Money doesn't go nearly as far as it used to

If you have been shopping for anything in the past 3 years, you will have noticed that your dollars are buying far less than they used to. You used to be able to get groceries for a week for $100 - well, now you are spending $175 and you are still not getting as much as before.

That's because the amount of money that was in circulation has increased dramatically starting with the COVID epidemic and it diluted the purchasing power of every dollar out there. Congratulations to us all, we just got a lesson in economics and how currency works. The more there is, the less it is worth. The more money is on the market, the less you and I can get for it.

This is a pattern that has been repeated in human history every time a government, a central bank or a combination of both, tried to make people feel richer by pumping more currency into the economy - currency that they simply make up out of thin air and release it by putting it up against newly created debt.

Here is how it works. Suppose you are a government, and you want to give people a few hundred bucks, so they feel better about you. So, you say, "I'm going to go into debt to the tune of 1 trillion dollars and I will say to the central bank that all of a sudden I, as the government, owe this money to the central bank and in return I want the central bank to give me currency against it." So, the Central bank does just that. They create and loan a trillion dollars of currency to the government in return for basically an IOU from said government and the IOU promises an interest level to make it worth its while.

Congratulations, you have just created a trillion dollars and now you are dispensing it to your population - but because there is now a trillion extra dollars in the marketplace, it has to go somewhere so it goes to price hikes for the same items, which now cost more than a week ago, because there is more currency chasing the same good and services now. But why is this a problem?

Well, 2 reasons. 1. Most people are not going to get so much money that they will be able to continue living at the same level as before - they will need to cut back on their lifestyles and what they purchase because things are more expensive. Inflation robs people from their abilities to continue living the same standard as before.

2. A few select people will find themselves a lot richer, having received the vast majority of the newly created trillion dollars, which they will then proceed to put into assets such as stocks, bonds, real estate, etc. Assets, which will continue to grow in value as the currency becomes more debased and more inflationary and they will be wealthier as a result than before, which most people will need to find ways to cut their standard of living.

But this is not bad simply because it results in the two scenarios I just described. This process is bad for the entire economy and the future of development. Having a more and more centralized wealth pool in the hands of fewer and fewer people will eventually result in a less and less productive economy and will eventually have dire consequences for everyone. Rich and poor alike.

So as you try to consolidate your lifestyle and find ways to cut your needs and wants to be able to afford what you have to have to live on, you will have to change the way you live and change the way you budget in order to be able to continue to improve you standards in the future.