Inflation is here and this brings even
Inflation could ruin those on fixed incomes,
cheat salaried workers and make the rich richer while most
people become poor. I do not like this fact but know how
to profit from it. Invest in either the best or the cheapest.
The middle road will suffer the most.
We can see signs of this diversion between
the ‘haves’ and ‘have nots’ everywhere.
Bugatti just introduced a 1001 horse power car selling
for $1.3 million. Cheap Kia sales are on the rise and the
Oldsmobile is gone. Soon it could be good bye Chevy good
bye! We can see signs of this everywhere.
Warren Buffet gave away $31 billion … to
Bill Gates! This is a real ‘haves’ deal.
Motorcycle sales are rising for example
now, not because they are a rich man’s toy. A June
6 USA Today article by William Welsh says that rising gas
prices are pushing rising motorcycles sales. The article
“Vincent Stone, 36, of Los Angeles,
shopping at L.A. Cycle Sports in Inglewood, is among those
switching. He garaged his van and bought a 25-year-old
motorcycle. ‘It cost me $85 to fill up the van. Man,
it's been killing me,’ he says. ‘My motorcycle
only costs $13 to fill up.’
“At Coleman Powersports in Falls
Church, Va., general sales manager Greg Keoho says the
store sold 109 motorcycles last month, up from 76 in May
2005. Scooter sales were up to 44 from 35 a year ago.”
The article sales that these increased
sales are fueled by expensive gas., You can find the article
in the USA Today archives at http://pqasb.pqarchiver.com/USAToday/results.html?start=10&id=2
Here is a great entry into the books of
human silliness. The very same people who bought Hummers
and huge SUVs for protection now buy motorcycles to save
on gas. I road a motor bike on the freeway just once, when
I was about 16 or 17. Even then I had enough sense to say, “I’m
not doing this again”.
Yet the economic pinch is already pushing
people to do dangerous things just to survive. It’s
bad enough to get people to ride their hogs and such on
the road rage filled highways along side the in a hurry
- talking on the cell phone -drinking Starbucks - worrying
about getting there on time - drivers in really big, fast
Look for businesses that help the middle
class survive. Wal Mart and Dollar Stores are great examples.
Many middle class consumers may not like their tactics,
but they have great futures because US consumers must cope
Industry has already figured out about
the disappearing middle class. Take for example an article
in the Market View section of Foodprocessing.com: “The
disappearing middle class - You may need to learn how to
market food to the ‘have-nots’ by John L. Stanton,
Contributing Editor. The article begins:
“About 25 years ago I lived in Brazil.
One of the things that made it such an experience was there
was no real middle class. There were the ‘haves’ and
the ‘have nots’. The problem with marketing
food there or almost any product was the bulk of the market
was the ‘have nots.’
“I thought how different this was
from the U.S., where we have a huge middle class with a
fair amount of disposable income. Our marketing practices
are geared to a large middle class.
“However, there are some harbingers
that might make the U.S. more like the underdeveloped Brazil
than the U.S. of the past. The Dept. of Education reports
the number of people who will not graduate from high school
is getting larger every year. And it might actually be
worse than the DOE portrays. For example, the ‘official’ drop-out
rate starts at 9th grade, so kids who drop out before 9th
grade are not reported as drop-outs. Or if you fail to
come back to school in the beginning of the year, you are
not a drop out, etc.
“Our problem as food marketers is
that income correlates with education. The lower the educational
levels in the U.S., the more people there will be in the
low-income groups. One estimate is that by 2025, about
50 percent of the population will be in the day-to-day
“Since I don’t write social
commentaries, my concern is the disappearing middle class
will significantly change the way we market food. It already
is changing. Look at the growth of dollar stores, the Sav-a-Lots,
etc. They are becoming the store of choice for that lower
50 percent, with that group “splurging” at
Wal-Mart. Even the next 40 percent will be very price-conscious
and probably mass merchant-loyal; they’ll only splurge
at today’s traditional grocery stores. The top 10
percent will shop wherever they want.” You can read
the whole article at http://www.foodprocessing.com/articles/2005/404.html
Not getting enough kids through school?
How could this be?
Whenever I visit Portland I get some keen
insights because when I left there and did not return for
decades. Often we miss seeing things because they creep
up on us minute by minute. However when you are away a
long time and then come back Wow! You see a lot of change.
There are a number of silly things I saw this trip.
First, is the education problem. When
I was growing up people were poorer (in dollar terms) than
now and they were building schools like mad. Now they are
shutting down the schools because they cannot afford to
This creates extra crime not having more
kids in school so the county there, Multnomah, built a
spanking new jail. Only…it has remained empty because
they cannot afford to open it.
Could any of this be because taxpayers
are spending all their money on debt, bombs and soldiers
to protect us against terror? Frankly this would be very
silly to worry about terror on the outside when the real
terror is having a poor, unschooled criminal population
that you cannot even jail!
Inflation? I drove by the house where
I was raised in Rockwood Oregon. My folks bought it for
$2,700 in 1947. They sold it in 1960 for $14,000. The house
is back on the market, two bedrooms, one bath, a bit over
800 square feet in a so-so neighborhood. The price? $184,500!
Perhaps we can learn from the past. A
big chunk of the debt that the US owes was created in the
war against the Soviet Union. We spent lots of money on
bombs and rockets because we feared that the Russians would
take over. We won. Right? Maybe not. In the wasp suburbs
of Rockwood, Oregon the neighborhood has been taken over
by Russian immigrants! They know what inflation will do
and have come to America (along with lots of Vietnamese)
to work hard.
So there you have it. The one saving grace
that might boost our flagging economy from the debt that
we created to stop the Russians from coming may be the
hard working Russians who have come. Is this silly or what?
But this is the way it is. The good part
is that many people will become even richer and how about
we all can be among them! One way to do so is invest in
businesses and countries that are especially suited for
either the very rich or the poor.
Learn more about fighting inflation
by investing in emerging currencies, gold, silver, Ecuador,
import-export, overseas markets and more. Join Merri,
Thomas Fischer from Jyske Bank Copenhagen and Steve Marchant
from Ecuador and me at our September 15-16-17, 2006 International
Business and Investing Made EZ course in North Carolina.
Review where to invest and do business now and learn
which markets and currencies may be strong in the year
ahead. Learn more about Ecuador import and export from
Steve. Our May course was overbooked and the September
course is filling up quickly. Our free accommodations
here on the farm are reserved on a first come first served
basis so do not delay! Go to http://www.garyascott.com/catalog/ibeznc.