Topic: Inflation overpowers the value of money - page 3. (Read 948 times)
We cannot do without coming across the influence of inflation because the economy we run operates by the models and policies that favours the continuous occurrence of it, ours is to always have a back up to what to do immediately inflation is sighted in the way we run our economy, the world at large is in control of it and we should also take every necessary steps in working towards avoiding this from happening to us the unexpected way, the more money is being printed the higher the level of inflation and the higher the value of money decreases.
Inflation is something that anyone hates, those who have a fixed or irregular income will of course be affected by inflation, the value of money continues to decrease, so we have to always think about increasing our income.
I agree with you. Inflation decreases the buying power. Before 1 year same product price was one third but now same product price is too high. We have to think to increase our income. Our income directly depends upon skills which we have. If we work on skills then we can increase our income. We can also increase our income by making YouTube channel and work on it for one year without gaining money. After one year, YouTube earning starts and in this way we can beat with inflation. Job holders cannot compete with inflation because job holder depends on your Boss or government and Boss of business and government increase salary annually. Government can take out money from pocket of public at any time by print money. When government prints money, currency value decreases. Government can increase the rate of unit of electrical at any time . In this way, inflation increases. Business owners can beat with inflation by buying assets and they invest in assets.
When inflation is out of control it will cause several quite complex problems. And one of them is the decline in people's purchasing power which will slow down the circulation of money in the market. And if it continues for several periods, it means that a recession has occurred. And that is a fairly critical condition for economic growth for a country. But as long as inflation can be controlled then everything will be fine. It's just that inflation seems to never stop. Because we realize that prices that go up never go down again and keep going up from time to time.
This is true. I know a lot of businessmen who were forced to either shut down their business or sell it at such cheap price due to inflation. It is best to remember that the rich also consumes, they also buy from the market and hence they also feel the effects if inflation especially for their businesses. Yes, they are forced to sell their goods and services higher but it also cost them clients and customers who cannot afford the sudden spike in the rate.
And when inflation is high and money is scarce people will begin to cut on all kind of superfluous expenses in order to buy what they really need, so if a business is selling goods that while necessary they are not really indispensable then they will see a serious drop on their sales, this is what affected a great deal of businesses during the pandemic and a great deal of those businesses are still struggling as now people learned to live without those goods anyway and the demand never recovered. 
Inflation does not effect only poor but its also a big threat for wealthy people and everything is of higher cost instead of vast amount of resources present in our country. May be the country's leader do not have any idea about the uses of these resources or may be they are scarcity of these resources but what I know is that here is abundant of gas, petroleum and water resources so they should worked on it to provide for each and every individual of a country.
You are absolutely right, inflation also affects wealthy individuals who run diverse businesses, as cost of doing business escalates when interest rates increase due to higher inflation rate. It is important to recognize that central banks continually strive to maintain inflation and interest rates at a reasonable level so that business can borrow money from banks at minimal rate to meet their financial requirements for business operations and growth. Achieving a balance between inflation and economic growth is an ongoing challenge for policy makers to ensure stability of the economy.
Exactly poor and wealthy people are both affected. For example, for a minimum wage earner, comparing the prices of goods and services, their wages may not catch up, decreasing their purchasing power. This can make it difficult for them to make ends meet and afford basic necessities, which means lesser consumers for the wealthy individuals who are in line with business industries. Either way, we cannot deny the fact that inflation can have a ripple effect on the economy as a whole.
They are both affected, but unequally. Inflation hits the poorest first because relative to their wealth or income they have to spend the most for food, housing, energy and mobility. This relative difference is absolutely important because the calculation is quite easy:
Person A earns $2,000 and pays $1000 for existential needs, inflation drives prices up by 100% while wages stagnate, now person A pays $2,000 out of $2,000 for existential needs.
Person B earns $20,000 and pays $2,000 for existential needs, all things equal, now person B pays $4,000 out of $20,000 for existential needs.
Person B doesn't only keep 80% of their income despite inflation, but person B could theoretically decrease the cost for existential needs by moving into a smaller apartment or selling the expensive car for a cheap car. Person A has nothing left after inflation and can't anything about their lifestyle either.
This is true. I know a lot of businessmen who were forced to either shut down their business or sell it at such cheap price due to inflation. It is best to remember that the rich also consumes, they also buy from the market and hence they also feel the effects if inflation especially for their businesses. Yes, they are forced to sell their goods and services higher but it also cost them clients and customers who cannot afford the sudden spike in the rate.
Raising prices during inflation is not so easy, especially when it comes to even companies where competition is very high. In the case of monopoly companies, it is very easy to do this, they raise the price and the consumer has no other choice but to pay this price.But for private companies with great competition, this is difficult to do, because the consumer has less and less money and there are competitors who have more resources and will keep the price low for as long as possible, not all competitors will withstand this. A declining economy, coupled with high inflation, is bringing tough times for everyone, for business and consumers.
When inflation is of course we have to spend more money, what usually happens is when the national inflation is around 7% per year but the increase in food ingredients can be more than 15% or 2x, of course this makes us have to think about looking for extra income and think about reducing expenditure items .
Inflation does not effect only poor but its also a big threat for wealthy people and everything is of higher cost instead of vast amount of resources present in our country. May be the country's leader do not have any idea about the uses of these resources or may be they are scarcity of these resources but what I know is that here is abundant of gas, petroleum and water resources so they should worked on it to provide for each and every individual of a country.
You are absolutely right, inflation also affects wealthy individuals who run diverse businesses, as cost of doing business escalates when interest rates increase due to higher inflation rate. It is important to recognize that central banks continually strive to maintain inflation and interest rates at a reasonable level so that business can borrow money from banks at minimal rate to meet their financial requirements for business operations and growth. Achieving a balance between inflation and economic growth is an ongoing challenge for policy makers to ensure stability of the economy.
Exactly poor and wealthy people are both affected. For example, for a minimum wage earner, comparing the prices of goods and services, their wages may not catch up, decreasing their purchasing power. This can make it difficult for them to make ends meet and afford basic necessities, which means lesser consumers for the wealthy individuals who are in line with business industries. Either way, we cannot deny the fact that inflation can have a ripple effect on the economy as a whole.
Inflation is something that anyone hates, those who have a fixed or irregular income will of course be affected by inflation, the value of money continues to decrease, so we have to always think about increasing our income.
Inflation does not effect only poor but its also a big threat for wealthy people and everything is of higher cost instead of vast amount of resources present in our country. May be the country's leader do not have any idea about the uses of these resources or may be they are scarcity of these resources but what I know is that here is abundant of gas, petroleum and water resources so they should worked on it to provide for each and every individual of a country.
You are absolutely right, inflation also affects wealthy individuals who run diverse businesses, as cost of doing business escalates when interest rates increase due to higher inflation rate. It is important to recognize that central banks continually strive to maintain inflation and interest rates at a reasonable level so that business can borrow money from banks at minimal rate to meet their financial requirements for business operations and growth. Achieving a balance between inflation and economic growth is an ongoing challenge for policy makers to ensure stability of the economy.
This is true. I know a lot of businessmen who were forced to either shut down their business or sell it at such cheap price due to inflation. It is best to remember that the rich also consumes, they also buy from the market and hence they also feel the effects if inflation especially for their businesses. Yes, they are forced to sell their goods and services higher but it also cost them clients and customers who cannot afford the sudden spike in the rate.
Inflation overpowers the value of money, do you think you are saying opposite to the truth?
Inflation causes decreasing power of fiat currency so it won't overpower fiat currency. Inflation does not always cause purchasing power decreases but most of times it does.
Purchasing power of the US dollar over time
Purchasing power
If you feel not satisfied with the US dollar, you can look at the Venezuelan bolívar.
In Venezuela, inflation and dollarization deepen schism between private and state employees
This illustration is well-known in the economy world and I would guess that it is usually right and not a wrong thing in there. Inflation is really hurting not just one nation but the whole world and the fact that we have crashes here and there is an important difference as well and should be considered as a big deal. I understand that it may not be that great anytime soon, but it should be considered as a big deal.Inflation causes decreasing power of fiat currency so it won't overpower fiat currency. Inflation does not always cause purchasing power decreases but most of times it does.
Purchasing power of the US dollar over time
Purchasing power
If you feel not satisfied with the US dollar, you can look at the Venezuelan bolívar.
In Venezuela, inflation and dollarization deepen schism between private and state employees
In the end, I am guessing that we should be considering this as a big deal, and yes it's not going to be simple and different but at the end of the day we are talking about a big deal here for financial reasons so nations should find a way to stop all this and save aside during bull years and use that during bear in order to prevent crash.
Inflation does not effect only poor but its also a big threat for wealthy people and everything is of higher cost instead of vast amount of resources present in our country. May be the country's leader do not have any idea about the uses of these resources or may be they are scarcity of these resources but what I know is that here is abundant of gas, petroleum and water resources so they should worked on it to provide for each and every individual of a country.
You are absolutely right, inflation also affects wealthy individuals who run diverse businesses, as cost of doing business escalates when interest rates increase due to higher inflation rate. It is important to recognize that central banks continually strive to maintain inflation and interest rates at a reasonable level so that business can borrow money from banks at minimal rate to meet their financial requirements for business operations and growth. Achieving a balance between inflation and economic growth is an ongoing challenge for policy makers to ensure stability of the economy.
Inflation is a classic problem that often and will continue to occur, the main factor because the central bank will never be able to control prices, different things if the government wants to use money based on gold so as to make the trust of everyone will increase, the value of money based on gold will never go down Because gold prices can overcome inflation.
As long as there are countries or whatever owes money to the IMF/World Bank, inflation will continue to reach a critical point. Currently, the debts of all countries in the world are enormous and impossible to repay. The situation will improve if the world bank writes off all the country's debt or there is a big reset and maybe a new currency replaces paper money. The whole World has been entangled in this degenerate system and will not be able to get out, Bill Gates, Jeff Bezos, and Elon Musk are just a speck of dust compared to the people behind this system, they can create a world crisis in just a short time.This fiat policy needs to be controlled because they are not aware that the more fiat they receive, the ability to buy the fiat value they get is not balanced with the initial nominal value of the fiat. Therefore, nowadays people are intensively studying investment because from investment we can balance the value of our money with future inflation rates which are always dynamic.
Inflation overpowers the value of money, do you think you are saying opposite to the truth?
Inflation causes decreasing power of fiat currency so it won't overpower fiat currency. Inflation does not always cause purchasing power decreases but most of times it does.
Purchasing power of the US dollar over time
Purchasing power
If you feel not satisfied with the US dollar, you can look at the Venezuelan bolívar.
In Venezuela, inflation and dollarization deepen schism between private and state employees
Inflation causes decreasing power of fiat currency so it won't overpower fiat currency. Inflation does not always cause purchasing power decreases but most of times it does.
Purchasing power of the US dollar over time
Purchasing power
If you feel not satisfied with the US dollar, you can look at the Venezuelan bolívar.
In Venezuela, inflation and dollarization deepen schism between private and state employees
To begin with, inflation is not a discrepancy. Inflation is an integral part of the current economic system. Echoing franky1, it's there by design. It's intentional. It's there on purpose. It isn't something that takes place because of incompetence or failure on the part of the government or because of something beyond the control of economic managers. That the prices of goods and services will continuously increase and that the purchasing power of money will continuously weaken-- albeit in a moderate and controlled manner-- are part and parcel of what is considered a great economic design.
Of course, inflation is "included in the program" of the modern economic model, because if you print money endlessly, then a decrease in the purchasing power of this money is inevitable, that is, the very depreciation called inflation. There is even such a thing as an inflation tax, which in a sense is a hidden tax that everyone who uses money pays. These are the rules of the game imposed on us. There is an alternative to avoid this, called bitcoin. All banks offer poor interest rates that can't compete with the increasing inflation, even at normal periods when it isn't spiking like it currently is. The only way to counter inflation is by investing in assets, such as stocks or bonds.
Indeed, investment in stocks and bonds is considered as a secure option that can help counter the effects of inflation, as their long term returns have often been significantly higher than inflation. However, it is worth mentioning that returns on Bitcoin investment have consistently been far higher compared to trading assets over the past 15 years, due to its inherent characteristics of hedge against inflation. Both of you made good points. Instead of letting your money be stuck in the bank with significantly low-interest rates that do not compare to the continuously increasing inflation, it will be better to invest in assets and Bitcoin. Between the two, it will be up to personal preferences and knowledge in which an individual will choose to invest. Personally, I do both, but it is nice to know there are options for our money to grow amidst inflation.
But again, be sure that you'll know the risk because it doesn't mean that you'll invest it in something where you have a 100% chance of getting it back. That is why others tend to hold their money in banks, but with a rich mindset, this is what they are doing: investing in something where you have a chance to gain more profit or earn more money. For myself, I both hold money in the bank and invest in assets, mostly digital assets like Bitcoin. I know this can't prevent inflation, but it can give me more income to fight inflation.
I agree, there are online/digital banks that are offering better rates for an annual rate if you ever choose them to deposit your money. And the catch is that you're also free to withdraw it anytime at your own will.
Before, I was a fan of time deposits but I've learned it all along that it's good to get into it if the rate defeats the inflation rate that your country is experiencing. Otherwise, it's much better not to keep it there and find a better asset or investment that will earn more than the inflation rate so that you'll retain your wealth and its value.
All banks offer poor interest rates that can't compete with the increasing inflation, even at normal periods when it isn't spiking like it currently is. The only way to counter inflation is by investing in assets, such as stocks or bonds.Before, I was a fan of time deposits but I've learned it all along that it's good to get into it if the rate defeats the inflation rate that your country is experiencing. Otherwise, it's much better not to keep it there and find a better asset or investment that will earn more than the inflation rate so that you'll retain your wealth and its value.
That is the reason why all of the banks are good as storage of money, for safe keeping. But as a place to get to as an investment, you'll get barely enough from them and can't even defeat inflation through their products.
The good thing with these struggles is we keep looking on better ways to manage these inflation rates and that's why some assets came out as good options such as Bitcoin, real estate, bonds and other instruments that we can choose.
These things happen when the government officials or politicians of a country are corrupt to the core. They keep hoarding money for themselves that they get either from taxes or anywhere that comes in the government treasury, they never spend the money what it is meant for, which leads them to borrowing money from other countries or the world bank which then keeps interests piling up, since they don't manage things well, the currency starts devaluing.
The political leaders or the government don't really care much because they think that they will just leave and someone else will take the seat and he will manage the things further. When the next government comes, the condition of the country is not even controllable because of the corruption that has been done by the previous government.
The political leaders or the government don't really care much because they think that they will just leave and someone else will take the seat and he will manage the things further. When the next government comes, the condition of the country is not even controllable because of the corruption that has been done by the previous government.
Although I've never bothered with the stock market, I believe that sometimes combining your options and creating a diverse portfolio is the greatest option in minimizing the risk.
It is important to highlight that Stocks markets have been established as traditional platforms for investment and trading of shares since decades. These market play important role to channelize investment for growth and expansion of companies business activities. Moreover, they have been instrumental in creating many Millionaires who timely invested in highly performing stocks, such as Amazon, Apple ,Exxon and many others.
In summary, it is advisable to include stock of well performing companies in our investment portfolio, in addition to Bitcoin, to effectively mitigate the impact of rising inflation.
Yes, you are absolutely right. Excessive government borrowing can cause a high inflation to a nation because When government borrowing becomes especially large it can substantially reduce the financial capital available to private sector firms, as well as lead to trade imbalances and even financial crises. And yes we can see the situation of our neighbour country Pakistan struggling to overcome from this attitude of borrowing money but still they are unable to overcome from this.
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