This period in Argentina was devastating for the middle and upper middle class. A dear friend was a baker. He provided pastries served on Aerolineas Argentina. Before the inflation spike he purchased a new truck every two years. He lived in a 4000 square foot home. His name was Alberto. He sold his home for $250,000 just at the start of the inflationary spiral in order to build a new bakery. When he completed the sale the agent forgot to pay the land tax on the property he sold.
During 1984 he struggled to complete the bakery. He had to sell his beautiful Ford truck and buy a clunker. The price of glass, wood, concrete and tile went up everyday. Alberto was like a man trying to stay afloat in Lake Michigan during a storm with concrete blocks attached to his feet. He eventually finished the construction and opened for business. But the cost of everything required to run a bakery made it impossible for him to stay in business. He went bankrupt.
The worst news came at the end of 1984. He was notified that his tax bill on the land he had sold was due. It was adjusted to compensate for the inflation. He owed $260,000. That is what happened to the value of the Argentine peso in just one year. The tax on land cost more than what he received for selling the damn house.
I visited Alberto in 2002. He was living with his new wife and three small children in rundown shack with 1500 square feet and one bathroom. There was hole in the wall leaving the bathroom open to the frigid air outside (it was August, which is winter in Argentina). Oh yes, he had no hot water. Try taking a shower with cold water when it is 40 degrees outside.
I pray we are not heading towards such an inflationary spike. But the Federal Government is lying to you about the actual inflation rate. You are being told it is only 5.3% right now. Yet this calculation excludes food and fuel. Do you think those are not worthy of consideration in determining the inflation rate? Take gas as a telling example. The price of gas has gone up roughly 68% in the last year. That ain’t 5.3%. You are seeing similar jump in food. Beef is up over 30%.
If you have an adjustable rate mortgage, get rid of it as soon as possible. I do not know how high the real rate of inflation will go, but I do know that Joe Biden and his team are totally incompetent. The unfettered spending by the Feds has sowed the seeds for an inflationary wave that will dwarf what we experienced in the 1970s. I encourage you younger folks to do some reading and some preparation. You do not want to wind up like my friend Alberto. It was tragic.
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