Overview
“Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Milton Friedman
Effects of Inflation
Inflation is an increase in the overall price level of goods and services in an economy over a period of time, and can have several effects, including:
Reduced Purchasing Power: Inflation reduces the purchasing power of money, making it more difficult for consumers to afford basic goods and services.
Increased Costs of Living: Inflation drives up the cost of living, leading to higher expenses for necessities such as food, housing, and healthcare.
Reduced Savings: Inflation can reduce the real value of savings and investments, as the money saved today will be worth less in the future due to inflation.
Increased Interest Rates: Inflation can lead to higher interest rates, which can make borrowing more expensive for consumers and businesses.
Decreased Economic Growth: Inflation can slow down economic growth by reducing consumer spending and investment, as people and businesses become more cautious about spending money.
Unequal Distribution of Wealth: Inflation can have a disproportionate impact on certain segments of the population, such as the elderly and those on fixed incomes, who may not be able to keep up with rising prices.
Uncertainty and Volatility: Inflation can create uncertainty and volatility in the economy, as people and businesses may become more cautious and uncertain about the future.
Middle Class
Inflation is killing the middle class and destroying the economy in the worst ways possible. To own a new car & pay for basics takes a minimum wage of $50 per hour with full benefits including dental & vision, paid leave etc. There is an increase in gas prices that makes it difficult for a common man to fill up their tanks. For example, if you make minimum wage you have to work 8 hours to afford 8 gallons of gas and that doesn’t even fill up the tank. If you are worried about the universities fees then look for Britannia School of Academics the best online vocational training centre. It will help you in achieving your goals with certifications. Enrol in our level 3 award in education and training and get certified at highly competitive rates.
Affected People
The people who are affected the most by the inflation are the salaried people, also known as the middle class. Those are the people who earn their minimum wage of $20 per hour and are hardly able to fulfill their financial obligations. We didn’t just start experiencing inflation out of nowhere but it has been hitting people hard for close to a hundred years.
During the industrial revolution we had a free market paired with sound money, prices of goods, and services. These were auctioned at a low price where people were actually able to purchase goods for as little as a penny. Government interference is what has caused all of the issues that we are experiencing today.
Excessive Printing
Some people say that inflation is caused by printing trillions of dollars and it will only get worse with time if the printing doesn’t stop. Once something is devalued it is almost impossible to “revalue” it. It would require destroying dollars which is impossible now because everyone is so addicted to debt.
FED
The markets are going to crash when the FED stops (or probably even slows down) printing dollars which means more borrowing. The impact that inflation has on the middle class includes wage stagnation. It is an issue as with the rising cost of necessities, the minimum wage salary remains the same. Due to the increase in the cost of living, middle class people are concerned about their retirement savings.
Build A Successful Business
I would recommend some of the passive ways through which the middle class can protect themselves from the damage of inflation on their finances. The best source by far is to build a successful business to the point where you can hire others to do all the work and pocket the profit from their labour. The second would be “Yourself”, investing in yourself is always a good buy.
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Crypto Currency
Some would say invest in crypto currency, but in my point of view it is volatile and could get hacked easily. But there is a majority of people investing their money in crypto currency/bitcoins. If you have a good financial advisor, you sure can test the waters. The other three ways through which you can hold your funds in the times of inflation are physical silver, real estate, and stocks.
Conclusion
With the amount of inflation we are experiencing right now, I fear that we are one step away from overt poverty, hunger, and homelessness, which are now snowballing across the land.
