OK, I’m no economist. Although I did take some economy classes in college, I’m not a professional who deals with stocks and bonds and I can’t tell you when to buy “puts” and when to purchase “calls”.
However, it seems to me that in this declining economy people are really doing the opposite of what makes logical sense. They’re “saving” their money. The trend seems to be to save up your cash and avoid spending anything you don’t have to. Be frugal. Save, and only spend when you absolutely have to. This will leave you more for when times are tougher down the road.
I am certainly open to correction on this, but that thinking makes no sense to me. Why? Well, we know that we are in a time of massive impending inflation. The government just passed a series of bills (with many more to come) that literally creates cash out of thin air and pumps it into the economy. This action, just as it always does, is going to cause our dollar to plummet in value. And the enormity of the cash that is going to be released in this country soon is something we have never seen in our history. The inflation we are going to encounter is projected to be huge and fast.
So why would you want to save up something that is going to be worth much less in the near future than it is now? It seems to me the logical thing to do is to spend your money on things that will last that you won’t be able to afford in the future. Or to convert your cash money into something that won’t be affected as much by inflation. Like gold or property, etc.
For example, if I have $100 now. For the purposes of this argument, let’s assume that in 6 months that $100 will be worth 1/3 of its original value due to inflation. By simply “saving” my money I just lost 2/3 ($66) of what I’ve worked so hard NOT to spend. Where did it go? Out the window. It is just gone.
It seems to me that money would have been better spent putting it towards buying a car, or a Sony MP3 player, or making memories in Disneyland, something useful. At least a trip to the beach will leave you with memories for the rest of your life. The savings account left you with virtually nothing. And let’s face it, you’re out the money either way. If it isn’t spent by you, and soon, it will be literally robbed from you by inflation. The only way to beat inflation is to put your money into things that can’t be taken by inflation…. things that you can afford now, that will be out of reach in the future. For example, if you would not be able to afford a toaster in the future, but you need one, buy it now while it costs $25 rather than $250 down the road. A savings account does not shield you from losing your money to inflation. The more money you have saved in cash form in the bank, the more you will lose.
Think about this. Have you ever said, or heard somebody say… “We could have bought that house for $25,000 – X many years ago. What were we thinking? Why didn’t we do it”. Yeah, that’s exactly what I’m talking about. But now, because of inflation, that house is worth $600,000 and nobody can get a loan for it, and you wish you had that $575,000 in property equity.
The flip side:
I’m trying to come up with a flip side… reasons why what I’m saying is actually NOT true, and I just can’t. But like I said, I’m not an economist. So if you have any thoughts on the subject, and have reasons why you think I am in error, please comment on this post below. I would like to hear your opinion.
sending...