During my stint in Congress as a staffer, I witnessed many examples of integrity. I also witnessed prolific lying, the depravity of which had no bottom.

With the November 8 midterm elections only days away, I’m reminded of how politicians weaponize the ignorance of voters. If you make investment decisions based on political falsehoods, you’ll lose money.

Today, let’s focus on inflation. There’s nothing like an election year to bring out the lies from politicians and their media flunkies. And few topics generate more demagoguery than inflation.

Below, I explain how both Democrats and Republicans are lying to you about inflation. I also steer you toward an investment opportunity that’s inflation resistant.

What the politicians get wrong…

As inflation remains elevated and the Federal Reserve hikes interest rates to combat it, Democrats point the finger at supply chain disruptions due to the coronavirus pandemic and the Russia-Ukraine war. There’s considerable merit to these arguments.

However, the party’s left-wing also blames large corporations and monopolies, for taking advantage of inflation by jacking up prices. They argue that a lack of competition has allowed these companies, especially in the energy sector, to gouge consumers. House Democrats have gone so far as to accuse oil companies of “ripping off the American people.”

But the fact is, profit-motivated companies in our free market system didn’t suddenly become more profit-motivated during the pandemic and Russia-Ukraine war, nor were they more altruistic before these black swan events.

Oil companies, a favorite boogeyman of Democratic populists, aren’t generating massive profits right now because they’re ripping off consumers. High oil company profits, and high inflation, are both a consequence of high crude oil prices.

Oil company executives have little influence over the price fluctuations of global oil markets, unless you believe in “deep state” conspiracies, and if you do, I suggest you change your sources of news.

Read This Story: Put Your “Petrodollars” to Work!

Republicans, meanwhile, blame one of their favorite boogeymen: government spending. They’re attacking President Biden’s legislative agenda, notably the American Rescue Plan that featured $1,400 stimulus checks paid directly to many Americans.

And, whether fair or not, most Americans regardless of political affiliation do blame Biden for inflation. He’s the incumbent, and getting the blame or the credit for economic conditions is part of the job.

However, inflation would have been high even without a pandemic relief bill, because the economy reopened faster than anyone expected, creating base effect distortions and supply imbalances.

More importantly, high gasoline prices (one of the most evocative ways in which Americans experience inflation) have nothing to do with the American Rescue Plan. Gas prices are affected by the dynamics of global oil supply, not domestic political policy.

When energy demand imploded in 2020 due to the coronavirus outbreak, the super-majors slashed capital expenditures. The rapid economic recovery from the pandemic left them flat-footed and supply shortages ensued.

The argument that Biden has tied the hands of energy producers by imposing environmental restrictions and emphasizing green energy is especially mendacious. Energy companies are sitting on 9,000 unused oil drilling permits on federal lands.

Inflation: it’s not just an American problem…

The inflation flim-flam artists neglect to tell you that rising prices are a global phenomenon. As gasoline prices reach astronomical levels in Europe and Asia, you can’t credibly argue that American policies are responsible for pain at the pump. The same principle applies to other components of inflation. In several countries, inflation is running far hotter than in the U.S. (see chart).

Monetary tightening is occurring worldwide, as well. The Federal Reserve announced an 0.75% interest rate hike on Wednesday, to curb inflation. A day later, the Bank of England raised rates by 0.75%, its largest single hike since 1989, as inflation in the euro area continues to run rampant.

Other central banks, including the European Central Bank and the Bank of Canada, also have been boosting rates aggressively to fight inflation.

The global economy is bedeviled by supply-chain disruptions, China’s zero-COVID policy, skyrocketing energy costs due to the Russia-Ukraine war, and food shortages caused by both the pandemic and Ukraine’s descent into chaos.

Ukraine accounts for 10% of the world wheat market, 15% of the corn market, and 13% of the barley market. Since Russia’s invasion, Ukraine’s exports of these key agricultural commodities have fallen by about 50%.

It’s not surprising that the Fed raised rates this week by 0.75% (75 basis points). That much was expected by Wall Street. But, as usual, it was Fed Chief Jerome Powell’s downbeat commentary after the announcement that dispirited investors. Powell made it clear on Wednesday that rates would stay higher for longer.

So will inflation, no matter which party gains control of Congress next week.

The new consumer staple…

Amid the conditions I’ve just described, how should you trade? In previous articles, I’ve recommended classic inflation hedges, such as gold and commodities. But there’s another investment you should consider: marijuana.

That’s right…marijuana. As this formerly demonized psychotropic substance enters the consumer mainstream, it’s proving to be an investment bulwark against inflation, the pandemic, and the economic slowdown. Marijuana has emerged as a “gotta have it” consumer staple, as reflected by soaring nationwide sales this year for pot.

That’s why I just launched a brand-new service detailing how you can financially benefit from the legalization of cannabis. Called Marijuana Profit Alert, it’s your guide to making money in these challenging times. Click here to learn more.

John Persinos is the editorial director of Investing Daily. You can reach John at: mailbag@investingdaily.com

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