Money is an important part of our lives. The economy has experienced a major rebound in the recovery and prices are rising more and more. Inflation continues to cause large increases in price and society continues to be hit by the pressure of it all. Let’s take a look at why prices are rising and why people are accepting it.
Why it matters
We know inflation causes prices to rise. Unfortunatelly, the fact is that people have been saving money and are still accepting price increases. The ability to pass on and to keep prices rising means that the price increase will not be temporary, but rather looks like a permanent increase.
What you can hear
Well known billionaire and manager of one of the world’s largest investment fund, Berskshire Hathaway, Warren Buffett, spoke to Berkshire’s millions of shareholders on Saturday. Buffett said that he was surprised by the “red hot” US economic rebound and warned the company was being hit by inflationary pressures.
Household incomes rose in March, the most in recorded history, right after bank accounts received the last round of stimulus. So people are saving and are expecting worse times. It can also be heard from governments that this is a temporary solution and prices will fall again in the future. It cannot be refuted that this will not happen, but it is better to be prepared.
What it could mean
Rising prices bring their pitfalls. In the future, some people could lose the purchasing power to buy basic things. Some households recorded up to a third of their income from the state. But such a model cannot work indefinitely, unles some kind of a universal basic income is installed.
What you can do
Saving money is one way to protect yourself against inflation. But it must be added that it is not a very efficient way. Mainly because the main effect of inflation is the loss of value of money on your account. It is better to let money work for you instead and make money with investments. If you would like to learn more about investments, you can start studying with our Platon Trading Academy. There you will find all the necessary information to successfully set up your investment strategy and start investing.