So we all are aware how prices for everything have gone up right?
I have done some price research on fiat currency and have come to the conclusion that fiat currency is dying.
Not only that, asset (stocks, crypto, real estate, private business) prices have gone down as well.
If fiat currency is losing value, where is that value going to?
Inflation. This is the brutal nature of inflation, and it is not a joke.
As more fiat currency is created to appease the world population, the value of each currency itself goes down and since fiat currency is based on nothing but trust and government debt, the value can go down to zero.
How can the value of fiat go to zero? Inflation & hyperinflation.
So usually inflation is 2% per year, which means for every $100 you lose $2 of buying power each year.
Year 1. $100 (starting)
Year 2. $98 (Y1-2%)
Year 3. $96.04 (Y2-2%)
Year 4. $94.11
Year 5. $92.23
Year 6. $90.39
Year 7. $88.58
Year 8. $86.81
Year 9. $85.07
Year 10. $83.37
What happens if we change the 2% to 8% like in 2021?
Year 1. $100
Year 2. $92
Year 3. $84.64
Year 4. $77.86
It only takes around 3 years to do the damage that 2% inflation does in 10 years.
So basically imagine living in 2030 prices on a 2020 salary.
This is essentially what happened. We are all paying 2030 prices right now due to rise of the rate of inflation.
What is the solution to inflation?
Deleveraging.
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