Marketplaces as a Hedge against Inflation

It took a few hundred years for the United States to accumulate a $10 trillion debt. That debt has funded all the wars the United States has participated in, including the Iraq war.

In the next five years, this debt will most likely double, as our gluttonous government relies on a $2 trillion annual deficit to jump-start the economy and fund social programs. Inertia has set in, and nothing will stop it.

In addition, the Federal Reserve and its overseas counterparts are printing money aggressively to support the global financial system and jump-start economies. There are no indications that central bankers will raise interest rates anytime soon.

Do not suffer the full effect when the consequences of this excessive money supply are felt. Protect yourself against inflation. The costs of protection are minimal and make these hedge measures worthy of implementation or, at a minimum, some consideration.

Some inflation pundits are recommending buying agricultural products, buying commodities, buying real estate, buying stock, and selling long bonds. These are all fine inflation hedges.

Another area that could thrive during a period of high inflation is the hard-good online marketplaces such as Amazon, Craigslist, eBay, and others. The reasons supporting their potential success are as follows:

1. Traditional retailers will have a tougher time raising prices quickly as compared to their technology-skilled competitors.
2. As the price of hard goods and the volatility of the market increase, activity on the online exchanges should increase.
3. Arbitrage opportunities will abound on the online space to the benefit of the marketplaces’ owners. Traditional retailers will be arbitraged to their detriment.
4. Online supplies of used merchandise should increase as prices increase, as sellers trade hard goods for hard goods.

Google Search might also benefit as a hard-good and price-discovery tool.

Do you know of any other non-obvious inflation beneficiaries I should be investigating? Let me know.