Today, I had a pretty good day skiing and spending time with my kids. On Saturdays I like to ski in the winter and hike in the summer and do anything I can with my 4 great kids. But after a good day I was reminded of how much things cost. I walked into the grocery store and went to buy some milk and the price had gone up from $2.25 to $3.09 in the last 18 months. Eggs now cost $3.29 versus $1.98 from 12d months ago. Almost every single item in the grocery store costs more money. So, I bought a few things and as my kids wanted pizza for dinner, I decided to use my savings app and get a coupon for Domino’s Pizza and by the Pizza with my savings app to get some cash back from my purchase – 5.4% cash back actually. After my coupon on cash back, I only paid $26 for 2 pizzas, bread sticks, and chicken nuggets. It fed the 5 of us for Saturday night dinner for the 49er football game and gave us lunch on Sunday. Doing may best to fight back against inflation.
Inflation in recent years has gone crazy. With the 2020 pandemic, the Federal Government used its powers to pump more and more free money into the economy and the Federal Reserve did its part to buy up assets to put even more money into the economy. And just like my college economic courses taught, the more the dollars flow to the people and inflate the US dollar, the more prices have to rise to deal with the demand and increased money supply. The sad thing is that the US Money Supply has increased dramatically over the last 2 years and has been in a steady consistent curve since upwards since 1971.
The above illustration shows the red line “money supply” increasing steadily from 1971 till 2021. The dollar’s purchasing power keeps decreasing dramatically and in a steady curve downwards as the money supply grows. Our dollars soon will be worth less than the money they are printed on.
For almost 200 years following the founding of the United States, the value of the U.S. dollar was officially backed by gold. The gold standard was a system agreed upon by many countries during that period, in which a currency was determined to be worth a certain amount of gold. This ended in 1914, according to the experts at Gold.org, and the U.S. gold-backed system ended in 1971 under an executive order by President Richard M. Nixon, but in actual fact, it had not been in practice for almost 40 years.
Scholars debate the benefits to this change of the backing of the US Dollar by Gold to a Fiat system where the government can manipulate and print money as it pleases. The intent was to give the government more tools to boost the economy, control interest rates, create jobs, and protect against foreign powers. Government backed money (fiat) is generally more stable than commodity-based currency (gold). But there is little arguing with the graph illustration above that clearly points out the steady rise in inflation and the diminishing purchasing power of the US dollar.
Inflation is the decline of purchasing power of a given currency over time. From what we have seen, prices increase, and the dollar cannot buy as many goods and services. The cost of a cheeseburger 50 years ago was 50 cents for example, and now it can be as much as $15. A bottle of coke was 5 cents, and now is closer to $2. A medium sized home in my market 20 year ago may have cost $250,000 and now costs up to $600,000. Prices have gone up on everything from gasoline to milk and everything else.
The problem with inflation is that as prices rise, wages have not risen as fast and do not rise as fast. Asset prices go up and our wages to buy them do not go up at the same rate so the poor have more and more difficulty getting by each money and their wages can buy less and less. The rich however, see the value of their assets go up with inflation and their wealth increases.
So inflation has the effect of keeping the poorer population poor, and the richer population continues to be rich and increase their wealth. In the last 2 years with supply chain issues due to the pandemic, we have seen inflation increase even faster as the supply of many goods has gone down that has also increased the prices of goods we need.
There are only a few ways to fight against inflation. First, own assets that can appreciate in value. Second, find ways save money and hopefully get cash back from your purchases. And third, make more money so you can deal with higher prices and buy assets. We feel that sidebusinessfreedom.com does just that. Our business will give you access to our mobile savings app that has over ten thousand coupons nationwide and also cash back at hundreds of retailers and restaurants. And, if you follow our system, you can make lots of money with very little investment. Best of all, you are building passive income that will continue to make you money over the long haul and set you free from the day to day of selling your time for money. Click here for a 25 minute conference call to learn the business and discover the plan to set you free.
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