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Money

The U.S. Is About to Wake Up a Generation on How Money Works

How Money Works

Photo: NeonBrand/Unsplash: wilhei/Pixabay


My jaw is still on the floor.

The US hit 6.8% annual inflation. It’s the highest number in 39 years.

That’s right folks. Prices of everything are going up at least that much.

Of course the calculation of inflation is hotly debated. We all know by now that it’s much higher. Gas prices in the US alone are up 58%. Real estate (shelter) is at record highs.

As a generation, we were told 12 months ago that this couldn’t happen.

Here we are.

You’re forced to understand what’s going on.

Or have your family’s livelihood destroyed. And if you’re not in the US it still matters. What the US does feeds into every other country. Because prices of most things worldwide are in US dollars.

How a generation became poor

In March 2020 a global crisis came from nowhere.

Governments created money out of thin air (money printing) to pay for the problem. Not to be a-holes. But to ensure they didn’t need to raise taxes that could lead to rioting in the streets.

Inflation is a second silent tax.

In response to coroni-macaroni, 40% of all US dollars ever to exist in history were created. Our dollars instantly became worth a lot less. What we can buy for those dollars fell sharply.

We pay for uncle coroni through money printing and inflation. Makes sense.

Investors became stupidly rich (or so they thought)

The US stock market has hit record highs since the start of coroni. The uneducated are jumping up high and saying “my house/stocks went up 20%. I’m rich, I tell ya!”

The problem is they are measuring prices in US dollars. 40% more dollars exist, so of course, everything looks like it went up.

Most investments didn’t go up. It’s an illusion.

“Personal inflation rate” became a hot topic

Inflation is often misunderstood. It means the devaluation of a currency.

When you hear the word “inflation” you should think to yourself my money just became worth less, not prices went up and I got rich.

A generation of Gen Z and millennials went to the streets (Twitter). They started to question the inflation rate. The head of the US central bank, Jerome Powell, quietly mentioned a few changes to the calculation.

So a new trend formed: The calculation of our personal inflation rate. The bad news is if you use gas or need shelter then the official inflation rate is wrong.

If you only watch Netflix, eat Dominos pizza and got your home for free via Daddy, then your inflation rate may be closer to the official number. Good for you, pal.

For most of us, inflation ripped a hole in our back pocket.

Stuff became hard to buy

I went to buy a couch last week. It’s a 5–6 month wait. My wife needs a new car next year. I made a few calls. 12 months to get a new Toyota. Oh, and the price is a lot higher.

I can get a 3–5 year old Toyota for her — for 10%-20% higher than the cost of a new Toyota (if I can find one).

The supply chain has broken. A certain economic powerhouse has struggled since coroni to manufacture stuff. So the rest of the world that sucks on her teat isn’t able to gobble up her delicious goods.

Manufacturing, where I live, died two decades ago. The US is similar.

When basic things become scarce, prices go sky-high.

Employees got slapped in the face

Gif Credit: Giphy

I went to dinner last night with my friend from New York. He hasn’t had a pay rise since he changed jobs three years ago.

Based on the current inflation number his wage went down 6.8% this year. Every year he loses money. His employer would love to pay him more money.

They can’t.

Business profit margins got smashed by coroni.

So he sits in front of me, looking like a deer in the headlights. He’s 20-something and has hopes of buying a home close to his New York office. That dream is dying real fast. We hold hands and have a little talk.

The elephant in the room

They told us inflation is temporary.

Now they changed their mind and said it isn’t temporary and we shouldn’t use that naughty word anymore. What nobody is talking about is, even if all this increase in prices is temporary, prices are never coming back down.

Once we pay a new price we’re used to it. We forget about the inflation tax on the goods and suck it up.

What you can do about it

I’ve got good news.

Despite what the doomsdayer say, America isn’t going to die.

Circumstances from coroni will get better. Markets will recover. Supply chains will eventually go back to normal.

What won’t change is the devaluation of the dollar. Interest rates are at zero. If they get raised it will most likely cause a recession. Interest rates could go negative like Europe, but that’s unlikely.

So we’re stuck in a holding pattern.

The only solution is to create more money out of thin air, which has been the savior since 2008 (except the number of US dollars in existence has gone parabolic).

Here are the practical solutions.

Show the inflation numbers to your boss

Now is the time you must ask for a pay rise. Use the data to quietly tell your boss about the problem. See if they can help get you more money.

To hire a new person costs your boss a lot more (if they can find anyone). It’s cheaper to give you extra cash in a flash.

Don’t ask, don’t get.

Get a new job

Most employers won’t give out pay rises. Thankfully there are plenty of businesses looking for people just like you. Hooray.

*Does happy dance*

Shift jobs to get a free pay rise that fixes inflation (for now).

Rethink your entire investment portfolio

Another way to beat inflation is to have your financial assets grow in price more than 6.8%.

An entire generation of us got forced to become investors.

No problemo.

It is what it is. That’s hard to do with stocks or bonds. What’s missed is that Wall Street is quietly being replaced by Web 3.0 (aka decentralized blockchains). Defi (decentralized finance) enables peer-to-peer lending that can outpace the 6.8% inflation.

Then there’s that naughty word again: cryptocurrencies. I had a revelation last with my friend from New York.

Cryptocurrencies are just tech stocks.

Every business is slowly becoming a tech company. Cryptocurrencies allow anybody with an internet connection to invest in a Web 3.0 tech company. It’s the fastest user adoption in history. And the number of developers moving to this new era of Web has gone parabolic too.

With a new class of financial assets, it’s possible to overcome crippling inflation. Spend your time and do the research.

Takeaway

An entire generation of people is now awake with 6.8% inflation.

No one is coming to save you. The US government said this wouldn’t happen. Yet here we are. They did their best so no point playing the blame game. I challenge anyone to successfully navigate the world’s biggest economy out of coroni without problems. Impossible.

Now we’re learning about money, even if we’re a little slow. We learned one thing: Keep your money in cash … and be ruined.

The only viable option: learn to invest.

Understand the replacement for Wall Street that ditches the old system, where money can get created out of thin air. You’ll recover faster.

Lesson: Your investment portfolio now needs to grow by more than 6.8%.


This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

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Tim Denning
I am an Aussie Blogger with 500M+ views — Writer for CNBC & Business Insider. Inspiring the world through Personal Development and Entrepreneurship. You may have seen my work on Medium, LinkedIn, Bitclout, or Twitter.

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