Letter Re: Purchasing Power

HJL:
That was a great article series. I personally work to create things with my knowledge, skill, and labor that will ride with inflation. Since I do it myself, my labor goes into the thing that rides with inflation without being taxed. I’ll also note that insurance companies watch very carefully what they will have to pay to fix your car or your house and adjust rates accordingly. My income is a percentage of that premium. My income is therefore indexed. The other side of the coin is that when business activity drops by half, like it did in contracting in 2008, premiums drop by half and I have to give back compensation long since spent. Oh the joy! Any merchant type activity gets you indexed income with vigilance.
No plan is foolproof. So there is no perfect solution, but you have to figure out how to index and lawfully avoid the taxes. JWR’s Tools for Survival figures into this. When I build a project, probably 70% of the hardware comes from current inventory. I grimace when I replace the used items, as the prices have risen, but it represents a hedge. Also, in acquiring the tools, you are schooled to learn how to use them. Up goes the value of your property as you practice. Down goes the cost to live, assuming your project made it less expensive or more convenient at your property. Likewise, my stored fuel keeps me from anxiety along with having to run down to the gas station and pay any price when there is a fire in Alabama disabling the pipeline that serves Atlanta. For the record, I did go top off but only after judging that the price was reasonable. Up goes your confidence when you embrace the capabilities you command that are so essential to navigating this very difficult world. – RV

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