In this week’s column, I want you to pause and consider your single biggest financial obstacle. Is it income taxes? Running out of money before the end of the month? Or how about inflation?
Surely not inflation, right? After all, it’s been under control for a couple of decades—hasn’t it?
Let’s take a closer look. In my view, one of the most formidable obstacles we all face in long-term financial planning is inflation. So let’s explore what inflation actually is—and what causes it.
Most of us were taught in school that inflation is linked to the Law of Supply and Demand. If product supply drops or demand rises, prices go up—therefore, inflation. But that’s not really accurate.
A better definition is this:
“Inflation is caused by an increase in the supply of money without a corresponding increase in goods or services.”
A Simple Hamburger Lesson
Here’s an example to help illustrate that.
Suppose I locked the doors at your office and asked everyone to work for 12 hours without a break. Let’s also assume that when each person arrived, they had no money, so I issued each of them a single $1 bill at the door.
Twelve hours later, everyone is tired—and hungry.
Now, I walk into the office with a single hamburger. Assuming no one can pool their money, what’s the most I could sell that hamburger for? The answer is $1—because that’s the maximum amount anyone has.
Now let’s rewind. Before I come in with the hamburger, Uncle Sam walks in and takes everyone’s dollar, cuts it in half, stamps both halves, and announces, “You now have two dollars instead of one!”
Now what’s the most I can sell the hamburger for? That’s right—two dollars.
Why Prices Must Rise When Money Supply Grows
Because we trust our government and accept its currency, when more money is printed without a corresponding increase in goods or services, prices must rise. So let me repeat the definition:
“Inflation is an increase in the supply of money without a corresponding increase in goods or services (or hamburgers) on which to spend that money.”
Will Future Inflation Be Worse Than the Past?
The real question now becomes:
Will the United States experience more inflation in the next 20 years than it did in the past 20?
A Look at U.S. Federal Debt Growth
To explore that, let’s examine the history of U.S. federal debt:
– In 1969, the national debt was $354 billion.
– It took 17 years (until 1986) to cross $2 trillion.
– By 1992, it reached $4 trillion.
– In 2002, it climbed to $6 trillion.
– Then from 2002 to 2009—just 7 years—it doubled to $12 trillion.
– From 2009 to 2016, it grew to $19.5 trillion, an average of over $1 trillion added per year.
– From 2017 to Q1 2025, debt climbed from $19.5 trillion to approximately $36.2 trillion— adding about $2 trillion per year.
That’s staggering growth.
Debt and Deficits: The Road to Inflation
And unfortunately, a country can only spend more than it earns in two ways:
1. Borrow the money, or
2. Print the money.
Both paths lead to the same destination: inflation.
What It Means for Your Future
So, are we likely to face inflation in the long-term future? With annual deficits of $580 billion and a federal debt ballooning past $20 trillion, I believe the answer is a resounding yes.
In next week’s column, we’ll look at how inflation specifically affects your personal financial planning—and what you can do about it.
💬 Call-to-Action
👉 Inflation is the invisible threat to your savings.
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