To kick things off a bit, what exactly is inflation?
Inflation is when the government expands the nations capital or money supply. Simply put its when the government prints more money (that it doesn’t have) or fiat currency from thin air. Inflation has been the rise and fall of every nation that tried beating the odds as it starts out from debt and requires even more printing or creating of wealth from thin air. Why is this a problem? The answer is simple, the more currency being printed and issued the less value it has, and the less in circulation the more value as proven through the law of scarcity. In essence it’s worthless and this is what we exchange out valuable time and energy for.
Money as we know it has lost its value and is still diminishing to date. The value of the US dollar has lost 95% of its purchasing power since getting off the gold standard in 1933. The notes that we carry today were once certificates of gold and could be redeemed for gold on demand by its holder. It even stated this in the notes themselves. Whereas today’s notes are backed by nothing except our belief that it has value, they are legal tenders, operating under sheer faith. It’s a glorified IOU system based upon credit or the creation of money, holding no intrinsic value that people like you and I exchange our time, freedom, and life a way for.
The level of inflation that we are witnessing now hasn’t been seen in over 40 years. Everything from gas, groceries, housing, clothing and whatever else is experiencing increased prices. This is due to none other than inflation, and the steady decline of the US dollar. The problem with this is everything is increasing besides the wages, and we exchange our time and energy for these wages which are constantly being leaked away due to this phenomenon. The dollar is no different than Monopoly money except that we agree to its worth and ability to be used as a medium of payment and exchange. We cannot print more time and energy and our money has been intended to be a store of such time and energy and should hold that value over long periods of time, that’s what I’m essence makes money MONEY. However each time more money is printed a piece of that value is lost and diminishes. This is the dangers of inflation, it devalues our net freedom (time and energy) and leaks away our purchasing power, as what a dollar buys to day only buys a fraction of what it did yesterday. Same products, same material, same amount of energy, same notes, only thing changed is it’s value and in some cases the color of those notes. It takes three times the amount of money today to acquire the same amount of products yesterday, huge difference and even bigger problem.
Now comes the good part…there’s a remedy 🙂
The wealthy has been playing this game for years. It’s quiet simple, they’ve known all of the above and some, so with that being said they don’t stock pile cash as they are fully aware of its declining value. With this, they take that cash and park it into assets that in turn earns them a profit and interest much greater than any bank of which typically gives less that 1%. This is is what’s meant by make your money work for you, also why you hear more news of how much they’re actually worth as opposed to how much liquid capital they have, as the name of the game is how much you can keep not make. What they understand is that a pile of money does nothing but a working pile of money earns a fortune over time. So you’ll see their money invested in the likes of stocks, bonds, real estate, business ventures and other asset classes that appreciate in value over time to help grow that money, beating not only inflation but the tax man himself. So instead of sitting our money on the shelf just to marvel at it, let’s follow the path laid before us and place it in a place where it can grow. The secret is to use cash to acquire assets, allow for those assets to earn more cash to acquire more assets and repeat the process by investing the interest. This is called compounding. Interests on interest, contrary to parking it in some account where it not only collects dust if that, but loses its value on a daily basis. This is how the rich get and stay rich. So til next time, good business sells itself…#Peace
Entreprenuershit 