Inflation Is Making Someone Rich… But It’s Not You

本站添加: 2026-05-12

[00:00:00]You've heard a hundred explanations for inflation, supply chains, the pandemic, government spending, gas prices, and now Ukraine. And all of these things are true.

[00:00:12]Well, to a point. But here is what no one tells you. While inflation was destroying your purchasing power, while your groceries cost 30% more, while your rent went up, while your savings quietly lost value, sitting in a bank account, someone was getting very rich and it wasn't an accident. Today, we are following the money. But before I move on, we need to agree on something basic.

[00:00:40]Inflation is not a natural disaster.

[00:00:43]It's not lightning. It doesn't happen to an economy the way a storm happens to a coastline. Inflation is the result of decisions, specific decisions made by specific people with, watch this, specific incentives. The official definition, which is prices raising over time, is technically accurate, but it's also the most sanitized version of the truth you'll ever hear. Here's the version they don't put in the textbooks.

[00:01:15]I know this because I wrote them.

[00:01:17]Inflation is a transfer mechanism. It takes value from people who hold cash and fixed incomes and it moves that value somewhere else. The question isn't whether the transfer is happening. The data is clear. It is. The question is where is it going? And let's start with the most documented least discussed part in the story. Corporate profit margins.

[00:01:47]During the inflation surge of 2021 through 2023, the US corporate profits hit record highs. Not just recovered from the pandemic, record highs. Now, stop and think just just for a second.

[00:02:00]Think about that for a second. in if inflation was purely a cost problem. If companies were simply passing on their own higher cost to consumers, their profits should have stayed roughly the same. Higher costs in, higher prices out, break even. But that's not what happened. Margins expanded. The Kansas City Federal Reserve, not really a reserve, published research showing that in 2021, over 50% of inflation in the noninancial corporate sector was driven by profit expansion, not cost, profit. What that means in plain English is this company used inflation as a cover. They had a legitimate reason to raise prices. Their costs didn't go up, but they raised prices more than their costs required and they kept the difference. Duh. There there's even a word in in as the economists use though they didn't use it.

[00:03:11]It was greedflation. And if I was a corporation, I wouldn't use that either.

[00:03:16]The companies that did this most aggressively were the ones with pricing power, meaning markets where you don't have many choices. Think about your grocery bill. The largest food companies in the United States control the vast majority of what's on the shelves. When they all raise prices at roughly the same time, you can't opt out. You have to eat. That's not a conspiracy. That's just leverage. And during inflation, leverage is everything. Now, here is where it gets more structural, more systematic, and honestly more depressing. There's a class of people for whom inflation is not a problem.

[00:04:03]It's a feature. They're called asset owners. An asset is anything that holds or increases value over time. real estate, stocks, commodities, farmland, infrastructure. Here's the critical thing to understand about these assets.

[00:04:21]During inflation, when the dollar loses value, which is what inflation means, asset priced in dollars goes up, not because they're worth more in any real sense, because the measuring stick just got shorter. If your house was worth, let's say, 400,000 before inflation and inflation runs at 8% for a year, your house might not be worth 432,000 on paper, you feel richer. But in real terms of what that money can actually buy your roughly where you started. Now, here's where the two worlds split. If you own a house, you're fine. Your net worth on paper went up. you kept your place. If you rent the house, your landlord raised your rent because the asset appreciated and they're just recalibrating the return and your wages almost certainly didn't go up 8%. At the same time across every asset class, people with stock portfolios, real estate, commodity explo explosion exposure, they had a natural inflation hedge built into the wealth. People with savings account, fixed income, hourly wages, they had no hedge. They were fully exposed. This is not an accident of the system. This is the system. The ownership of assets is extraordinary or extraordinarily concentrated here in the United States.

[00:06:01]The top 10% of households, wait for this, own approximately 93% of all stocks. The top 1% own more real estate wealth than the entire bottom combined or even the entire 50% bottom combined. So when inflation causes asset values to inflate, the gains flow almost entirely to people who were already wealthy. And the losses, well, they flow to almost entirely everyone else. Now, we need to talk about the Federal Reserve. The Fed's primary tool for fighting inflation is interest rate hikes. raise rates, borrowing money becomes more expensive, slow down the economy, reduce demand, prices stabilize. Well, that's the theory.

[00:06:53]Here's what actually happens. When rates go up, banks make more money. When the Federal Reserve raises the Federal Funds rate, banks can charge more on every loan they issue. Mortgages, car loans, businesses, credit cards, their revenue always goes up. But the interest they pay you on your savings account goes up just much much more slowly, if nothing at all. Sometimes barely at all. Banks borrow money from you. That's what a deposit is. You're lending money to the bank at low rates and they lend it back out at higher rates. The difference is called net interest margin if you care.

[00:07:38]During rate hike cycles, that margin expands dramatically. The biggest US banks posted record profits like high profits in 2022, 2023, the exact years when the Fed was aggressively raising rates to fight the inflation that was crushing you and I and everyone else.

[00:07:59]The medicine that was supposed to fix the problem was making a very specific set of institutions extraordinarily profitable. Follow the money. Now, let me show you something specific because I don't want this to be abstract. Walk into any major supermarket in America and look at the store brand products. The generic labels item there, it's like 20 30% cheaper than the brand the the brand name products. Now, look at who's making them. They're coming off of the same facilities, sometimes on the same production lines as the name brand products. The only difference is the label. But during inflation, something interesting happens. The name brand raises its prices, let's say 15%.

[00:08:50]The store brand raises its prices by 10%. Even though the manufacturer, who often produces both, collects on both ends. Meanwhile, the consumer, you and I, choosing between their preferred brand and their budget gets killed. And whoever chooses the same company often wins. The supermarket itself is doing something similar. They track inflation data obviously and they know that in an inflationary environment, consumers are less price sensitive on said item basis because everything is more expensive everywhere. So margins on certain high velocity items actually improve. This is not speculation. Grocery chain profit margins showed notable expansion during the inflation period. Some chains quietly had their best years in decades.

[00:09:44]You were subsidizing it one grocery run at a time. And now there's one more group we need to talk about. And this one operates mostly outside of public view. institutional investors, private equity, hedge fund, the people who manage money for people who already have a lot of it. During inflationary periods, sophisticated investors do something that most regular people can't easily do. They rotate. They move money out of cash and long-term dated bonds, which loses value during inflation and into real hard assets, real estate, infrastructure, energy, commodities, things that hold value or appreciate when the dollar weakens. Private equity firms made enormous moves into single family housing during and after the pandemic. When inflation drove home prices up, these institutions and their portfolios appreciated substantially. At the same time, wouldbe homeowners, firsttime buyers, younger families found themselves priced out not just by general inflation, but by competing against institutional capital that was using their cost of living as an investment thesis. I want to say clearly that because it's important, some of the same forces that make housing unaffordable for working and middle class Americans were the investment opportunity that made institutional investors significantly wealthier during the same period. That's not a conspiracy theory. It's documented in the financial findings, investor presentations, and earnings call. These companies weren't hiding it. They're they were proud of it. And it wasn't a smart trade. It was quasi illegal. The trade was made possible by conditions that were devastating for everyone who wasn't in it. So question, what do you do with this information? I'm not going to tell you that inflammation inflammation inflation is your fault for not investing sooner or trading. I'm going to tell you what actually matters.

[00:12:03]First, understand the game. Cash is the worst place during inflation. Cash loses value. Assets hold or gain. The people that are getting rich from inflation are asset owners. Then only long-term or however you need to do it to become in some form an asset owner. Index funds, bonds dur during high inflation periods, real estate investments. Well, it was Ibonds. These are accessible entry points that don't require being wealthy at at the start. Second is watch the margins, not just the prices. When you hear a company complaining about inflationary pressures while also reporting record profits, those two things don't add up. That is the signal.

[00:12:50]That's where pricing power is being exercised. Third, follow the money yourself. Corporate earning reports are public. Federal Reserve data is public.

[00:13:01]Bank profit disclosures are public. And the information that would make you angry, justifiably angry, is sitting in plain sight. It's just written in a language most people don't speak. That's why this channel exists. Let me bring you back to where we started. Inflation.

[00:13:21]It is a transfer mechanism. It takes value from people holding cash and fixed incomes and moves it somewhere else. Now you know where it went to corporations with pricing power who used the cover of inflation to expand their margins. To asset owners, those holding appreciated.

[00:13:42]Real estate increased. Other people's wages declined. to banks whose net interest margins widened every time the Fed raises rates to institutional investors who rotated into hard assets, including your potential home, before most people understood what was happening. None of this required conspiracy theories. It required a system, a system that rewards those who already have capital in the most invisible way possible, those who don't.

[00:14:12]Understanding the system is the first step to navigating it. And that's what I do here every week. We follow the money.

[00:14:21]If this video gave you something you didn't have before, there's a subscribe button. Or maybe share it with someone who needs to hear it. I read all comments. I promise I will read every single one of them. And until next week, follow the