn’t know any better.

But all this time it’s the Federal Reserve’s loose monetary policy that has been responsible for inflation. No one wants to talk about how the trillions of dollars the Fed pumped into the economy in 2020 was bound to create inflation.

No one wants to talk about how the Fed tried to deny that inflation was happening, then claimed it was merely transitory, and now imagines that it can combat inflation. And because Washington doesn’t want to admit how this inflation started in the first place, you have to doubt that the solutions to inflation are going to be effective.

Gold and Silver as a Best Defense

Unlike most consumer goods, gold and silver aren’t subject to shrinkflation. Yes, the prices of coins will increase as the gold and silver price increase, but that’s the natural result of rising prices. You’re still getting an ounce of gold when you buy a one-ounce coin, even when inflation is rising.

And it’s even better to already be an owner of gold or silver when inflation rises and the values of gold and silver rise, too. A rising gold or silver price means that your ounces of gold and silver are actually increasing in value and gaining in purchasing power, unlike the dollars in your wallet that lose purchasing power as inflation increases.

That’s why gold and silver have been trusted for centuries as inflation hedges and safe havens during times of economic turmoil. When paper currencies lose their value, companies go bankrupt, and financial crises envelop a nation, gold and silver remain tangible physical stores of value that can help ensure financial stability.

Many Americans today are looking to protect their savings, and they’re finding out about a gold IRA or silver IRA. These precious metals IRAs are just like any other IRA account except that they hold physical gold and silver coins or bars. You can even fund your precious metals IRA with a tax-free rollover or transfer from an existing 401(k), 403(b), TSP, IRA, or similar retirement account.

With inflation at levels we haven’t seen in 40 years, can you afford to let the value and purchasing power of your savings and investments shrink if inflation becomes entrenched? Or would you rather take steps to protect the value of the wealth you’ve worked so hard to accumulate?

Don’t let inflation take one more bite out of your money. Call Goldco today to learn more about how you can benefit from owning gold and silver.
Trevor Gerszt is the founder and CEO of Goldco, a precious metals dealer in Los Angeles. For more than 20 years, Trevor has sought out ways to help people build long-term wealth through the security and stability of precious metals and other alternative assets. Goldco is A+ Rated by the Better Business Bureau, a 5-Time INC 500 Winner and has countless 5-Star Reviews for its quality customer service, dependability and strong reputation.

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With inflation at the highest levels we've seen in 40 years, American consumers are dealing with issues that they haven't seen on a large scale in decades. Among those is shrinkflation.
inflation, shrinkflation, consumer discretionary spending, buying power, gold, silver, retirement income
Friday, 02 September 2022 11:24 AM
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