Real Life Economy

How does inflation affect you?

Inflation became part of our reality, but how does it affect you? for many people the economic system we are living in, is part of the undoubted reality not to challenge. It is true that the complexity of the system make it hard to fully understand. As such, challenging its foundation look very hard. Which give the impression to many that taking the time to understand it is as a waste of time. Like many other aspects of our life, sometime it is the subjects that affect us the most that we choose to ignore.

While many people take their time to argue about politics, veganism, corruption and the complexity of life. Economics, is a topic many chose to ignore. Nevertheless, it is one of the most relevant and crucial aspect of any human living in the western society. In a different series of posts, I evolved a conversation about the concept of national debt (click here to read more about it). Our economical structure affect every aspect of our lives. It is reflected in our salary, the cost of living, our capacity to save money and the quality of our communal space. In my personal opinion there is 3 important topic that we, as a society, should understand, talk about and change. Those 3 subjects are: the national debt, the concentration of power by cooperation’s (click here to read more in the subject) and inflation. In this post I will concentrate in inflation.

How does inflation affect you

What inflation is all about? To make it simple, it is a contestant and systematic tool used by our government to devaluate our money. to make it even more simple, it is a rate that measure in  % the lost of your worth as a citizen yearly . This is why one of the first lessons  in economic class dictate that “a 100 euro today worth more that a 100% in a year from now”. It is true only thanks to inflation. What does that mean about you personally? it means that if you are earning the same wage for 5 years, while you’re getting the same number of money, it will worth less each year. Maybe, it can explain why life become harder and harder.

For the sake of understanding the gravity of the concept even better, lets get into numbers. You can find below some details about the inflation rate is Europe and the USA 🙁 https://tradingeconomics.com/euro-area/inflation-cpi  , https://tradingeconomics.com/united-states/inflation-cpi )

As you can see in the long term, inflation is a number that is constantly growing. According to the Bureau of Labor Statistics consumer price index, the dollar experienced an average inflation rate of 2.62% per year between 1985 to 2016. Prices in 2016 are 123.1% higher than prices in 1985. In other words, $100 in 1985 is equivalent in purchasing power to $223.05 in 2016, a difference of $123.05 over 31 years. It means your money lost more than 50% of its value in almost 30 years. At this point, if you believe this is true only in the USA, you are wrong. It is a world wife symptom of poverty.

If this is the case, why we read in our newspaper that inflation is good or necessary? in the reality, it is because it is true. Inflation is benefiting big cooperation’s and it is a necessity for the survival our governments. If you are following me for a while, I hope that you already understood that at our current times, the benefit of the government is many times opposed to the benefit of its people. In my next post in the subject, I will get more into why this is the case with inflation. For now, it is important for me that you understand the following point – Inflation is affecting the majority of the aspects of your life. It is one of the main tools used by our government to make sure the rich get richer while the poor stay poor. It is a tool that promise that we will work harder, get the same reward while getting poorer.

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.

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.

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.