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| Inflation helps those that are leveraged BEFORE the inflation happened
Not all inputs are tied to inflation
Some costs are fixed overhead [land, machinery payment with 3 yr. left, storage bins, tile, irrigation, bldgs. livestock etc.
Inflation makes it easier to pay that debt- totalstuff you sellminuse cost is net, should be more, than the variable and fixed inputs before inflation
It is your decision if you want to spend all your net increase on shiny new paint or pay the fixed over head debt
Almost like having the neighbour and his farm given to him for nothing and you have to buy and pay the mortgage
Inflation might make your farm a little easier to pay the martgage. Maybe your neighbour never had much debt and don't know how to manage that debt, when input costs go up and bank acct. is not enough. Now you the one with experience in money management
You just fooling yourself, if you try to buy shiny paint, when the older stuff, is still working, just fine and ignore the fixed over head debt
That why some say inflation don't help them any. They have poor money management skills, compared to your experience
The danger is leveragingAFTER inflation hits, seems like no matter what you do, unless inflation continues. It almost always comes to an end [lol]
You pay twice the former price for land and now have twice as big a mortgage, plus all the other inflated inputs
Inflated inputs alone should never be a problem
The problem or advantage is when you decide to leverage or not and what happens, once the decision is made
Many folks have been just plain lucky that their 300/acre land is/was worth close to that amount in yearly rent
Of course they had to make the decision to buy the land and take the risk. Figure out how to make it work
Maybe they had the 300/acre already put aside, in cash. They did something right, and made a great decision, buying what nobody else wanted
Nobody said for sure, that inflation would ever come, when you think it might, or keep on going, as if there is no end
Some don't think the risk is worth it and sometimes it ain't
That's why we have to be business managers, down on the farm, and don't live on a weekly paycheck
Driving the tractor or combine is the easy part. The rest takes management and risk | |
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Inflation and the stock market
