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.
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.
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