Oct 29 • General Lounge
Inflation
Let's talk about inflation. Listen, I know. What's interesting about inflation? You hear about it on the news, you know it's supposed to be around 2% and sometimes it's a little more or a little less. What's the big deal? How does it affect you? Well, that's what we're here to discuss. Inflation is somewhat a hidden (in plain sight) tax on the people of a governed state. For a state to apply this tax to its people, it must have its own currency and the ability to print more of it when necessary. You must be asking yourself by now: How is this a hidden tax if they are printing more money and it's not coming from us? Well, the thing is, it is coming from the people, but in a very discreet way. This money being printed out of thin air directly affects the total supply of the currency. When this happens, the value is pulled directly from the already circulating supply of the currency. I'm aware this can all get confusing, so I'll give you an analogy.Let's say 5 people collectively have $10, and they can only buy apples with it. Now, let's say there are only 5 apples; each apple would then be worth $2. Now, let's say $10 more is randomly added to the economy, so these 5 people now collectively have $20. But there are still only 5 apples. Eventually, the extra money supply will be applied to the apples, and their price will catch up. The price of apples would then rise to $4 each to account for the extra money added to the supply. This is the core idea of inflation. These entities can print the money we all work for and spend it on the same goods as us. This is why it costs more to buy apples than it did 10 years ago today, even though we are able to generate more apples for a cheaper cost. Inflation is a tax on those who work hard and save money without a yield, or even with a yield smaller than the inflation amount. I will continue to break down different ideas day by day. I want to keep the articles semi-short; it takes a lot on the brain to learn the types of concepts we'll go over.
Feel free to ask questions or discuss in the comments below!
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Inflation
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