Maybe the people who think the rate of inflation is +15% annually don't have any idea what they're talking about.
1) The money supply (M3) has doubled in the last 5 years
Is that based on supply or demand? Is all that money staying in the US? Do you know the components of M3? Many of the components have nothing to do with the supply of money available for spending. Besides, the Fed has used interest rates, rather than money supply, to spearhead monetary policy for about 25 years now.
2) gasoline has more than doubled in the last 5 years
3) food prices have more than doubled in the last 5 years
First of all overall food prices haven't doubled over the past five years. That's nonsense. As long as the available money supply doesn't increase faster than our GDP growth there will not be inflation. People who spend more for gas and food will spend less on other things. As Friedman said: Inflation is always and everywhere a monetary phenomenon. Inflation is caused by too much money chasing after too few goods.
I can confidently say that prices will probably be up at least another 100% 5 years from now in 2012.
Based on what, you're feelings? I suppose you also know where interest rates are going. LOL
You don’t say what’s in your portfolio, but unless it’s energy and other commodities, you won’t be beating inflation for the next 5 years either.
Corporate earnings are at record highs but the only way to beat inflation is with commodities? How much food do you keep in your survival shelter?
And good luck trying for another 100% appreciation on your house by 2012 too.
If inflation increases 100% over the next five years so will value of his home. Doesn't inflation increase the value of tangible assets? Or is our imminent economic collapse going to make all assets valueless?
#1 (question on M3). Your questions indicate you don’t know what M3 is. Would take to long to explain, go read up on it.
#2 (food prices). Your implied definition of inflation is actually correct, which is why I’m surprised you missed the point. Inflation is in fact the growth of money over and above the growth of goods and services (GDP). Now, if we know M3 is growing at GREATER than 10%, but GDP is quoted as 2-3%, then we know by definition that there is inflation.
#3 (prices up another 100% in 5 years) - see comments on #2. All that money that is being printed and is currently being held outside the US will come home (examples: China sinking $3billion into hedge funds) and will drive up prices.
#4 (housing) - housing is deteriorating because the “monthly payment consumer” is not able to make the payments on his ARM loan. Defaults are increasing drastically - read up on the 2 Bear Stearns CDO hedge funds that just went to $0 this week. They held mortgage derivatives