Day 563 - 19% inflation not 9% - https://golifelog.com/posts/19percent-inflation-not-9percent-1658014301739
Interesting observation and opinion about inflation in the U.S. from inflationchart.com (made by @levelsio) –
Inflation is actually 19%, not 9%.
Actual numbers are being downplayed.
"You’re now losing 19% of your money to inflation per year or 1.43% per month. At this rate, in 4 years over 50% of your money has evaporated."
That’s slightly over double of the forecast.
It looks scary.
I’m no expert economist, but I can go with the idea that the numbers don’t always reflect reality, and that downstream, real prices of goods might increase even more than 19%, but some might decrease too.
Perhaps the real impact on the ground depends on what you spend most of your money on:
Inflated prices:
- Housing
- Food & beverage
- Textbooks
- Childcare
- Healthcare
Deflated prices:
- Clothing
- Software
- Toys
- Cellphone service
- TV
Sadly, we can’t avoid food and drinks, housing, healthcare. The costs of our core consumption goes up, while the nice-to-have goes down.
That’s the counterintuitive thing - when times are tough, we intuitively cut down on the luxury spending, nice-to-have spending, when it’s actually the basics that need to be reviewed.
Of course, those are U.S. inflation numbers. Singapore’s forecast of inflation for 2022 is ~5%. Lower, but perhaps will rise as the year progresses. Which makes me wonder how much exactly that 5% is downplayed… If by the same multiple as the US (i.e.e double - 9% to 19%), then it’s like 10% or more? Caveat: Pure conjecture there, but concerning nonetheless…
I don’t understand the economics too deeply, but my main noob takeaway are:
- find ways to earn more (at least 20% more) instead of just saving as whatever money you hold will decrease in value
- review spending on consumption basics that’s most affected by inflation
- even investing in crypto isn’t a hedge against inflation that high anymore
What else can we do to hedge ourselves against inflation this high?
Inflation is actually 19%, not 9%.
Actual numbers are being downplayed.
"You’re now losing 19% of your money to inflation per year or 1.43% per month. At this rate, in 4 years over 50% of your money has evaporated."
That’s slightly over double of the forecast.
It looks scary.
I’m no expert economist, but I can go with the idea that the numbers don’t always reflect reality, and that downstream, real prices of goods might increase even more than 19%, but some might decrease too.
Perhaps the real impact on the ground depends on what you spend most of your money on:
Inflated prices:
- Housing
- Food & beverage
- Textbooks
- Childcare
- Healthcare
Deflated prices:
- Clothing
- Software
- Toys
- Cellphone service
- TV
Sadly, we can’t avoid food and drinks, housing, healthcare. The costs of our core consumption goes up, while the nice-to-have goes down.
That’s the counterintuitive thing - when times are tough, we intuitively cut down on the luxury spending, nice-to-have spending, when it’s actually the basics that need to be reviewed.
Of course, those are U.S. inflation numbers. Singapore’s forecast of inflation for 2022 is ~5%. Lower, but perhaps will rise as the year progresses. Which makes me wonder how much exactly that 5% is downplayed… If by the same multiple as the US (i.e.e double - 9% to 19%), then it’s like 10% or more? Caveat: Pure conjecture there, but concerning nonetheless…
I don’t understand the economics too deeply, but my main noob takeaway are:
- find ways to earn more (at least 20% more) instead of just saving as whatever money you hold will decrease in value
- review spending on consumption basics that’s most affected by inflation
- even investing in crypto isn’t a hedge against inflation that high anymore
What else can we do to hedge ourselves against inflation this high?