Seven Percent More Money Than Last Year Means Nothing Changed

That is a very bold claim, but mathematically speaking that is the fact. The typical inflation rate for the United States along with most of the western world is 3%. In 2021, the inflation rate is now 7%. Inflation is the increased amount of money circulating in the economy compared to the previous year. If the inflation rate is 7%, that means that there is 7% more American currency floating around in the economy. In other terms, inflation could be described as the decrease of purchasing power because of rising costs of goods due to each individual dollar having less value. 

 Is that a good thing? Absolutely not! Money is valuable because it is finite. More

money equals less value. Less money equals more value. That is why air is free and gold is

expensive. Since there is more money in the system a person would need to make more to be of the same wealth they were in the year prior.

Inflation makes the prices of goods and services go up. And that leads to workers spending less, which then causes companies to shut down. Inflation can be checked naturally if wages are going up, but lately- especially 2020 and 2021, that just isn’t the case. The people that hurt the most from inflation are paycheck-to-paycheck low-income workers. They have no cushion when inflation predictably rises.

If inflation is so bad, why do governments let it happen? That is a complicated question, but the biggest reason is government overspending. In short, governments spend more money than they get from taxes. The amount of money they spend, but don’t have available, gets printed. Governments do this because they need money now, and the easiest way to do this is to simply print more money. The printed money gets pinned on the federal government as debt, but that doesn’t help solve inflation.

Before citizens blame politicians for all of their woes just know that to fix a one-year U.S. federal government budget you would need to cut 2.77 trillion dollars out of the budget or about one-third. So, kiss goodbye to all your favorite government programs such as pensions, welfare, Medicare, infrastructure etc. Nobody would vote for the guy that wants to take away grandma’s medicare, but that is what it would have to take to fix the budget and stop inflation. 

Yes, society is truly doomed, however, know these simple ways a person could use to grow their wealth and stay on top of inflation. Investing in stocks and getting passive income is a great way of staying ahead of inflation. If the inflation rate is 7% but a dude’s stocks grew 8%, he would be 1% wealthier. Now combine that with his income from his job, now he isn’t doing so badly. Everyone knows that the rat race sucks—and it does.