rajatsonifnance on Nostr: The cost of living will rise forever. But why? There's a very simple explanation: The ...

The cost of living will rise forever.

But why?

There's a very simple explanation:

The amount of money chasing the number of goods available to be consumed is rising.

Let me give you a simple example:

Year 1: you have 100 apples and $100 in the economy, the price of an apple should be $1.

Let's say because of technological innovation we can produce 110 apples in year 2.

The supply of apples has gone up but the amount of money chasing those apples stays the same.

The price *should* decrease to ~$0.91.

What happens if the amount of currency in the economy increases faster than the number of apples?

What if apple production can't keep up with money production?

Year 2: 110 apples, $120 in the economy. The price of apples rises to $1.09.

I know this is overly simplified and there are a lot more factors to consider.

But as the amount of money in proportion to the number of goods increases, we see prices rise.

When the US government borrows trillions of dollars, what is that money being used for?

If it's not spent on investing in production, PRICES WILL RISE.

Maybe we won't see the impact in the short term, but over the long term, this results in a decrease in purchasing power.

The same amount of money can buy fewer goods because there are more units of currency than goods in the economy.

We are seeing this happen in real-time!

Apples haven't gone from $1/pound to $1.09 per pound.

They've risen 3-5x.

I remember when apples were $0.79/pound and now I see them at $2.49-$2.99/pound.

Today, there are so many ways that money enters the economy, and this wouldn't be a problem if it were used as an investment to increase the quality/quantity of goods.

But it's not.

Instead of being invested, the new money is being used to incentivize a DECREASE in production.

Governments incentivize citizens to STOP BEING PRODUCTIVE!

Social security exists to incentivize retirement (a period where people spend but don't produce).

Tax benefits on real estate are used to incentivize purchasing homes to make money (instead of producing other goods and services).

Billions are spent on the military and this spending leads to death and destruction instead of prosperity (taking away labor from production of goods and services).

This is why your cost of living constantly goes up.

For every action, there will always be an equal and opposite reaction.

When one group gets to make decisions and take action without putting in the work required to make it happen, someone else has to work twice as hard to do the required work.

Instead of teaching kids how to invest, governments offer free money to retirees.

By the time Millennials and Gen Z are supposed to receive social security, the benefits will be worthless because all of the value will have been extracted already.

When real estate investors are told to buy homes because of tax benefits, the supply of homes in the economy for people who want to buy them to live in decreases.

When the military receives billions of dollars to train members on how to kill others, those members are NOT producing actual goods and services that society needs.

All of these resources (labor, raw materials, goods, and services) are taken away from other parts of the economy.

Since you can't print resources but demand is essentially unlimited (as population grows so does demand), prices have nowhere to go but UP.

Instead of investing in the future, governments incentivize spending and then promise to pick up the slack for people at an older age.

Governments get to print the money we use today.

They will print forever.

Prices will rise forever.

You must either defend what they do and learn to deal with the consequences, or you can do something about it.

"But I have no control over this!"

STUDY BITCOIN.

The supply of everything else can increase, but there will never be more than 21 million Bitcoin.

Prices will always fall when you save in Bitcoin!