In the last 12 months, inflation has gone up by 10%. This is the highest number in many decades. But many things have gone up more than that; houses by 17%, gasoline, etc.
When inflation goes up, the buying power of your money goes down. People that have money saved, have lost 10% of that money’s value. People that don’t have a home and want to buy one, find it less affordable.
Here are some comments by Steve Forbes commenting on a book by Nathan Lewis –
“Why is monetary policy so fundamentally important?
A modern economy is ultimately “a vast network of cooperation”…in which hardly anything is created without combining goods, services and labor and capital from all over the world…The network of cooperation is organized through the use of money, with information transmitted via prices, interest rates, and profit and loss. These seemingly simple bits of information direct all economic activity.
Unstable currencies are like viruses in your computer – they corrupt those bits of information.
Everyone understands the basic need for fixed weights and measures in daily life – number of ounces in a pound, minutes in an hour; just as we use money to measure the value of products and services. If the measuring stick itself becomes unstable the smooth functioning of an economy is disrupted just as our lives would be if the number of minutes in an hour constantly fluctuated.”
Imagine 10% inflation year over year? In 7.2 years prices would double. In 14.4 years, prices would quadruple.
We should all care about inflation and pay attention to who and how it is being caused.
If there is a winner from inflation it is those who have debt and are paying interest rates lower than the rate of inflation. Perhaps that is what is driving government’s fiscal policy.
As long as the government is in control of something like our money, can it be efficient? Can it be controlled correctly?
I’m beginning to see more decentralized products (cryptocurrency, but others as well) and definitely have an interest in learning more.
Amen