Let's Talk About Inflation

Welcome back to Dvorkin on Debt, the podcast that empowers you with real solutions to life's biggest money challenges. 

Today we are going to be talking about our economy. How much is inflation playing into the US tariff policy? 

The first thing is you have to understand what's happening out there.

So let's just say a 2x4, a piece of lumber. When we sell it to a foreign country, they may charge us 20% extra. But when they sell it to us, we may charge them 5% tariff. That's not necessarily fair, right? If they charge us 20%, we're going to charge them 20%.

And if those countries don't comply and the America the America is a very powerful consumer-driven economy and America if they stop buying certain products they're that's going to impact negatively on a lot of different countries. Tariffs will increase prices, right? 

There's no question. And if we have to charge more for goods with the hope of that we can replace those goods with goods that are made here. I don't think that's a reality because a lot of our goods are made with expensive labor here versus in other countries that may be paying $2 an hour, $3 an hour to an employee versus $20 an hour here. Now, we can always say there's more automation here and we can replace the reduce the labor and that may be true in certain circumstances, but things will definitely go up in price. I don't think we've seen the full impact of tariffs yet. We are extremely far from the finish line right now. We are really at the beginning of the race. But I do believe that there needs to be a sense of fairness in world trade and certainly America has been taken advantage of. Um and that needs to change now, right? So, given all this low confidence inflation and trade tensions, what can everyday people do to protect themselves financially?

Stop spending. I mean, that's the first thing. I mean, people really, really need to really make sure that when they go and buy things, that it's the right things they're buying that they're absolutely necessary. People need to start thinking about what they're spending their money on, try to increase their savings if they can. And right now with the market, the stock market being so shaky, it's a little scary, but consistency.

Continually dollar cost averaging your investments is a great method to become wealthy over time. Doesn't happen overnight, but I can tell you that compounding interest, the theory of compounding interest pays immense dividends over the course of the lifetime. And there's always, you know, certain people in our society, they say, "How are they so rich?" Warren Buffett. Well, be he's wealthy because he understands probably be better than most of us the concept of compounding interest and he's been investing for 70 years. And if you do anything for 70 years, eventually you get pretty good at it. But I would hope so. You would hope so. 

But thank you for breaking all of that down, Howard. 

Uh, appreciate it and I can't wait to talk to you next week about another topic. For everyone watching, please visit debt.com for free tools and resources, whatever budgeting tools you need. It's all available for free, knowledge for free, all on our website. Thank you. Thanks so much.