It's been a while since I had the time to sit down and rant about any one thing. Life has become pretty busy and focusing on my future survival and what I value most in life comes into play. I am watching rampant inflation eat into my wages and savings and there is nothing I can do about it.
It feels like every time I go to the store prices increase and it's forcing me to rethink where I store my purchasing power. That has naturally pushed me further into Bitcoin and I do not regret my decision.
Life is becoming harder, I can feel it, I can see it and I feel like we're starting to approach the end game. I am far more fortunate than most in my country, I have work, and an income, and shelter and I'm grateful for it.
However, we're seeing more people pushed further into poverty and this puts further pressure on governments to increase the welfare state naturally funding it through taxes and inflation.
I speak to friends and family on how they feel about it, some don't care they feel it's just part of how things work since prices always rise each year, but for me, it's about the pace at which it's rising.
Others are taking note and are looking to invest, be it property or stocks or index funds. A lot of my friendship circles are now actively starting to invest to try and beat the losses of inflation.
These are people of modest means and they don't understand the risk they are taking to get that yield. In many cases the yield is positive in nominal terms but negative in real terms, that is the sinister creep of inflation.
If you're not an asset holder you're being robbed at record rates and have nothing to offset the losses. Selling your labour you can only earn so much per hour and if you cannot increase your salary or income to outpace inflation you're losing money.
In addition, the more you strive to earn more, be it increased wages or through investing you push yourself into a higher tax bracket. This is the painful part of the inflation, they light the fire underneath your bum pushing you to go and take more risks or work harder.
Only to squeeze more productivity out of you and then take that additional productivity out of you through higher income tax or capital gains tax. You take all the risk and all the burden and get to keep less of the gains.
Making money is only a part of the equation, and not a given. Even if you are able to make more money through labour or investment it's not about how much you make, it's about how much you get to keep and even more importantly how much you get to preserve.
Despite what many people think, that they up in dollar or their local currency terms, a lot of that wealth you will NEVER get to see, much less enjoy. I am not trying to be a wet blanket only telling you what I see happening.
What I am seeing is a trend towards borrowing against your assets. This could be leveraging your home, your stock portfolio or even your Bitcoin. When you borrow money, you essentially bring it into existence, it's a way of printing money in a sense. As inflation increases, there is a big incentive to borrow since you can pay it back with cheaper currency in the future.
It seems to be the more tax-efficient approach too since you cannot tax debt. People are willing to pay the interest rate on a loan instead of paying a lump sum of tax.
They also get to benefit from the currency debasement as their debt burden becomes smaller in real terms. This way you get to keep more of your purchasing power.
I don't make the rules, I just see how people are using them to their advantage and how others ignore it at their own peril.
The way I see it is that the local economy is starting to feed on itself and in doing so the Rand (Our local currency) has to be the error correction. They are printing more money than ever before to keep the system afloat, thus diluting any Rand holders and Rand earners.
Eventually rolling over that debt puts such a burden on the currency that people lose confidence and dump it completely. At that point the country will have 3 choices, to dollarise or go with another international currency, to reboot the currency, or to move to A Bitcoin standard.
The last one I think will be the least likely, because governments cannot expand power under a hard money standard.
I am not saying I have the answer, things are changing so fast and it's hard to keep up. I don't see it getting any better, I only see more of the same in bigger doses and it's up to the individual to find a way to play in the rulesets presented.
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
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