Most of us like Tom Faye have learned how to be careful with our budget, finances, accessories and lifestyle in the quest for riches. We wish to have all that we could at home yet these riches still evade the majority of society. Could there be an invisible enemy that has a direct corelation with the depreciation of your capital, stopping you from achieving your goals? Keep reading to find out more by Tom Faye.
According to Tom Faye, What’s better: Cash in the account or at work?
While we lockdown/ shelter in place there’s an economic phenomenon munching away at your cash while it’s sitting in your bank account. It’s losing value and we know it. Follow Tom Faye on Instagram.
Is the rise in Money supply beneficial for the economy at this time?
The most important thing to understand is that our governments’ Large Scale Asset Purchase programs or Quantitative Easing have gradually increased the amount of cash supply available and floating around in the economy. However, not much emphasis was laid to increase production. As a result, we have:
- significantly greater demand than there is the supply of goods and services. Especially during the lockdown.
- There are more people with more money to spend. A large fraction of it was not involved in the production cycle, still, they are buying goods with the increased cash available in their pockets.
To what extent can these differences in supply and demand affect the economy?
Before we go into its effects, let’s mention its root cause. The basic cause for this tremendous difference is the fear of missing out on the goods they typically would have access to.
As a result, producers and suppliers can’t keep up with this increase in demand on top of supply-chain issues, and a reduction in the global movement of goods means that the end retailer is under pressure. the example of Hauraki Countdown Supermarket in Auckland. It is due to close for a week due to supply and staffing issues. The reason being the unavailability of products to sell on the shelf. Everyone has taken it and the supply chain is unable to keep up with demand.
Are High demand and low supply catalysts to rise in inflation?
Yes, high demand and low supply do have their say in inflation. A higher money supply leads to an increase in demand which ultimately increases inflation. Low supply makes this inflation even more significant.
This inflation is influencing the value of your money in savings accounts, depreciating its value by some percentage every year.
What are the possible methods to escape from this inflation?
First thing is to avoid leaving your cash idle in bank accounts. If you now pull your money out of that inflationary system and secure it with the property the pinch will be there but way less as typically property value growth and cash flow outrun economic inflation by a minimum of 6% annually. This is what you can do: get your cash out of the bank, buy what you need now while it’s still available and before inflation causes it to be worth 10% to 20% more than it’s worth today, then find yourself a hedge against inflation that can support you and your family through this extended inflationary period we find ourselves in and protect you for years to come.
Source : Chicago Daily Post