Inflation is something we cannot escape from. It happens in every economy, and we feel it in our every day purchases. It may not be an appealing concept at all, but there’s nothing we can do about it – really.
Most people think that inflation is when prices go up, but in reality, the rising prices is a symptom of inflation. Inflation is really a situation wherein there is an overflow of money. When this happens, people are willing to pay more for a commodity, and prices go up as well as demand.
As a result, we get less for our money than before. Before 1776, there was no such thing as inflation. Five dollars was worth five dollars – no more, no less. It isn’t that way anymore. Our money loses worth and we can buy less with our money now than our forefathers.
Have you ever heard stories from your grandparents about how much a dollar was worth in his day? Fifty cents was good for a week, and you could buy a car for a few hundred dollars only. Who doesn’t wish for days like that?
If you find yourself in a situation where there is just one pair of concert tickets left, would you pay over the top price just so you can get in, or would you tuck away your money and settle for a date in a coffee shop instead? What about if there was no tickets left except through scalpers – this is how these people make money. The same concept works in business too. People buy early, and sell at premium price. This is also the same concept as in real estate, when you get in on a pre-selling stage, believing that particular piece of property will escalate when done.
Inflation has also changed our lives tremendously. History will show that life was much more simpler a few decades ago than now. Even if the basics are the same, prices are much higher. The cost of living now is incredibly high compared to the 1960s.
What happened? Crises happened – we had to go through wars, calamities, recession, crime, counterfeit, and overprinting – to name a few reasons. Technically, when any government goes into overdrive and starts spending more than it has, then it is in deficit. This will result in inflation going up. Of course, the government should find a way to pay off whatever it had to borrow, and the inflation rate goes down.
You don’t even have to look at history books to know that war and calamities have a severe effect on the economy of a country. Look around the world – the Iraq war cost gasoline prices to shoot up and with that everything became more expensive.
To make up for the increase in prices, families had to cut back on their luxuries and non-essentials, and at the same time, wives had to look for ways to augment the husband’s income. Life became harder, and earning a living became more stressful.
Inflation has a severe effect on our lifestyle, family life, and personal life. It spares no one. Everyone is affected.
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QUOTE OF THE DAY
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of the citizens. “ – John Maynard Keynes
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CONCLUSION:
Inflation may be a stressful concept to live and deal with, but it is not going to last. It’s a situation that is more often than not, temporary, and we all manage to live through it, albeit having to be more prudent than usual.
