Inflation overpowers the value of money

[Sayeds56]

All banks offer poor interest rates that can't compete with the increasing inflation, even at normal periods when it isn't spiking like it currently is. The only way to counter inflation is by investing in assets, such as stocks or bonds.

Indeed, investment in stocks and bonds is considered as a secure option that can help counter the effects of inflation, as their long term returns have often been significantly higher than inflation.  However, it is worth mentioning that returns on Bitcoin investment have consistently been far higher compared to traditional assets over the past 15 years, due to its inherent characteristics of hedge against inflation.

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[dothebeats]

All banks offer poor interest rates that can't compete with the increasing inflation, even at normal periods when it isn't spiking like it currently is. The only way to counter inflation is by investing in assets, such as stocks or bonds.

Indeed, investment in stocks and bonds is considered as a secure option that can help counter the effects of inflation, as their long term returns have often been significantly higher than inflation.  However, it is worth mentioning that returns on Bitcoin investment have consistently been far higher compared to trading assets over the past 15 years, due to its inherent characteristics of hedge against inflation.

Both of you made good points. Instead of letting your money be stuck in the bank with significantly low-interest rates that do not compare to the continuously increasing inflation, it will be better to invest in assets and Bitcoin. Between the two, it will be up to personal preferences and knowledge in which an individual will choose to invest. Personally, I do both, but it is nice to know there are options for our money to grow amidst inflation.

[Ultegra134]

Indeed, investment in stocks and bonds is considered as a secure option that can help counter the effects of inflation, as their long term returns have often been significantly higher than inflation.  However, it is worth mentioning that returns on Bitcoin investment have consistently been far higher compared to trading assets over the past 15 years, due to its inherent characteristics of hedge against inflation.

Although cryptocurrencies, especially Bitcoin, have shown great returns compared to other investment products, it's also worth pointing out that returns from any kind of investment are never guaranteed. With that being said, even if you invest in an attempt to counter inflation, there's still a decent chance that the results you're anticipating won't be met. Bitcoin, for instance, isn't generating passive income in the way stocks do through dividends. Thus, although Bitcoin has proven over the course of the years that it runs through a series of circles, a few wrong moves and a negative market may lead to a loss of funds.

Indeed, investment in stocks and bonds is considered as a secure option that can help counter the effects of inflation, as their long term returns have often been significantly higher than inflation.  However, it is worth mentioning that returns on Bitcoin investment have consistently been far higher compared to trading assets over the past 15 years, due to its inherent characteristics of hedge against inflation.

Both of you made good points. Instead of letting your money be stuck in the bank with significantly low-interest rates that do not compare to the continuously increasing inflation, it will be better to invest in assets and Bitcoin. Between the two, it will be up to personal preferences and knowledge in which an individual will choose to invest. Personally, I do both, but it is nice to know there are options for our money to grow amidst inflation.

Although I've never bothered with the stock market, I believe that sometimes combining your options and creating a diverse portfolio is the greatest option in minimizing the risk.

[Lida93]

Inflation exist because of fiat, for me they are just one.

Anything that can be control by the government can be manipulated by them, and makes thing worst without them being exposed of taking this kind of problem as an advantage to take their people's money. The higher the inflation, the more taxes they could gain for the entire population of their nation. Only wealthy people are not being affected by inflation, only the poor ones suffer and the Government doesn't even care at all.

Well, they'll do little something about it just to show the public they actually "care" and they're "doing" their job as public servants.

@AicecreaME, I totally throw my weight behind your point as it's exactly the situation in my country with the government haven raised interest rate at three consecutive times just within the first quarter of 2023 in a bid to bolster the country economy against inflation spike. And this interest raise has affected the ordinary citizens in many ways as we are the ones that bears the costs of it all through indirect tax in electricity tariff, foodstuffs and internet services etc, that have consequently increased in price.

It's sadden that those we give the privilege to be in central authority of the nation's wealth are managing it only to serve their cabal best interest, with little positive effects on the citizens with every policies formulated and promulgated.

[Wong Gendheng]

Inflation is a classic problem that often and will continue to occur, the main factor because the central bank will never be able to control prices, different things if the government wants to use money based on gold so as to make the trust of everyone will increase, the value of money based on gold will never go down Because gold prices can overcome inflation.

[Fortify]

Lack of purchasing power which is caused by inflation is encouraging economic uncertainty, and this is because many nations has been found wanting in production capacity, instead they encourage importation of consumable goods from other countries, the country involved will therefore put up a policy, that will compel the consumer country to exchange there currency to the currency of the country, they are purchasing from, this will further weaken and stagnate there currency to trigger high inflation rate.

The causes of high inflation can be attributed to the following:
1. Excessive Government borrowing
2. Unwanted and unstable domestic policy
3. Unsatisfiable or lack of domestic production

1. Excessive Government borrowing: the government of many nations has seen borrowing as a norm, there accumulated debts requires generation to come, to service, this is common in African countries where the government borrow funds not for establishing an asset or building an institution that can generate generate revenue, for them to either service existing debts and build more infrastructures, they prefer borrowing funds for either embezzling it or using it for things that are not accounted for.
They do this without minding the consequences that may be accompanied with this act, at the end countries like this dips in high level of inflation and valueless currency.

2. Unwanted and unstable government policy: the government policy most times are unfriendly and it is repeatedly done, just for example allowing the importation of already existing good to there country, instead of boosting the production of such goods to meet it's citizens consumption.

3.lack of domestic production: government of many countries practically don't have anything to offer, the keep on wasting the little resources available to their reach, failing to encourage local production, the government should look into locally made goods, this will avail them the opportunity to do business with countries that are interested in the product and services, as the case may be, they should make it their priority to lure local investor, reach a compromise with them, allow them to produce at a minimal taxing rate, this will enhance the domestic needs of the country, No doubt we need each to survive but not in everything.

You could argue that all the levers that are available to central banks have assisted certain countries in being able to contain and fight inflation/deflation in the past, so it's not necessarily a bad thing or uncontrollable thing. You could argue that government policy is similar to the policy of the foundations that look after certain cryptocurrencies, so they are not immune to outside influence either. Plus they will forever be at risk of the 51% attack, which is not a problem while it's popular but could face problems when popularity wanes.

[Vishnu.Reang]

Yes, you are absolutely right. Excessive government borrowing can cause a high inflation to a nation because When government borrowing becomes especially large it can substantially reduce the financial capital available to private sector firms, as well as lead to trade imbalances and even financial crises. And yes we can see the situation of our neighbour country Pakistan struggling to overcome from this attitude of borrowing money but still they are unable to overcome from this.

[Sayeds56]

Although I've never bothered with the stock market, I believe that sometimes combining your options and creating a diverse portfolio is the greatest option in minimizing the risk.

It is important to highlight that Stocks markets have been established as traditional platforms  for investment and trading of shares since decades. These market play important role to channelize investment for growth and expansion of companies business activities. Moreover, they have been instrumental  in creating many Millionaires who timely invested in highly performing stocks, such as Amazon, Apple ,Exxon and many others.

In summary, it is advisable to include stock of well performing companies in our investment portfolio, in addition to Bitcoin, to effectively mitigate the impact of rising inflation.

[redsun114]

These things happen when the government officials or politicians of a country are corrupt to the core. They keep hoarding money for themselves that they get either from taxes or anywhere that comes in the government treasury, they never spend the money what it is meant for, which leads them to borrowing money from other countries or the world bank which then keeps interests piling up, since they don't manage things well, the currency starts devaluing.

The political leaders or the government don't really care much because they think that they will just leave and someone else will take the seat and he will manage the things further. When the next government comes, the condition of the country is not even controllable because of the corruption that has been done by the previous government.

[sunsilk]

I agree, there are online/digital banks that are offering better rates for an annual rate if you ever choose them to deposit your money. And the catch is that you're also free to withdraw it anytime at your own will.

Before, I was a fan of time deposits but I've learned it all along that it's good to get into it if the rate defeats the inflation rate that your country is experiencing. Otherwise, it's much better not to keep it there and find a better asset or investment that will earn more than the inflation rate so that you'll retain your wealth and its value.

All banks offer poor interest rates that can't compete with the increasing inflation, even at normal periods when it isn't spiking like it currently is. The only way to counter inflation is by investing in assets, such as stocks or bonds.

Definitely.

That is the reason why all of the banks are good as storage of money, for safe keeping. But as a place to get to as an investment, you'll get barely enough from them and can't even defeat inflation through their products.

The good thing with these struggles is we keep looking on better ways to manage these inflation rates and that's why some assets came out as good options such as Bitcoin, real estate, bonds and other instruments that we can choose.

[xSkylarx]

All banks offer poor interest rates that can't compete with the increasing inflation, even at normal periods when it isn't spiking like it currently is. The only way to counter inflation is by investing in assets, such as stocks or bonds.

Indeed, investment in stocks and bonds is considered as a secure option that can help counter the effects of inflation, as their long term returns have often been significantly higher than inflation.  However, it is worth mentioning that returns on Bitcoin investment have consistently been far higher compared to trading assets over the past 15 years, due to its inherent characteristics of hedge against inflation.

Both of you made good points. Instead of letting your money be stuck in the bank with significantly low-interest rates that do not compare to the continuously increasing inflation, it will be better to invest in assets and Bitcoin. Between the two, it will be up to personal preferences and knowledge in which an individual will choose to invest. Personally, I do both, but it is nice to know there are options for our money to grow amidst inflation.

But again, be sure that you'll know the risk because it doesn't mean that you'll invest it in something where you have a 100% chance of getting it back. That is why others tend to hold their money in banks, but with a rich mindset, this is what they are doing: investing in something where you have a chance to gain more profit or earn more money. For myself, I both hold money in the bank and invest in assets, mostly digital assets like Bitcoin. I know this can't prevent inflation, but it can give me more income to fight inflation.

[m2017]

To begin with, inflation is not a discrepancy. Inflation is an integral part of the current economic system. Echoing franky1, it's there by design. It's intentional. It's there on purpose. It isn't something that takes place because of incompetence or failure on the part of the government or because of something beyond the control of economic managers. That the prices of goods and services will continuously increase and that the purchasing power of money will continuously weaken-- albeit in a moderate and controlled manner-- are part and parcel of what is considered a great economic design.

Of course, inflation is "included in the program" of the modern economic model, because if you print money endlessly, then a decrease in the purchasing power of this money is inevitable, that is, the very depreciation called inflation. There is even such a thing as an inflation tax, which in a sense is a hidden tax that everyone who uses money pays. These are the rules of the game imposed on us. There is an alternative to avoid this, called bitcoin.

[MusaMohamed]

Inflation overpowers the value of money, do you think you are saying opposite to the truth?

Inflation causes decreasing power of fiat currency so it won't overpower fiat currency. Inflation does not always cause purchasing power decreases but most of times it does.

Purchasing power of the US dollar over time
Purchasing power


If you feel not satisfied with the US dollar, you can look at the Venezuelan bolívar.
In Venezuela, inflation and dollarization deepen schism between private and state employees

[Mame89]

Inflation is a classic problem that often and will continue to occur, the main factor because the central bank will never be able to control prices, different things if the government wants to use money based on gold so as to make the trust of everyone will increase, the value of money based on gold will never go down Because gold prices can overcome inflation.

As long as there are countries or whatever owes money to the IMF/World Bank, inflation will continue to reach a critical point. Currently, the debts of all countries in the world are enormous and impossible to repay. The situation will improve if the world bank writes off all the country's debt or there is a big reset and maybe a new currency replaces paper money. The whole World has been entangled in this degenerate system and will not be able to get out, Bill Gates, Jeff Bezos, and Elon Musk are just a speck of dust compared to the people behind this system, they can create a world crisis in just a short time.

This fiat policy needs to be controlled because they are not aware that the more fiat they receive, the ability to buy the fiat value they get is not balanced with the initial nominal value of the fiat. Therefore, nowadays people are intensively studying investment because from investment we can balance the value of our money with future inflation rates which are always dynamic.

[Sayeds56]

Inflation does not effect only poor but its also a big threat for wealthy people and everything is of higher cost instead of vast amount of resources present in our country. May be the country's leader do not have any idea about the uses of these resources or may be they are scarcity of these resources but what I know is that here is abundant of gas, petroleum and water resources so they should worked on it to provide for each and every individual of a country.

You are absolutely right, inflation also affects wealthy individuals who run diverse businesses, as cost of doing business escalates when interest rates increase due to higher inflation rate. It is important to recognize that central banks continually strive to maintain inflation and interest rates at a reasonable level so that business can borrow money from banks at minimal rate to meet their financial requirements for business operations and growth. Achieving a balance between inflation and economic growth is an ongoing challenge for policy makers to ensure stability of the economy.

[justdimin]

Inflation overpowers the value of money, do you think you are saying opposite to the truth?

Inflation causes decreasing power of fiat currency so it won't overpower fiat currency. Inflation does not always cause purchasing power decreases but most of times it does.

Purchasing power of the US dollar over time
Purchasing power


If you feel not satisfied with the US dollar, you can look at the Venezuelan bolívar.
In Venezuela, inflation and dollarization deepen schism between private and state employees

This illustration is well-known in the economy world and I would guess that it is usually right and not a wrong thing in there. Inflation is really hurting not just one nation but the whole world and the fact that we have crashes here and there is an important difference as well and should be considered as a big deal. I understand that it may not be that great anytime soon, but it should be considered as a big deal.

In the end, I am guessing that we should be considering this as a big deal, and yes it's not going to be simple and different but at the end of the day we are talking about a big deal here for financial reasons so nations should find a way to stop all this and save aside during bull years and use that during bear in order to prevent crash.

[dothebeats]

Inflation does not effect only poor but its also a big threat for wealthy people and everything is of higher cost instead of vast amount of resources present in our country. May be the country's leader do not have any idea about the uses of these resources or may be they are scarcity of these resources but what I know is that here is abundant of gas, petroleum and water resources so they should worked on it to provide for each and every individual of a country.

You are absolutely right, inflation also affects wealthy individuals who run diverse businesses, as cost of doing business escalates when interest rates increase due to higher inflation rate. It is important to recognize that central banks continually strive to maintain inflation and interest rates at a reasonable level so that business can borrow money from banks at minimal rate to meet their financial requirements for business operations and growth. Achieving a balance between inflation and economic growth is an ongoing challenge for policy makers to ensure stability of the economy.

This is true. I know a lot of businessmen who were forced to either shut down their business or sell it at such cheap price due to inflation. It is best to remember that the rich also consumes, they also buy from the market and hence they also feel the effects if inflation especially for their businesses. Yes, they are forced to sell their goods and services higher but it also cost them clients and customers who cannot afford the sudden spike in the rate.

[Pejoh Asu]

Inflation is something that anyone hates, those who have a fixed or irregular income will of course be affected by inflation, the value of money continues to decrease, so we have to always think about increasing our income.

[Twentyonepaylots]

Inflation does not effect only poor but its also a big threat for wealthy people and everything is of higher cost instead of vast amount of resources present in our country. May be the country's leader do not have any idea about the uses of these resources or may be they are scarcity of these resources but what I know is that here is abundant of gas, petroleum and water resources so they should worked on it to provide for each and every individual of a country.

You are absolutely right, inflation also affects wealthy individuals who run diverse businesses, as cost of doing business escalates when interest rates increase due to higher inflation rate. It is important to recognize that central banks continually strive to maintain inflation and interest rates at a reasonable level so that business can borrow money from banks at minimal rate to meet their financial requirements for business operations and growth. Achieving a balance between inflation and economic growth is an ongoing challenge for policy makers to ensure stability of the economy.

Exactly poor and wealthy people are both affected. For example, for a minimum wage earner, comparing the prices of goods and services, their wages may not catch up, decreasing their purchasing power. This can make it difficult for them to make ends meet and afford basic necessities, which means lesser consumers for the wealthy individuals who are in line with business industries. Either way, we cannot deny the fact that inflation can have a ripple effect on the economy as a whole.

[Joshapat]

When inflation is of course we have to spend more money, what usually happens is when the national inflation is around 7% per year but the increase in food ingredients can be more than 15% or 2x, of course this makes us have to think about looking for extra income and think about reducing expenditure items .