Here’s something I’ve been thinking about a lot lately:
Some may remember a whole bunch of internet nuts banging on about how Covid was going to bring in a new world order and redistribute wealth or something like that. Now that it’s been a few years since the initial Conjob 19 (whoops I meant say COVID19) pandemic started we’ve seen 3 straight years of inflation in America and Australia getting close to 10% every year and possibly looking like 6% for this the fourth year since the pandemic. This really does suck for those of us struggling to get by and myself being one of those people but as far as being a great equalizer, what’s really happened?
Imagine of you will you had managed to save $1 million dollars in the bank. There will be plenty of baby boomers that will have managed to save this amount, particularly with pension plans and superannuation. In theory, if you had that amount of money saved up you should be able to buy a million dollars worth of stuff. With 4 years of rampant inflation that million dollars can now only buy 60% maybe 70% of what it could have prior to this whole thing happening. Let’s take this a step further, what if you were a billionaire, that billionaire if he’s been hoarding cash has basically taken that same 30 – 40% hit as well. Storing that money in stocks wouldn’t have helped (unless you’re actively trading) because that market has basically gone nowhere (even with dividends you still would have lost out big time). Real estate has increased slightly but not 40% from pre covid levels and bonds pay fuck all anyway. Crypto is down in a big way so basically not many passive investors would have made a 40% yield to cover this unless you got in some kind of ground floor opportunity, or actively trade on the stock market (but even trading the stocks has been like guerilla warfare the last few years).
Inflation like this whilst it hurts the little guy as well, has the effect of getting money moving again. It reduces the amount of power the rich have, at least in regards to purchasing power. In some ways, we might be in a banana republic scenario where there’s no point holding onto excess amounts money if it’s going to devalue by 10 per year. Anyway have a think about it.
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