Pages

Wednesday, May 27, 2015

Inflation, the cost of borrowing future money

Inflation causes the poor to be poorer and the rich to be richer. Cost of food and transportation have increased with time, and the cost of them will continue to increase as long as we are living in the world of borrowed money.

Future money, and lots of future money were borrowed to meet GDP growth expectations and create jobs for the people. US introduced quantitive easing to erase borrowed future money that cannot be repaid. By keeping interest rates low, they allowed rich corporations to become even richer because companies can now borrow money at rates close to zero.

Apple had $194 billion in cash, which is enough to buy 2 McDonald's corporation.
Source : http://techcrunch.com/2015/04/27/apple-now-has-194-billion-in-cash/#.39s1m0:e9Vj

More countries are either erasing debts or printing more money in the world today, and these polices have desirable results to improve the overall economy. However, these achievements have been successful at the expense of consumers which is the middle and low income bracket household. Things either became more expensive like food, transportation and services or cheaper like communications and electronics. Companies or small medium enterprises faced increased in costs which hopefully can be passed on to consumers or customers.

These scenarios are evident of the inflation structured economy today that we live in. And if we still keep our money in the bank, the value of our money could end up depreciating faster than we could imagine. A bowl of noodles now cost $3-4 may soon be $5-6 in two to 3 years time. MRT rides that cost $0.79 will soon be $1.

This is the cost of borrowing future money which affects us in an invisible way.




3 comments:

  1. For any new trader, who is performing SGX stock trading, it is necessary to have an expert guidance who can give a path to their trade.

    ReplyDelete
  2. I am trying to recover my money with Intraday SGX Signals invested in singapore market lost before.

    ReplyDelete
  3. But through investing in the stock market, we should be able to beat inflation rate, as the increase in the inflation rate should by right also lead to greater profits for our shares as well as a higher share price.

    It is also important for us to plan for our retirement early and to start saving as well as investing to grow our retirement fund to be able to support us in our silver years.

    ReplyDelete