In the last 3 years, we've watched our wages devalued by more than 30% now. Every working class person feels the pain. Many of us are drowning now as our wages have not kept up with the rapid rise in cost of even essentials. This also means that our past wages, past savings, stored almost exclusively in 401Ks, pensions, and IRAs, which are typically stored in the “market” have also been devalued by the same amount. It's the most massive devaluation, err, stimulus, err inflation I've ever seen in my career. Central bankers, AFTER providing the uber wealthy with zero rate loans, who used it to acquire actual assets and especially rent-seeking housing, decided to start jacking interest rates to “save” us even harder from the inflation of the stimulation. Stocks plummeted. We watched our already devalued retirement plans get wiped down by an actual 32%. All combined, for most working class people, we will never recover from this 60% loss of purchasing power. Simultaneously, the uber wealthy, including politicians, have nearly doubled their net worth.
Anyhow, I was looking at the trajectory to ruin this has put us on. Local governments jacked up property taxes, took all of the federal stimulus plus some, and our entire lifetime of savings is now worth only a few years, maybe less of retirement. It had me wondering. Inarguably, the dollar is worth less. Yet, many people own shares of companies in their retirement plans. And, those all started plummeting in valuations too. It's a double whammy, and it makes no sense to me. Inarguably, the dollar doesn't buy what it used to. So why would assets, stocks, shares of companies (which are assets and have LOTS of tangible resources), plummet so much. In terms of dollars, if we needed to sell off those assets, it would take a LOT more dollars to buy them now.
To simplify this thought experiment even more. Imagine that you bought shares of a company and the only asset is a single machine that cost $100,000. There are 10 shares, 10 shareholders. Each share cost $10,000. After all of this devaluation of the dollar, if you were to buy another machine, that machine now cost $130,000. Why are shares of this company now trading at 30% less instead of 30% MORE in terms of dollars? Yes I know there are lots of other factors in the real world, but this wipe down of the markets is just a blanket crushing wipe down across the board. EVERYTHING was hit. Every one of our retirement accounts, every individual investment we have, spanning many markets, all wiped down, and all by almost the exact same amount. 30% devaluation of stocks, yet a 30% increase in the price of goods and services and our general cost of living. I'm trying to wrap my mind around how this has been orchestrated, yet again… third time in my career to see such a huge wipe down on our retirement accounts. First time to see this much inflation though.
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