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

National debts, the real problem of the average person. Part 1 – What is a national debt?

What is a national debt? It is not a secret that life in the west becomes progressively more complicated. People need to work more to earn less, while the cost of living is growing constantly.  The reasons for that can be divided to two. The structure of our current economy and the international relationship that has been created between the world countries. To learn more about the first reason, you can click here and read more about the vicious cycle of your current economy.  A this series of posts I will concentrate in talking about one of the most important factors that is making the economic life of so many people extremely complicated.

The reason for the increasing burden in the daily lives of many people is not as obvious as we would like to think, it is called the national debts. We hear about it all the time and take it as a reality that is bigger than us. We leave it in the domain of the abstract facts that are painting the background of our society, letting it be handle by “The professional people in charge”. The truth is that this subject is one of the most relevant to our lives and need to be addressed as a top priority in our political and social conversation.

Lets start by understanding what it is all about.  External loan (or foreign debt) is the total debt a country owes to foreign creditors. The debtors can be the government, corporations or citizens of that country. The debt includes money owed to private commercial banks, other governments, or international financial institutions such as the International Monetary Fund (IMF) and World Bank. In simple words, it means that the national debt, is money that a government (a public institution) owes to  private institution around the world attached the a certain interest rate. If you are interested to know the status of your county click here. As you can notice, if you’re living in a western country the national debt of your government is between 90% – 6000% of the GDP. In simple words it means that the country do not have the capacity to pay back the loan. In many cases, not even pay back the interest % on the loan.

What is a national debt

Why does it matter? First, it means this debt will never be paid and that no real solution exists to solve it. Secondly, It means that more the time will pass more problematic the situation will be. And the third point (maybe the most relevant to this post), is that real prosperity for those country is not possible. It is important to understand that these points and numbers are known to all and that it is not a new situation we put ourselves into. This debt problem exists for many decades. It is true that the last economical crash in the last 20 years made the balance inflate. But it is known a understood by all the world leaders and economist for many decades. Now, please take the time to think how many changes of government you had in you country in the last 20 years. All of them understood the problem, part of them not only ignored it but worsen the situation, letting it be the problem of the future generation and governing party.

The national debt of many western countries has increase dramatically in the last 15 years. The speed of loan taken by countries is a direct warning signal to us all. This loans that are taken are a clear sign of lack of responsibility of local government, as they are well aware that they do not have a real plan to solve the current debts they are in.  This lack of responsibility need to stop! simple solution exist and should be implicated. At the moment, just keep in mind that if you’re searching to understand why life has become so economically complicated for the average person in the western society, the national debt of your country is probably one if not the most important factor for that.

Share you thought with me in comment 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 helping me cause. For more topics in this blog click here.