The War on Inflation
February 17, 2022
Everyone’s seen it. Tags on goods add an extra dollar sign; those neon lights on gas station signs pile on the cents, the dollars, the worry. We are living in a period of intense inflation. Inflation is when the value of the dollar goes down, and the prices of goods and services soar. Recently, the US has experienced a 7.5% increase in inflation rates, something that hasn’t ever been seen in this economy; it’s the largest increase in forty years! Now, 7.5% may not seem like a lot, but considering the fact that twenty years ago the dollar was equivalent to $1.56 today, we can see that 7.5% is quite a lot.
But where did inflation come from? Well, before 1913, when the federal reserve bank was established, every dollar in circulation was backed by a dollar’s worth of gold. This was called the Gold Standard System. This fell out of fashion when the First World War came about. Both Britain and the US experienced price hikes like never before, and there simply was not enough gold to cover the amount of dollars in circulation. Then, after prices climbed to their peak, the world was thrust into the Great Depression. Many economists blame the Gold Standard System for the Great Depression, because there was only 40j% of circulated dollars being covered by gold. The dollar was equivalent to around $.40. The demand on the dollar became too much, and banks shut down. The world plunged into a darkness that led to the greatest economic recession ever, well, maybe until today.
With the demand on the dollar becoming increasingly more akin to that of the 1920s and 1930s, we are waging a war against inflation. Every price on every good has gone up, and Americans have begun to notice that it’s not going to stop any time soon. So, the Fed has become the media target as of late. The Fed, also known as the Federal Reserve System or FRS, is responsible for the inflation situation. They are the ones we turn to when faced with national economic crises; they’re the ones who’ve been tasked with killing inflation entirely. The situation should not be handled lightly, even on our end. What the Fed intends to do may very well wreck our economy, but the action would cause a lot of good for the nation. We are facing a time like no other. It’s not our gold that’s causing the problems, its the lack of working people and resources. Wages are rising for entry level jobs because there aren’t any occupants to fill the vocations. There are so many other reasons as to why the inflation rate is on the unforgiving rise, but the biggest has been COVID. The COVID-19 “vaccine mandate” has pushed a lot of buttons and forced many to vacate what they once knew as stability. The supply chain has become a pinprick compared to the cascading flood that was available to us in 2019.
So, we need to remember to brace for impact. We are about to enter into a financial period in American history where we’re scrambling to come up with cash that doesn’t exist. We need to be prepared for the worst. Here are a few ways that we can be fiscally and mentally responsible. Live within your means! If you’re living within your means, you are making financial decisions that you have the money for at the moment you make them. If you have a thousand dollars, try not to spend more than half of that, because you never know what hidden investments might have to be made, or crises that you may have later. Make choices that will benefit you in the long run. If you’re new to an area, don’t buy a house, rent. The area you just moved to may not be the area for you, and homes take years to pay off before you can sell them. Try to save as much as you can. You never know when you might be forced to pay for some unknown expenditure. Start eating out less and cook more! Eating out on average will cost $10-$20 per meal, but eating at home costs around $5-$8. Understand what your fixed expenses are. Do you have a car payment? House payment? Insurance? Those are fixed payments that you need to remember when factoring your budget. That budget is a necessary thing and encompasses everything mentioned previously. Research as much as possible and create the perfect budget for yourself. There is no reason to stress about the coming game if your defense is impenetrable.
So, all in all, there is a cloud above the US at this moment, but if you bring your umbrella, you won’t get wet!
To learn more on inflation:
https://www.foxbusiness.com/economy/lumber-prices-homebuilders-inflation
https://www.investopedia.com/terms/i/inflation.asp
