EPS 41 - Inflation & Tariffs: What They Really Mean for You

From Jerry explores the real impact of rising prices, inflation, and tariffs—from simple t-shirt math to the historical bread lines of Weimar Germany. He explains how costs trickle down to consumers, why shortages fuel chaos, and how history shows us the dangers of runaway inflation. More, he offers practical advice for protecting your finances today: build an emergency fund, cut high-interest debt, and take control where you can—whether through smarter budgeting, side hustles, or planning ahead.

💬From Tee-shirts to bread Jerry gives a couple of examples to help drive home the point that inflation and tariffs can affect us in some unexpected ways. 

📊 Historical Snapshot:

Here’s a striking chart showing the price of bread in Berlin during the Weimar hyperinflation:

• Dec 1918 — 0.5 marks
• Dec 1921 — 4 marks
• Dec 1922 — 163 marks
• Aug 1923 — 69,000 marks
• Oct 1923 — 1.7 billion marks
• Nov 1923 — 201 billion marks

This is what happens when inflation spirals out of control.

(Image: Bread prices in Berlin, 1918–1923)

💬 Have a question or comment? Contact Jerry here

Transcript

SPEAKER_02: 0:00

The best things in life are free, but you can give them

SPEAKER_00: 0:42

Hello, hello, hello. to money from a queer perspective and you know recently i've been watching a lot of videos on tiktok and youtube and it's been a lot of of people complaining about the costs of everything rising prices and just generally how expensive everything is and a lot of that's just due to regular old everyday inflation right and we know basically that just means the cost of goods has just steadily increased it's gone up right i mean what the costs were back in the 50s, 60s, 70s, 80s are not what they are today, right? And just prices generally creep up. And it's due to a wide variety of factors, right? Just how expensive it gets sometimes to produce things. But recently, again, things have just seemed like they've really gotten out of control. And it kind of reminded me of a couple situations that happened in the past. And as they say, if you don't learn from uh... that past, you're doomed to repeat it. But I'm going to give you a couple of examples and it just helps to crystallize things when we're talking about inflation and even more esoteric things like tariffs, which a lot of people don't really understand. But let's just say in my first example that I decided to go into the t-shirt business and I can buy three t-shirts wholesale for$10. And then I turn around and sell them for 20 each. So I've made a$50 profit, you know, Three t-shirts, 60 bucks minus 10, there's my net profit, right? And again, this is a very simple example. But let's say that the wholesaler, their cost of goods has increased. And instead of selling me three t-shirts for$10, now these three t-shirts are going to cost me 13. So I in turn... I want, if I want to keep my profit at$50, I raise the price of my t-shirts as well, because ultimately I'm just passing this along to my end consumer, which is you. So now let's say a little, a little later on down the road that the fabric distributor is hit with a 50% tariff on imported goods, which he passes along to the wholesaler. And then he passes that along to me. And then I in turn pass that tariff, cost, tax, however you want to say it, onto my customers. So then you're ending up being the one who's paying the tariff. So how much are my t-shirts after each step? So let's just take it through a run through the numbers and let's just look. So again, when I initially start my t-shirt business, my three t-shirts cost me 10 bucks. I sell them for 20. So three times 20 is 60. minus the$10 that I pay to the wholesaler. So I net 50 bucks. So far, so good. Then the wholesaler raises his prices. So let's just say that again, he raises them up to three t-shirts,$13. To keep my profit at$50, I know that if I take my cost of goods,$13 plus the the amount of money that I need to make for whatever reasons, right? I want to net$50. So that's$63, 13 plus 50, 13 plus 50 is$63. So my, uh, the new price for my t-shirts, if I take$63 and divided by three, that's$21. And my profit again is$3, uh, times or three t-shirts times$21 minus 13 cost of goods. There's my$50. Now let's say again that the distributor has increased his prices by 50%, a 50% tariff. Then what happens? So now the costs really jump, right? So we have my$13 t-shirt that I now have to bump up or the wholesaler has his three t-shirts that he sells to$13 and Now he has to multiply that by one and a half times. That's$19 and 50 cents for those same three t-shirts to keep my profit at$50. Then the revenue has to be$19 and 50 cents, right? Plus the$50 that I need to make. That means that's a total of$69 and 50 cents. So my new price per t-shirt is is$69.50 divided by three is$23 and some change. Let's just say$23 and I'm going to round it up to 17 cents. So I've got my... Three t-shirts times$23.17 minus the$19.50. So more or less, again, keeps me at$50. So originally, again, I was selling t-shirts for$20. After the wholesaler increased his price, that means I had to raise my price to$21. And then after the 50% tariff, then my t-shirts are now selling for$23.17. So I could absorb these costs somewhere along the line. The wholesaler could have absorbed the cost somewhere down the line and so could have the original distributor. But in business, no one really does that or they only do it for a limited amount of time. They always pass those costs on and that's what happened in this scenario. And you can see how this affected the price. Now, as the consumer, if I'm buying a t-shirt for$20 and and I can afford that, then fine. Then when the price jumps up to$21, that's not too bad either. And I figure, well, you know, prices go up. Okay. So it's just a dollar more. So I'll buy it for$21. Then when the tariffs hit later on, I go back to buy some more t-shirts and I find out that the price has now gone from$20 to$21. And now it's$23 and 17 cents, which is an odd amount. So I could, You know, if I'm the guy who's on the retailer side who's selling these T-shirts to the consumer, I may even raise my price up to$24. Now, that just depends, right? If I feel like I can get away with it, if the customers are still going to pay for it, then I will. But I take a chance because are people going to be able to afford$24 T-shirts if Is it worth it to them? And am I making a mistake in raising prices that high in such a short order? Because who knows what this timeframe really represents, right? This could be probably within six months. It might be a year, but whatever it is, it just goes to show you that. These costs ultimately get passed along to the consumer, and ultimately it's the consumer who has to decide whether they can afford to continue to pay for it or they cannot. And the thing is with the consumer, you don't have anyone to pass these costs along to. You don't have anyone else to do that. You can go to your employer and you can say, hey, you know, can I get a raise? Or maybe you'll be lucky and get a promotion. That's a good way to increase your income and be able to afford some of the things that you want, but you may not. So in that case, you may just simply do without, right? Or it may become longer between times that you buy these things because where you used to buy them on a regular basis, now it's become a more of a luxury item. And you decide if I was buying them, let's just say every month. Now I decide to buy one every other month. Or again, that spacing becomes further and further apart. Or it may become, I just can't afford these at all and I'm not going to buy any more t-shirts for a while until the price comes down or I can afford it. Here's another example in real life terms of how some of this actually happened as well. So let's say in the early 1900s in Weimar, Germany, I'm a baker and I sell 100 loaves of bread a day to 100 people. And I buy the exact amount of ingredients to sell my 100 loaves of bread to 100 people. Now, let's say due to things out of my control, government rationing, shortages on the cost of goods, I can only find enough ingredients to make 50 loaves of bread. So that means, in turn, I can only sell my 50 loaves to 50 people. However, I still have 50 people who still want bread. And that's what begins to happen when I then go to open my shop one day and I see that there's a line of people queued up outside of my shop. And they started queuing up at 4 a.m. to buy bread when I opened my doors at 7. So I've got now 50 people outside that are ready to buy my bread. And I only have 50 loaves of bread for the entire day. So I could theoretically sell out, let's say, in an hour. Not only do I have no more bread I can sell to anybody, but I also have 50 disappointed people, right, who walk away with no bread. Now, let's just say that this has happened to all the bakers in town. And so they're all experiencing the same situation. So the next time, let's say, I open my door or, you know, I go to my bakery, there's 200 people standing outside my bakery waiting. trying to buy bread for me. So again, if I only have those 50 loaves, that's going to cause a lot of problems because again, I just simply don't have that much bread to go around and neither do the other bakers in town. And if bread is a staple of life, then people are really going to be upset that they cannot buy bread. It's just simply not available. So again, That's a classic example of scarcity that is caused by shortages in the supply chain. And in economics or in history, you know, this is just simply a supply shortage. There just isn't enough bread in my supply to meet the demand. Even though people are willing and able to pay, I just don't have it. You could offer me, you know, a zillion dollars. But I don't have any bread to sell you. And again, oftentimes, too, what then happens is the government will step in and they will ration bread. And instead of, you know, prices alone determining who gets bread, you know, for anybody who lines up first come first serve, which is, you know, common. But then when rationing takes place, then everybody is allocated a certain amount and they can only buy a certain amount. And that's more of a quote-unquote fair distribution of commodities or whatever goods people are trying to buy. So there's a rationing failure that often happens because there's excess demand. And because supply is cut in half, in my example, and the demand far exceeds what can be provided– again, 200 people trying to buy– 50 loaves of bread, not only does it create those, again, massively long lines and lots of frustration that, again, people then become super angry. And in Weimar, Germany, this was the government prior to the Nazi government in the 30s that took over. But again, in this early 1900s or 1920s, and in the early 30s, then prices really went up so fast due to regulation and fear that bakeries and shops, you know, they ended up with all these desperate people, you know, trying to buy whatever they can before the next price increase. So the situation then in economic terms, again, is a shortage where you have excess demand over supply that again, leads to rationing and long queues. And so what happened is there were, after World War I, Germany faced these huge crippling reparations and they had a loss of farmland and raw materials and the government imposed rationing. Farmers often withheld grain or sold it back or sold it in the black market. And so bakers, like in my example, could only bake a fraction of what they normally produced. So demand stayed high because everyone still wanted bread, but supply collapsed. There wasn't enough wheat, flour or coal for the ovens. And again, huge lines outside of bakeries with people waiting hours, hoping to get just a single loaf of bread. So the shortage of loan could have been, uh, uh, The shortage alone would have been bad enough. But then the real explosion came when the government began printing money to pay these reparations and fund subsidies, which means prices soared astronomically. So if, again, in my bread example, prices change daily, sometimes hourly, just to cover the cost. And because the prices became so hyperinflated, Customers would literally need wheelbarrows of Marks to buy bread or a single item. And people's psychology shifted. They began buying bread immediately. if they had the money because they knew tomorrow it would cost far more. They couldn't wait a week or what have you to buy bread. They had to go as soon as the money hit their hand because demand became frantic and it worsened the shortage. And rationing then also became completely ineffective. And when the government tried to cap the price of bread, the bakers then often couldn't even afford to produce bread at those rates. So supply shrank even further. So this is, again, a textbook example of when excess demand meets collapsing supply. And it was one of the root causes where ordinary Germans, they faced this during Weimar's hyperinflation crisis. And it wasn't just a bread line, you know, because bread really is what we're talking about in terms of how people fed themselves. This is how hunger happens. And it symbolized how an economy can break down when money loses its value and goods are scarce. So just to put it into a little bit more of a perspective, the price of bread in Berlin, in German marks, in December of 1918 was half a mark, 0.5. In December of 21, a loaf of bread was four marks. December 1922, it was 163. By January 1923, it was 250 marks. In March of 1923, 463. June 1923, 1,465. And you can see how it's speeding up, right? In July 1925, a single loaf of bread cost 3,465 marks. August 1923, 69,000. By September of 23, 1,512,000 marks. In October 1923, 1.7,430,000 marks. And by December of 1923, it was$201 billion. And that's just a good example of just showing you how the price of goods can just get completely blown out all out of proportion. And what happened with a lot of people, because you're like, how can somebody afford, you know,$2 billion, 2 billion marks, you know, for a single loaf of bread? I mean, where do you get that kind of money from? Because again, that's just an astronomical amount of money. But what was happening was the government was printing money like crazy. They were printing money faster than people could even spend it. And because money then became practically worthless, people were using it to line their houses as wallpaper, insulation. Kids were playing with it. It was like, you know, monopoly money. It didn't really have any value anymore. I mean, how do you put into perspective... you know,$2 billion with the marks to buy one thing, right? That means that one mark that you have, it's meaningless, right? So they had to print these enormous bills to give people the ability, you know, to buy these things with these huge numbers. But again, that's when these currencies, again, become completely useless. You know, families then, instead of having to go, you know, buy$2 billion, go to the store, you know, go to the bakery with$2 billion of marks, you know, they would barter instead. Their savings were wiped out because, again, what they had is not what they have anymore. And people just used, again, that money for whatever the purpose they wanted because it just was practically meaningless. So that's an example of runaway inflation. And that in turn produces chaos and a loss of trust in the money. So if you can't even bother going to the bank to worry about withdrawing money, because again, if you thought you had, you know, a thousand dollars in the bank, that thousand dollars was actually worth pennies. Well, I'm using pennies in our terms, but it just really wasn't worth anything. So what you really have to do in, as it relates to you is you, You have to prioritize your money, right? You need to start by making sure that you're protecting yourself by building an emergency fund. And again, that's just a pyramid of money, a priority money. You build at least three to six months worth of living expenses to fall back on. When times get tough, you lose your job. You need a cash cushion. you have it because you've been planning and you've been saving and you've been working towards making sure that you're not left in the cold and that you don't lose your house because you can't afford to pay your rent, what have you. Now, as I say all that, you know, I know that in this case, there's a lot of things that are difficult to do. So what I mean by that is is a lot of people feel sort of trapped in their situation because they've signed a lease or they've got a family and they just can't pick up and change your situation in a heartbeat, right? But if you're a single person or even if you're, you know, coupled up, sometimes you then have to make these difficult decisions because sometimes if you don't have control over the price of goods which mostly you don't and you don't have the ability to pass these costs on to anybody right so the only thing you can do is take control of your own financial situation so if you're single right and you um say if i'm gonna save or if i'm gonna pay down my debt because you want to you know build up your cash cushion First, do you want to pay down your debt next? And you want to save for everything else after that, like retirement. So if let's say I have some credit card debt and let's just say, you know, you got a 19% interest rate or a 25% interest rate, 30%, whatever it is. All I'm saying is those high interest rates are what you're paying to these companies for the luxury of retirement. buying that purse, those shoes, what have you on credit, right? So in essence, if you bought those shoes on sale because of those high interest rates, it ate up anything you would have ever saved on those shoes. So you're paying these companies massive amounts of money. You're just giving them essentially free money. I mean, that interest, you can just obviously Kiss it goodbye. You might as well just throw that money that you're paying them in the gutter or on the fire because that's about as much as it's, you know, as much as good as it do. It's not doing you any good. That's what I'm saying. So you really have to keep your credit card debt, any auto loan debt, etc., to a bare bones minimum. You don't want to borrow if you don't have to borrow. Now, you know, I think some financial advisors will say, well, there's, you know, good debt, you know, like if you own a home or there's good debt, if you take on student loan debt. Hmm. Well, I would say probably not because yeah, it's nice to own a home. Right. And the good thing about buying a home is that it's an asset. It will, if you buy in the right areas, you know, go up in value. Right.

UNKNOWN: 23:05

And,

SPEAKER_00: 23:05

That car that you buy on credit is not going to go up in value at all. It's going to decrease in value. So you've just wasted essentially a lot of money on a decreasing asset. The best you could do is just if you have to buy a car on credit, right? You buy the car that's most affordable and get you the best ride possible. you know, that fits your lifestyle. And then you pay it off as quickly as possible. So you don't have that debt hanging over your head. Same thing with the credit cards. You pay those off as fast as you can. And you start when you're looking at paying down your debt with the highest interest rates first, because again, that's the largest amount of money that's just being thrown out the window. There's, you know, a lot, other strategies as well. I think I've talked about this in the past, like the debt snowball where you pay off the smallest balances first, even though maybe the interest rates are low, but it gives you sort of that psychological good feeling that, Oh, I've made some progress and I paid one credit credit card off. Let's go to the next. So you put that same amount of money to the next credit card and you pay that off and so on and so on. Depends on, I mean, obviously cards you have, et cetera, but I mean, you get the idea. But in the ideal situation, you pay off your highest credit card debt first with the highest interest rate. And that's because, again, you're saving more money because all that interest is just money you're kissing goodbye. It doesn't do you any good. It does nothing for you. And you're just giving this money to these credit card companies so they can just become even wealthier than they already are. So... Another round for another day. But all I'm saying is you need to pay yourself first, build up that cash cushion, and pay off your debt. I know that's really preachy, but sometimes financial advisors, they don't want to give you bad news, but they are often the bearer of bad news. And it all depends on how they deliver it to you, right? I mean, if a doctor's going to tell you you've got cancer, hopefully they're not just going to come out and say, oh, tap on the shoulder. You've got incurable cancer. So, sorry. I mean, that's so cold. And you really don't want to be given bad news like that. I mean, I won't even go into. I've received bad news before from people who were trying to tell me, you know, someone in my family died in the most cold, awful way possible. I'm literally, again, tapping on the shoulder. That's how I found out one time someone died. Anyway. Sorry about that. But again, what I'm saying is that financial advisor wants to help you. Hopefully that financial advisor wants to deliver to you a plan that is designed to help you move through this situation. They want to give you the information in the best possible way so you don't run away from it, but they want to give you these cold, hard facts that sometimes you don't want to face yourself, but it is the reality. With the plan, you can start to tackle it. And that is usually the whole ball of wax of what a financial plan is designed to do. It's a whole analysis of your world, giving you the ins and outs, the goods, the bad of everything, and then a plan to help you move forward, especially if you feel like you cannot do it on your own. There's lots of tools that are out there for budgeting, for saving, for investing, and on and on and on. But I think I've said this many times. Seek competent advice and get someone who's really there in your corner for you who can help you really develop a realistic plan for you. And they can help when things don't always turn out like they planned. You can adjust, right? And you can then maneuver your plan accordingly. to suit the situation. You know, they say that a plane doesn't fly from A to B in a straight line, right? There's course adjustments that happen all the time on that route. And that's how you have to think about your financial plan as well. You're going to make course corrections over the course of time. It just doesn't flow as easily as it does on paper. But the fact is that you are making progress. You are doing the right things for yourself. And you're preparing yourself for the world that it's going to throw stuff and obstacles in your way. And in the last podcast, I talked about procrastination. That there are definitely perils for you ignoring things and letting time slip through your fingers. So you want to take advantage of what you have today. Improve your situation to the greatest degree. And if you are single, like I said, maybe... if you prefer living alone, you just cannot live alone right now. So you take on a roommate, you split the cost of everything. If you're coupled up, maybe again, you guys have to decide as soon as this lease is up, we're moving to a less expensive place and you make all those kinds of decisions. A lot of us just do that intuitively, right? Because we're like, our paycheck is only going to go so far. So we have to make some of these choices. Sometimes the ones we don't like, um, but in favor of ones that are going to benefit us. So yeah, maybe we do take one of our spare rooms and we rent it out. That's a huge win, right? Sometimes we need to go get a second job. That's again, a possibility, especially if you have a credit card debt and your budget doesn't really allow you to pay more than you are. Go get a gig, right? Drive for Uber, DoorDash. You pizzas, whatever it is. You know, lots of people have second, third jobs. I hear that all the time. I knew a guy that I worked with and he started his own window cleaning business in college. And when I met him, he was probably in his fifties and he He was still window cleaning, even though he had a wife, a home, kids, a whole nine yards and a steady job. But he still did his window cleaning business because he had customers that he had a client list that had built up over the years. And he continued to do that. And I think he told me he could, you know, clean windows and I don't know, like an hour or something, including the screens. But he also branched out into blinds as well. And I asked him, I said, well, when you retire, you know, what are your plans? He's like, well, I originally, I thought, you know, I was only going to be doing window cleaning for a short period of time, you know, just to get me through college, but then it became lucrative for me and I just couldn't give it up. And then over time I built, you know, a reputation and I had a client base and, I just found that it was one of those things I actually enjoyed and I was able to branch out and do other things and started making me money. Now, something that I thought would only be a side hustle, I foresee myself quitting my main job and just doing that. So, hey, anything can happen if you put your mind to it and if that's a worthwhile activity for you. Lots of hobbies can turn into something lucrative for you. You just don't know. Again, my point being that you have to do these things sometimes despite your unwillingness sometimes to do them if you didn't have to. I don't want to take on a roommate if I don't have to. I don't want to take a second job if I don't have to. That is all true. But do you then face the consequences of those decisions? Yes, somehow, someway. Not to again be preachy. I hate being preachy. I know this sounds preachy, but all I'm trying to say is you need to prepare yourself because situations like Weimar, Germany can happen without you having any part in it. The tariffs that are being placed on these businesses today are astronomically high. There's usually always some tariff here and there, but usually it's more targeted and specific. These are just global tariffs. All goods are being taxed at this and very high rates. And businesses, from what I've read recently, they've saturated themselves with as much tariffs as they can stomach on their own. And they are now passing and going to be passing this all along to the consumers. And like I said at the very beginning, people are starting to see it. They're really starting to feel it. And it's becoming problematic and will most likely continue to be even more problematic. So set yourself up in a positive way because you need to make sure that your situation is well under control because you can control your situation to a large degree, right? You can't control what's going to happen with your employer. Who knows? They're here today, gone tomorrow, right? But if you have a window cleaning business, right? then you definitely have control over that, right? Ideally, I always say that to people all the time too. You know, you should be self-employed because that's one of the best ways, in my opinion, that you're able to take control of your financial future because you have total control over what you do with that business. Anyway. A lot of stuff that I've said to you today. I didn't mean to take up so much of your time. I appreciate you listening. I hope you got some value from it. I'm going to post even a little bit more stuff on. I'm going to put it on my blog, which is new. There's a couple of things out there. I need to add more to it. My whole website and my newsletter and my blog is all work in progress for me. So I'm trying to get everything up and moving forward. It's, a benefit to me because I enjoy it and it's a benefit hopefully to you because it's useful and again maybe you find a little bit of entertainment out of it as well so that's really my spiel for today and I will talk to you next time