I’m getting tired of politicians’ scapegoating on inflation.
President Joe Biden blamed inflation on Russia.
And Democratic senators Elizabeth Warren and Bernie Sanders blamed inflation on price gouging by corporations.
They’re not telling you the truth.
Inflation came from global governments’ own actions.
The first straw was their response to COVID.
First, they shut down the economy in response to the pandemic. This reduced demand, and companies had to limit supply.
Then they handed out stimulus checks like candy while ramping up quantitative easing and cutting rates.
With more money to spend, demand came roaring back. But supply wasn’t equipped to keep up.
The next straw was their tinkering with the world’s energy market.
Governments turned their back on fossil fuels. They shut down energy infrastructure on home soil.
This limited domestic supply and increased dependence on other countries for energy.
Then global tensions with Russia escalated. Their response was to stop trade with Russia, a large global energy supplier.
All of this led to the highest inflation levels in 40 years. But the government won’t tell you that.
Nor will they tell you the cure.
The cure isn’t one man putting his ego aside.
The cure isn’t corporations cutting already-thin profit margins.
The cure will come from a lab.
An Alternative to Fossil Fuels
Synthetic biotechnology will be the world’s inflation killer.
This industry changes DNA to form something new.
It has the potential to recreate many materials and products that we rely on today.
One of the most frequently studied use cases is for biofuel.
Biofuels are renewable energy sources created from plants or animal waste. They can serve as alternative energy sources to fossil fuels.
Researchers are experimenting with different synthetic biology to improve crop yield.
As yields improve, biofuel production becomes cheaper.
Lower costs would encourage biofuel use. That will help reduce the world’s dependence on energy cartels.
With less dependence on other countries, there’s less risk of a supply shock.
Supply shocks can increase prices and cause inflation. We’re seeing this happen now as a result of the Russian sanctions.
Keeping Food Prices at Bay
Synthetic biology can also be used to reduce food costs by creating a specific kind of bacteria.
Studies have shown fertilizer containing the bacteria was more efficient for corn production.
It let farmers use less fertilizer while increasing yields by roughly 3%.
Fertilizer can account for 30% of a farmer’s operating costs. So more efficient production will help keep food prices down.
This has never been more important. Fertilizer costs have spiked 300% since 2021.
Natural gas is an input for fertilizer. So the price increase could continue to climb due to the Russia conflict.
Synthetic biology may offer the solution to keep fertilizer costs lower. In turn, it will help keep food prices at bay.
There’s Tremendous Upside for Synthetic Biology
Biofuels and fertilizer are just a few use cases for synthetic biology.
It’s also used in drug development, cosmetics, fragrances and bioplastics.
The industry is still in the early stages. But there’s tremendous upside.
MarketsandMarkets forecasts the synthetic biology market to reach $30 billion by 2026.
That’s up from $10 billion in 2021.
To get exposure to the market, you can buy the Global X Genomics & Biotechnology ETF (Nasdaq: GNOM).
Due to weakness in genomics stocks, the exchange-traded fund has been beaten up over the past year.
But now you can get in near its 2020 lows, which offers an attractive entry point.
Regards,
Research Analyst, Strategic Fortunes
Morning Movers
From open till noon Eastern time.
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