Topic: Inflation overpowers the value of money - page 4. (Read 1001 times)

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.

@AicecreaME, I totally throw my weight behind your point as it's exactly the situation in my country with the government haven raised interest rate at three consecutive times just within the first quarter of 2023 in a bid to bolster the country economy against inflation spike. And this interest raise has affected the ordinary citizens in many ways as we are the ones that bears the costs of it all through indirect tax in electricity tariff, foodstuffs and internet services etc, that have consequently increased in price.

It's sadden that those we give the privilege to be in central authority of the nation's wealth are managing it only to serve their cabal best interest, with little positive effects on the citizens with every policies formulated and promulgated.

Although cryptocurrencies, especially Bitcoin, have shown great returns compared to other investment products, it's also worth pointing out that returns from any kind of investment are never guaranteed. With that being said, even if you invest in an attempt to counter inflation, there's still a decent chance that the results you're anticipating won't be met. Bitcoin, for instance, isn't generating passive income in the way stocks do through dividends. Thus, although Bitcoin has proven over the course of the years that it runs through a series of circles, a few wrong moves and a negative market may lead to a loss of funds.
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.

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.

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 traditional assets over the past 15 years, due to its inherent characteristics of hedge against inflation.

Well, there is a need for growth, and there is also too much growth over short period of time. If you have 2-3% inflation that's not bad, that means growth and that should happen, people can get that much in their salary increases as well and could grow in position until they are a bit late, that way everyone lives a happy life and all goes well.

However, because there are situations like 2008 and 2020, we end up with high inflation that ruins peoples money and investments, and that causes people to be falling short of what we are talking about here, and that should be important to remember. I know that it takes time to handle all of this, but if you can, then you are going to do as well as you could hope for.

Basically, yes, the value of a currency will decrease in price due to inflation. Inflation is an event where there is too much money in circulation, but the ecosystem uses it a little, which makes the exchange rate lower. In my opinion, there is actually no term "inflation beats the value of money" because Inflation is another word for the decline in currency value.

And this is related to monetary policy, economic policy, taxes, and others related to the rise and fall of money productivity in terms of usability, control of supply and demand, which results from policies that are set into the economic system.

If the policies issued do not have calculations that meet the needs and standards of macro and microeconomic developments, it will cause uncontrolled currency failure, as happened in Zimbabwe.

They as governments have no limits, no governmental restrictions to prohibit themselves in printing more fiat currencies. Their fiat currencies can be printed more and more, no caps. Do they consider their printings as risk of their fiat currency value?

I believe they do know about that risk but they don't mind because if they don't print more money, their governmental operations will be halted and more political problems will occur in their societies. The wealth of their citizens and purchasing power of their national fiat currency are not what they care most.

The Covid-19 pandemic and massive QEs in many nations came very suddenly but they gave us many red flags. The story of Venezuela is very old and hyper inflation in that nation started years ago, long time before the pandemic outbreak but I agree that it is a classic story about failure for fiat currency and central bank.

It is convenience and that rule of law which makes it so dominant but its all lost if you cant go to sleep and retain most of your value you had when you saved it there.   Savings that lose value are a horrible irony and waste of time when it really slips out of control.   There is point where every FIAT currency just has to give up, they cannot pay their debt and printing more is pointless.
  Many modern countries are in a similar situation to Greece with overwhelming debt spent on projects not yielding any benefit long term just spent money that cannot be expected to be returned.   The difference being they have retained the ability to print off new money to pay off the old debtors, its a soft default not hard but all the same value is lost in the process and many countries have repeated that loss to debt holders many a dozen or hundred times.   Eventually we require an alternative despite government mandating usage of their particular branding to paper transfer of value, the fungibility and liquidity I think fails to maintain the status of any modern FIAT currency, very few retain the ability to actually back their paper with a promise to exchange for worth on demand.

In Venezuela or similar its a weight of 10 lbs of paper to buy  1 lb of meat and its probably become worse since I saw that video.   All countries do this and all the Federal reserve promises to do for example is maintain orderly markets, they give no promise to keep value retained only not let slip entirely the rope holding up the façade .

The issue with inflation measures is that they're highly inaccurate in presenting the broader picture. As you've already mentioned, energy, and I'll also add fuel prices, play a vital role in inflation. Higher electricity and fueling costs mean an increased cost of production, which means an increase in the price of goods, which the consumer is faced with paying. However, inflation measures don't take into account the increase in energy and fuel; thus, when we hear about 10% inflation, it's actually a lot higher. Personally, I'm having to pay a lot more money for fuel and energy bills than I used to.
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.

Actually every one had their own reasons for borrowing,So we can’t blame the people who borrowing money.But borrowing will steal your peace and happiness,after borrowing money you are forced to pay certain amount on a fixed date.In a meanwhile you get any financial problems,but the borrowers will not consider it mostly.Because their fully motive will be getting additional money as an interest at your hard situation.So my suggestion is only borrow the money at the emergency,don’t borrow money for your luxuries life.

That's true because with the increasing price of petrol every other materials also get expensive so if the price of petrol and gasoline  are under control then inflation will also be able to Control.

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.

Overall, fiat provides users with flexibility and convenience when it comes to trading and storing value. It has a high level of liquidity, making it easy for users to convert to different currencies and make daily purchases.

But while good, fiat also has disadvantages because it is prone to inflation and loses value over time. Besides that is heavily dependent on the central bank, to maintain its value. Therefore, a stable economic environment and public confidence in the currency will help reduce the risks associated with fiat.

I think there's a need to understand this inflation from the perspective of currency and asset values, once it's all talking about fiat economy system, inflation must set in because the value of fiat currency cannot sustain the economy without being affected, that's the running of the policies right from time, regarding bitcoin since the introduction of cryptocurrency, bitcoin has a separate network and run a different system incomparable to the centralized fiat economy runnings, bitcoin cannot change the inflation from fiat currency but can exist independently without being affected by inflation, so if anyone could want to have a different experience outside the inflation role then adoption of bitcoin could be a preferred solution because as inflation continue to occurs the value of bitcoin keep increasing over time because bitcoin is a volatile currency while fiat Wil keep loosing value over time when inflation looms in.

Energy price really have great effect on price of commodity. For example here in my country, the price of petrol went up twice recently and this has cause price of commodity to go up causing more inflation. Increase in energy price can't be left out as a factor causing inflation.

As sad as it is, we all should know that inflation has come to stay. Government fiscal and monetary policies have not been able to stabilise the prices of goods and services.
Fiat keeps devaluing as the day goes by. This is why we should engage in investment that will give us multiple streams of income to keep up with the world's current economy state. And also we should try to save in bitcoin or cold which will fight against inflation.
The issue of of inflation is not peculiar to just one country, it is universal.

Totally agreed, loans is necessary for certain country especially for a country that has rapid growing economy. The countries that has issue with their loan are mostly because the government is corrupt. If the government use the money to grow the people's economic inflation wouldn't be anything to worry.

Borrowing is not a bad economic policy and it is an important part of the financial performance of many countries. Borrowing to finance capital projects such as infrastructure can bring many economic benefits. When a good infrastructure will provide the necessary support and facilities for business activities and investments. Thereby encouraging domestic investment and attracting foreign investors, contributing to economic growth and creating job opportunities.

Mainly how the government manages loans efficiently and fairly. If they use loans wisely in potential projects, it will contribute to creating long-term economic benefits. On the contrary, if the balance is not well balanced, it will cause inflation problems and destroy the country's economy quickly.

This is why we pick bitcoin instead. Because inflation makes bitcoin price go as much down as possible and that is the best thing to do for bitcoin, I believe that it would be best if we avoid using fiat as much as possible since the return is not there and the results are not that great. If you keep on investing into bitcoin instead of fiat stuff, then you are going to end up with a lot of profit in the end.

I bet that it is going to take a while, it is not going to be simple, but if you can make that work then I am sure that it will be not that difficult to make a profit when you can. Bitcoin will surely go up on the long run, and one of the reasons for it is the inflation at fiat as well, hence why bitcoin is much better option.

Bitcoin's volatility indeed confirms its potential as a haven against inflation, as it remains impervious to the abrupt impact of inflation in any given country. Instead of allocating 100% of our assets to FIAT, which is inevitably prone to annual inflation, I find it wiser to diversify a portion of our holdings into alternative assets like stocks and Bitcoin. Diversification becomes essential to safeguard the value of our assets, or even better, to witness them grow.

However, I must acknowledge that Bitcoin carries substantial risks. As you rightly pointed out, any asset, including Bitcoin, could face the risk of being abandoned by the masses. We cannot prevent people from selling their Bitcoin and potentially deserting it. Undertaking such a venture requires a willingness to assume considerable risk and mental fortitude.

In essence, exploring avenues like Bitcoin can be a prudent strategy to protect against inflation, but it demands a careful balance of risk management and preparedness to face the uncertainties that come with it.