Saturday, July 23, 2011

Kicking the can down the road only makes the can bigger

In Argentina, the government fined nine economic research companies the peso equivalent of $122,000. Their crimes? They reported the actual inflation rate. The Argentine government annual wage hikes of 20 to 30 percent, but holds that the inflation rate is still in the nine percents.

Has this tactic slowed the actual inflation rate? We think not. The truth cannot be stopped, but it can be muffled for a while with tactics like these.

If you are starting or operating a business on Planet Earth, you should have a strategy for dealing with potential inflation. Buying futures, or stockpiling inventory, or locking in low interest rates, or some other plan would be prudent to at least consider.

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