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Tuesday, May 08, 2012

UNDERSTANDING INFLATION

05/08/2012

 UNDERSTANDING INFLATION




We know this is the new economy,  but unless the laws of nature have changed or no longer apply we are doomed in the long run.

Miracle of miracles, for the past thirty years, Clinton era included, we have printed more and more money, ran up deficits, ever larger, and the government shows there is no inflation to report, a lie.

Of course if you are working class your buying power has been reduced, mostly blamed on stagnant wages, but also as your wages have gone down, you have been forced to buy more and more stuff made by the slave labor in third world countries, yes China is still a third world country, so is India, comparatively speaking, so you don't feel the pinch so bad as if you had to buy stuff made by the American worker being paid what used to be the American wages and benefits, we have accepted slavery of our brothers for short term benefit.

I don't blame you, the phenomenon is universal, survival of the fittest right, till your number is up.

But before you understand what I am saying here is a simple explanation, so " inflation" is prices going up, cost of stuff going up, and we see a lot of people worried about the prices actually going down, deflation like that in Japan, for the past twenty years or there abouts.

And may be you are right if you are in either of the inflation/deflation camps,  because you see the two are right.

Like I said earlier, one reason you don't see/feel inflation is that we buy the stuff made by slaves overseas, and also that the wages in the US are also falling, another reason is that the technology and automation are keeping the "productivity" and going higher, fewer people to make more widgets.

But there is inflation and there is deflation, both of them going on right now, here in the US and all over the world actually, the reason you don't see it is because you are not a part of the real economy.

A rule of the basic economics is called "time value of money", but how about money value of time, in as much as for what you can get for the money you received for the time you spent on the job? That one is a bit harder to understand, let's say you make thirty thousand a year but now the boss wants you to work two extra days a year, you see now you have to work longer to buy the same items as you did last year, so that is in realty inflation (paid for in time worked), now how about this that your medical deductible goes up, or health insurance premiums go up higher than you pay did this year? You are not making "less money" nut you are getting less for your money. Another part of the inflation is that your house value has cone down, and your house being an investment if you trade or sell your house and get less that what you have in it, the purchasing power of it has gone down, that is inflation to you, since basically inflation only means less purchasing power.

Yet the biggest reason that there is no visible inflation in the economy despite the out of control government spending is this, that the rich are taking the money out of circulation fast as the government is spending it" and you can take that to the bank.


 if this article is not yet complete please look back soon



LIFE IS A GAME OF CONNECT THE DOTS, IF YOU DON'T CONNECT ALL THE DOTS OR DON'T CONNECT THEM IN THE RIGHT ORDER YOU NEVER GET THE PICTURE

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