How Inflation Helps Rich Become Richer

[Mika]

Not many people realize this but inflation builds wealth for wealthy people, and rich people become extremely rich. The Middle Class, on the other hand, pays higher taxes, and the poor will get poorer.

Do you know what the major problem is?

In 1944, the United States Dollars stopped being money, and instead became the Reserve Currency of the World. In 1971, US President Nixon took the Dollar off the Gold Standard.

Thus the major problem is the US Dollar. When there is inflation they print a lot of currency notes and low-income people are hit hard. That’s why savers are losers because when you save money the value of your money goes down, especially during inflation. Likewise, your house is not your asset, it is a liability because you will have to spend money on taxes, insurance, and maintenance.

During inflation, investors invest more money, businesses start to buy more businesses, and they continue to build their wealth.

 

[Jasmine]

During the corona pandemic a lot of businesses failed, a lot of people lost their income sources, yet, Jeff Bezos managed to become world's richest man. Jeff Bezos is not the only example, a lot of individuals and businesses grew their net worth by multi millions during the pandemic. Businesses always use time to their advantages. Therefore, it does not matter whether there is a pandemic or recession big businesses are always able to built their income. When there is inflation, rich people start investing in the market because the market is down and they can by assets and equity for cheap. They can do that because they do not have the dearth of funds. However, for poor people, investment is not possible during inflation. Even the middle class cannot invest during the inflation because they will experience loss in their income. However, with simple lifestyle changes anyone can build investment funds

 

[King bell]

Inflation is an economic term that affects your daily life, whether you are aware of it or not. It is the increase in the general price level of goods and services in an economy over time. Living through a period of inflation (e.g., late 1970s and early '80s), you would have seen a significant change in your purchasing power, such as the ability to purchase twice what you could previously for the same amount of money.

Some economists believe that inflation has a "trickle-down" effect from rich to poor, providing more jobs and income opportunities for those who need them most, while others feel that it hurts everyone except those at the top. To decide whether inflation affects all people equally, you have to take a close look at the Fed's actions.

The Federal Reserve, or "the Fed," is the central bank of the United States. It sets monetary policy (interest rates and lending) to achieve its mandated goals of full employment and price stability. Many people feel that the Fed has done a poor job of creating jobs, but it has had much more success in controlling inflation. Since about 1980, consumer prices in the U.S. have risen on average at an annual rate of 3% per year.