Rising Tide

Greg Spears

YOU CAN ADD ANOTHER item to the list of things in short supply: Up here in Maine, used boats are hard to find.

“You can’t buy a house, a car or a boat this summer,” said Sean, manager of the local lobster dock in Bremen, Maine. Luckily, you can still buy lobsters from Sean, though they’re mighty pricey.

Every afternoon, scuffed-up boats with names like Chomper and Sandollar glide up to the dock to winch their catch up to Sean’s lobster tanks. On a recent July day, hard-shell lobsters fetched $10.95 a pound and soft-shells, which have less meat inside, $9.95.

The same lobsters cost $6 and $5 last summer. Back then, China wasn’t buying, and neither were restaurants. Now everyone wants Maine lobsters, Sean said, including Canadian canning houses that let their inventories run down.

To an economist, it looks like too many dollars chasing too few goods—the classic recipe for inflation. At a conference organized by University of Pennsylvania’s Wharton School in April, Prof. Jeremy Siegel noted that M2 money supply—ready money, including cash and deposits in checking accounts, savings accounts, certificates of deposit and money market funds—jumped 25% in less than a year. It has never expanded by that much before, Siegel said, not even during the difficult days of the Second World War.

Siegel predicted a burst of inflation for the next three or four years. “When will it start?” someone asked. Right away, Siegel answered.

After the conference, I bought shares in an inflation-protected Treasury bond fund. Who knows what will happen, but I hope to ride inflation like a surfer on the crest of a wave. Too bad I didn’t think of the really smart inflation play—to buy a used boat in Maine last summer.

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