The Hidden Tax We're All Paying

Hey Jessconimists

We all have to pay our way through this world. The way we do that is through our labour and intellect. We provide goods and services to the market, and in return, we are rewarded with an agreed-on value, and that is money.

Most, if not all of us earn our money in the fiat of your national currency, or perhaps you make foreign currency it doesn't matter, fiat by any other name is still very much the same. Its a piece of paper or digital representation of value that your government backs up to say has value, and we all agree it has value.

The purchasing power

When normies ask me about crypto, they always speak about one thing, the volatility and the ability for it to lose its value at a moments notice. Which is entirely accurate as its still a speculative store of value but your fiat currency loses its value every year without fail. A fiat currency can bottom out just like cryptocurrency as we've seen with countries with hyperinflation like Venezuela and Zimbabwe.

Fiat is by no means bulletproof, and the ability for a central authority to control inflation has been a failure every single time. There is not a single fiat currency that doesn't continue to lose its purchasing power every year.

Image path - investopedia.com

How does inflation work?

Governments put money into circulation to create economic growth, but when a nation's money supply growth outpaces, economic growth sustained inflation occurs. This inflation affects all of us as prices rise. A single unit of currency loses value as it buys fewer goods and services.

This increase in prices ultimately leads to a deceleration in economic growth. So what do governments do? They print more money to try and jump-start the economy thinking we can take from future growth and bring into the present to they can maintain their so-called healthy economy with 2% inflation.

The double tax

As inflation increases and goods and services become more expensive, we need to earn more money to keep up and remain in the same place we were in the previous year. Making more money means paying more taxes, paying more taxes means coming home with less money, and this is how inflation is a double tax on the consumer.

To be honest I think inflation numbers are being manipulated and we're closer to a 10% yearly inflation than the so-called 4% our local government gives us with the cost of living outpacing salaries at an insane rate.

Diversifying your wealth

I think keeping all your wealth in one currency is placing too much faith in one point of failure and with governments around the world constantly proving their incompetence I don't think it's wise to keep your wealth all in one fiat. I personally keep a shared basket of Dollars and Euros and cryptocurrencies I think would be worth more in the future.

Let's connect

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