Stagflation Looms: Why Asset Ownership Is Now Essential

For the first time in 30 years, the Federal Reserve is contemplating interest rate cuts while core PCE inflation remains elevated above 2.9%. This represents a dramatic departure from historical central banking norms, where policymakers traditionally waited for inflation to fall convincingly before turning dovish. The current approach signals desperation to prevent deeper economic pain, even at the risk of fueling persistent inflation. As The Kobeissi Letter warns, this environment creates a perfect storm for cash holders, where the silent thief of inflation systematically erodes future spending power.

The implications of this policy shift are profound. When real interest rates drop below inflation levels, the traditional safe havens of government bonds and cash savings become wealth-destroying assets. This dynamic creates what value investor Mike Alfred describes as the fundamental divide between wealth creation methods: “Almost nobody gets rich with a salary.” The richest individuals globally are consistently entrepreneurs and investors who understand that asset ownership, not cash accumulation, drives long-term wealth preservation and growth.

Simultaneously, the U.S. labor market shows concerning signs of deterioration. Layoff announcements from blue-chip corporations and Silicon Valley companies are accumulating, while job openings decline and help-wanted signs become less common. This erosion of employment stability means that relying solely on cash reserves may prove insufficient during economic downturns. Asset ownership provides the necessary buffer when traditional income streams become uncertain.

Compounding these challenges, the United States continues deficit spending at over $2 trillion annually. While massive government spending once promised investment and productivity gains, it now primarily serves as the cost of maintaining basic economic operations. This level of deficit spending points toward future tax increases, increased government borrowing, and potential currency devaluation of the U.S. Dollar. As The Kobeissi Letter emphasizes, investors who own productive assets—from businesses and commodities to uncorrelated digital stores of value—position themselves best as fiat currency’s purchasing power continues to erode.

The suspension of critical jobs reports during government shutdowns creates additional market uncertainty, leaving policymakers, analysts, and investors navigating economic storms without reliable compasses. When essential economic signals go offline, markets become choppier and planning becomes nearly impossible. This environment of heightened uncertainty benefits short-term traders but creates hell for long-term planners seeking stability.

Meanwhile, the dreaded term “stagflation” has returned to economic discourse, describing an environment where economic growth stutters while purchasing power slides. With the Federal Reserve potentially implementing two more rate cuts in 2025, this toxic combination becomes particularly poisonous for savers. Real interest rates drop further below inflation, eliminating the incentive to hold supposedly “safe” government securities. In these conditions, those who own assets aren’t merely staying ahead—they’re setting the economic pace while others risk being left behind.

As former President Donald Trump discusses potential stimulus checks and the economic rulebook gets rewritten in real time, we’re witnessing an unprecedented convergence of government support, persistent inflation, and historic technological revolutions. This new economic era demands a fundamental shift in wealth preservation strategies. The traditional approach of cash savings and government bonds no longer provides adequate protection against systemic risks.

Financial commentators consistently return to the same conclusion: asset ownership has transitioned from being a strategic hedge to an essential lifeline. From productive businesses and commodities to scarce digital assets like Bitcoin, owning tangible value represents the most reliable defense against currency devaluation and economic volatility. As The Kobeissi Letter succinctly states, the choice has never been clearer: “own assets or be left behind.” In this rapidly evolving economic landscape, the time to secure hard, productive, and scarce assets is now more critical than ever.