Inflation Beating Trends


Inflation is here. Interest rates and prices are rising. During the last strong inflationary trend. I simply recommended (and invested myself) investing in Australia, Germany, Japan, Switzerland and gold. Sure enough those currencies skyrocketed versus the greenback.

Recent messages have looked to see if investments in Switzerland (no), Germany (no), Japan (no) and Russia (perhaps) will fight inflation.

That last inflationary round seemed simpler because other major governments were not involved in excessive government spending. The logic then was clear. The U.S. had massive debt and was creating huge deficits. The Germans, Japanese and Swiss were not. We have seen in the last three messages that this is no longer the situation. For more on this go to:

Germany-euro: http://www.garyascott.com/archives/2004/07/05/1064/index.html

Swiss: http://www.garyascott.com/archives/2004/07/07/1065/index.html

Japan: http://www.garyascott.com/archives/2004/07/09/1066/index.html

Yet there is one common investing fact that fits now as it did then. To beat inflation make investments that rise more than costs. Okay you say! I admit this is a pretty obvious fact, but sometimes we get so caught in thinking about traditional inflation fighters that we forget this simple truth. All we have to do is buy things that rise more than costs.

To fight inflation, ask what will be in demand next? But how can we see?

The last three messages aimed gave us a glimmer of how. Russia, for instance, might be in. Germany, Switzerland and Japan are out. Get the drift? Change…is the only eternal and it is always at work. We should be thinking things that differ from inflations in the past. China, SE Asia and things new create different new demands. So when trying to spot trends, we try to see what in the old is new. This is not an easy thing to do but we have you and each other and the power of the crowd. You have (and we share here) knowledge and experience to the power of 3000. (see Triumph of the Masses at http://www.garyascott.com/archives/2004/06/16/1057/index.html to understand this better.

One major trend we have been looking at is the backlash of materialism. Capitalism as we know it in the Western world and U.S. has been very much a philosophy of quantity over quality. This has led to many imbalances. Too much garbage in the land. Too much carbon dioxide in the air and too much stuff we don’t even want to know about in the water. Plus fighting…fighting….fighting over resources.

Yet there are many signs that this is changing. A recent message at this site pointed out the power of this change when it said:

"There is a principle that life evolves in an efficient way. Pollution, war and such are inefficient. So where will this lead the flow of living we call mankind? I would like your opinion."

Here are a few ideas that a reader, Bob, shared.

"Gary – my two bits – Life in a pure state does evolve in an efficient way. Unfortunately what we see today is greatly degraded life, decadently craving materialism and sensation, lost and destructive to itself and its fellows. Where will this lead? Most likely (but this time there is some hope) to the same place it has always led in the history books of this universe – a civilization blowing itself up.

"There are only two types of beings in the way they respond to this typical end round of civilization – 1) the vast majority simply participate or watch with running commentary as life decays and blows itself up or 2) a few desperate, heroic souls, the ones on whose backs society is carried, seek and recognize truth and do something about it on a large scale.

"The only chance Man has is in the extensive use of an extremely advanced spiritual science that helps souls permanently vanish the weighty burden of their eons of ignorant misdeeds. Best, Bob”

There is good news Bob. There seems to be a growing group who are not necessarily desperate or heroic, but who through the way they live are creating change. They eat better, make their work about more than just money and are more interested in people and experiences than things. They are not changing the world through preaching or prayer (though they may do lots of both). They are changing things by the way they spend.

Let me share an example. The “Diamond Organics” catalogue gets mailed to me. This glossy sells grapes, figs, organic body care and lots of other such stuff. Let’s not kid ourselves, when they mail out hundreds of thousands of 64 page, slick paper catalogues, this takes lots of trees, water and petroleum. And there are many catalogues mailed every day…millions in fact. So this aspect is not good.

Yet change does not come over night and we can see a message in the products that “Diamond Organics” sell that may help us spot a trend.

Their coffee for example is organic, fair trade and sells for $6.95 a half-pound. That’s $13.90 a pound! We can buy Folgers for $2.49 a pound or even Starbuck’s French Roast for under $8.00 a pound. If this catalogue keeps coming and this coffee keeps getting offered it mean that consumers are willing to pay more for health, for a cleaner environment and to be fair to others. Just maybe….this makes up for some of those trees and water and gas that were destroyed to produce the catalogue. Keep in mind…previously the same number of catalogues were sent but were selling non organic, non fair trade, non good for the environment stuff.

The same catalogue sells bouquets of organic flowers and states, “What a way to grace our tables with a flowers grown without the use of chemicals and harmful pesticides. The truth is the flower industry is one of the heaviest users of agricultural chemicals.”

This is great…full of environmental goodness, but a small bouquet of 8 to 10 stems runs $18 to $39 bucks! If these flowers sell it shows that consumers are willing to pay for values more than value. The values of non-polluting, non-harmful agriculture is a rising trend.

That catalogue offers buffalo meat and tells why this is healthier for the body and environment. I promise you this is a trend.

Even the likes of Ted Turner agrees with this. An article in The New York Times entitled "Bison Burgers, for Humanity’s Sake” tells how Turner is raising buffalo and in 2002 started a chain of buffalo restaurants.

He has 23 locations open, a doubling since last October and eight more are on the way. You can see more on this at http://www.tedsmontanagrill.com/

There is more to say about this…but in a moment.

Just perhaps this suggests that there is something to this goodness in the market place that will really grow. What do you think?

We can explore this further by reading what another reader Nick shared.

“I really appreciate this dialogue and this is the first time I have written a summary of my understanding of the changes that are taking place and how this is going to affect the global society. If we go back to the story of Adam and Eve in the garden we find that it is more than a story. What happened there was that Adam and Eve gave up their authority in the spiritual realm, which rules the physical realm we live in. The serpent, which represented what we call the controllers, received that authority and we see what the controllers have done in the intervening 6,000 years.

"We are about to see what will look like a major intervention, which we first saw the beginning of 2,000 years ago (the solution was already in place in the garden). This authority in the spiritual realm which the controllers have is about to be challenged in a major way by a group of people who have been selected and prepared, they will have the ability to move at will between the spiritual and physical realms. This 'body' of people will engage the controllers in what can be called a battle which the controllers will lose.

"We can just imagine the chaos which will result in the financial, political and religious arena's as this change takes place. I believe we will the abuses of the earths resources halted, pollution will be eliminated, there will be an orderly distribution of the material goods which people need to live and like I said earlier, the principals which Christ taught when he walked this earth will be established. The true nature of God (not what religion teaches and uses to control) is revealed in the laws found in the Old Testament and we will see them implemented. The governments of this world could be called to accountability fairly quickly but the economic (resource management) would take more time. We will see true economic sustainability implemented. People will be able to live without fear and love for ourselves and others will be our guide in decisions we make. Nick”

“Great” I first thought as I read this, “but what does it tell us about any coming trend?” I may have been pondering this when I remembered a message at this site about reverend Rick Warren’s book the Purpose Driven Life (http://www.garyascott.com/archives/2003/07/28/873/index.html) and how it sold 4.5 million copies.

Maybe the thought was still lingering when I read a Times magazine article by Kate Novack entitled, “Yo, Where is my Bible?”. The article tells about the hot selling “Refuel”, a new Bible for teenage boys that is packaged like a skateboarding magazine. It is called a Bible-zine.

The article explains how religious motifs are hot items in the market on everything from T-shirts to face creams.

Maybe that thought was still there when Merri came in with the newest diet book that is selling so well, “The Makers Diet” by Jerome Rubin. This book offers a weight shedding, healthy diet based on Biblical concepts.

Then a June 24 article in USA Today by Cathy Lynn Grossman slapped me in the face. “A new generation spreads the word” tells how young adult christens are “on fire with faith”. The article gets to the point when it says that they have “No plans to preach. No pulpit”. These are 18 to 34 year olds who ignore denominations, who erase the lines between secular and religious themes, who insist God is God, truth is truth and they’re everywhere, so you have to look everywhere. The article included some interesting statistics. 59% of 18 to 34 year olds believe the Bible is relevant to their lives. 80% say that their faith is very important but only 34% say they are absolutely committed to Christianity.

“Forehead slapping time”, I thought! Sometimes it is not the specifics of what is written, but the spirit of what is written. Nick the reader was reflecting what a huge market is spending money on…a more spiritual and less capitalistic life. This is a trend…a big one!

Ted Turner can confirm this again with his Buffalo Grill. The reason behind these restaurants is to help Turner who lost billions when his AOL-Time Warner shares tanked, meet a one billion dollar charitable commitment he made. Turner has created a foundation that works with the United Nations to make small innovative programs such as his Equator Initiative aimed at reducing poverty and preserving the vast biological and economical wealth in countries around the equator.

Can we connect any more dots? Let’s share the thinking of one more reader, Dario.

Most money managers spend more time conducting analyses of computers and semiconductor and financial companies, than on food production, forest management, sustainable energy, and related industries. I am most concerned about foods, health and energy. Cereals are the staple food for humans. China, which had been a net exporter of rice since 1992, became a net importer. Grain used for feed in China went from 14 million tons in 1960 to 100 million tons in 1997 (source USDA). Kazakhstan, once producing and exporting nearly as much grain as Australia, may soon be struggling to feed itself. Africa’s production of grain cannot sustain itself.

"Perhaps one of the most underrated issues facing the world is increasing water scarcity. Water tables are declining on all the continents. It is only a matter of time before some major aquifers are depleted. Irrigated areas in Texas have declined about 11 percent after peaking a decade ago as the southern shallow aquifer of the Ogallala is depleted. Fertilizer is agriculture’s most important item. From 1950 to 1990, the world’s farmers increased use of fertilizers from 14 million tons to 146 million tons. Fish farming is becoming like chicken farming. It has led to the use of hormone treatments and diseases that require the increasing use of antibiotics. Consider basic needs. With the population at over 5.2 billion people and growing, the earth’s surface needs to be managed carefully. If we keep managing agriculture and forests the way we have in the past, we cannot sustain ourselves. We need a program for sustainable agriculture, forest and energy management. Dario”

I couldn’t agree more as I sit here typing away at our isolated, organic farm flowing with pure water, natural forests and free energy.

So these are three inflation fighting ideas our readers have shared.

The first trend is towards organic things produced and bought in healthy, humane ways. The second is a return to spirituality and finally humanity’s need for sustainable agriculture water and sources of energy.

They are all connected by a need for quality over quantity. This shift has to happen. Each of these trends comes from a backlash of mankind’s material excess. Nature is a pendulum and when it swings too far it will snap. That’s a law…not a trend and this law is the ultimate driver of these trends. Look for ways that they are manifesting in the market place and get your business and or investments in the way.

Do this and inflation will never be your concern.

Until next message, good investing

Gary


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