better world · Real Life Economy

Conversation about value – Your money is losing value every day

Can you actually explain to a 10 years old what value is all about? We like to think that we can. In the reality, the evolution of our monetary system and the prices of our daily products are fluctuating so often, that an honest moment of reflection will bring the majority of the people to understand they cannot explain our current system of valuation.

There is many reasons for it. I spoke about it in my previous post (Click here to read more). To make it simple, as money became an abstract concept (No, we do not hold gold in reserved to back up our current currencies….Not for at least 70 years), our capacity to grasp the concept of value becomes extremely complicated. a simple way to approach the subject, will be look at the salary of people compared to the cost of living. If we will take the minimum wage of a person as an indicator for the value of an individual worth as a measurement of his time (The value of a salary is normally reflected as the time and effort a person but in a specific task), we could expect that that the sum will represent an equal value to the cost of living. Alas, this is not the case.

The fact that a minimum wage cannot support decently a person in the majority of the countries, is the first reason we find it hard to valuate anything. A second factor is the amount of different prices we have in our market for a variety of products that are serving the same functionality. How come a Tshirt can range From 1$- 200$? How comes a table can range from 15$-10,000$?

Inflation is killing humanity

Moreover, the cost of living in our society is constantly growing, while our Money worth diminish on a yearly basic. In fact, not only that the minimum salaries are not growing proportionally to the cost of living, inflation creates a reality in which the same amount of money earned by an individual worth less each year. It is easy to notice, while the cost of rents, properties and products are rising constantly the inflation is killing our currency creating a mechanism of a double lost. Those are are all part of the reasons we are losing our capacity to understand the concept of value. Many people are becoming poor not because they are not working or contributing enough, but because their income and worth is not longer valuable as the market rise.

By losing the capacity to valuate things around us, we are losing our capacity to evaluate our time and our worth. By doing so, we become weak in front of the system that we are living in, lost in an ocean of random pricing. This reality is crumbling our society as it create a separation between the seller to the consumers. Giving the first an ultimate power of the price of our income and the price of the products we buy. In a previous conversation about our economy (Click here), I demonstrate how a system in which the majority of the people work for a cooperation and spend their income in another cooperation creates a enslaved and weak society.

I truly believe that understanding where value come from, will allow people to evaluate better the life around them and get control on their lives. Which will create a stronger society that can march into general prosperity. It is fundamental as our incapability to understand the topic affect everything in our lives, including how we see ourselves psychologically. Value is a real concept that used to represent capacity and practicality. as it change and becomes abstract, so our real capacity to control our life and to peacefully prosper.

In my next posts I will get deeper into what value is all about and how we can recreate a society in which real value is given based in constructive principles.

Share you thought with me in the comment section and express your opinion. Awareness and open conversation are the key for the creation of a better future.

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better world · Politics and Government · Real Life Economy

Are you ready for the next European economical crisis?

In the last decades, economical crisis’s has become part of our reality. Somehow, we are always surprise when it hit us. It is quite a remarkable fact, as we are allocating millions of dollars yearly to prevent and predict those events. In our current system, we have central bank, state institutions, economics and governments that are all supposedly in charge of making sure it will not happened. Nevertheless, it start to look like the next economical crisis is inevitable.

In the way I see it, those economical crisis should be categories as natural disasters. They happened fast, affecting the majority of the low and middle class drastically,  destroying the life of endless citizen and normally takes years of recover (if ever possible). My theory in the subject is that the big institutions, our governments and the rich are well aware of it way before it comes. Moreover, this layer of our society have the confidence that whatever come, they will be safe or saved. After all, bank and cooperation’s are saved by the government. In the worst case scenario, a specific company will bankrupt leaving  the rich with their riches, ready to move to their next investment. (just look at our recent history for countless real life proves).

It is unnecessary to mention, that the cost of saving this cooperation’s, banks and riches is payed years ahead by the low and middle class, in form of taxes under the justification of national debts or recession. It is a paradox, the people that get hit the harder by mistakes that are not theirs, are the one to pay for its consequences. The middles class lose their jobs, their saving disappear, their money devaluate itself together with their security, confidence and comfort. In this cases, the low class just becomes poorer which promise they will stay that way. 

the next European economical crisis

Now lets be smarter than we’ve been previously. We can learn from the past and prepare ourselves for the future. Does the next economical crisis is around the corner? The answer is yes and it is closer that you may think. In wonderful book called “Manias, Panics and Crashes” by Robert Z. Aliber and Charles P Kindleberger (Click for book review), a theory in the subject is presented. The book is showing that economical crisis’s never stop, they just move around the globe. We are unaware of it, as it will create panic. Which is exactly the same reason we are not aware of the crisis that is coming to hit us now. In the book, a few clear criteria are presented which appear before any economical crisis. I will lay them down and show the current European condition.

  1. An unreasonable increase in house prices is created – Based on publications, Eurozone house prices rise at the fastest rate in 11 years. House prices in the first quarter of 2018 were 4.5% higher than in the same quarter a year earlier. (Slovenia led the way with a 13.4% rise). Click her for the full article  
  2. An euphoria is created in the market between investors that shift to investments to the local market– recent publications had been showing that investors around the world are optimistic about the European market, ignoring the fact that the ECB  just slashed the European growth forecast.  Click here for article – Optimism article 1, 2, 3.
  3. A catalyst need to appear to create the burst of the crisis – There is many things that can evolve to be the catalyst that will launch the crisis. The Italian new government, the Bretix, trump new import/export reform (the “Trade war”) or just one the local big banks that can just collapse are all part of a long list. Just google the next European economical crisis and find endless article in the subject.

The bottom line is clear, the next economical crisis is around the corner. This time, Europe is even less prepare to handle with it than the last time, as it did not manage to recover yet. Moreover, the political fragility at the moment is not a good and comforting sign for the future in case I’m right. What can we do about? Well, at the moment not a lot. From the other side, when it comes we can demand that the solutions that will be implemented will demand the rich, bank and cooperation’s to take responsibility, for the sake of creating a better future for the middle and low class. After all, it is their doing and it should be their responsibility.

Share you thought with me in the comment section and express your opinion. Awareness and open conversation are the key for the creation of a better future.

If you like this content and would like to get more, Please like this post subscribe to this blog or to my Facebook. Your support is giving me motivation and helps me cause. For more topics in this blog click here.