In fact, many people are being taken advantage of by our monetary system, and they are totally clueless that it’s happening. As the effects increase and the pressure builds, the natural human reaction is to make the necessary minor adjustments and just deal with it. A household may choose to reduce its spending or increase work hours to earn more money. Unfortunately, that’s not enough.
To combat against what’s going on a total mental makeover is necessary. It requires unlearning everything you think you know about money, and learning the new rules of the game. The rules of money changed in 1971 when the US dollar became a currency.
As we’ve stated in previous articles, currencies are designed to lose value, or purchasing power, over time. Purchasing power is the value of a currency expressed in terms of the amount of goods or services one unit of currency can buy. It is how much “bang” you get for your buck. Over time, as the amount of currency in circulation increases, the “bang” grows weaker and prices rise. The rise in prices is known as inflation.
Inflation Destroys Wealth
Inflation is a wealth destroyer, eroding purchasing power, or “bang,” over time. The following chart from the Pew Research Center provides an example. It shows that even though workers’ wages have increased in nominal terms over the last several decades, after inflation is taken into account, real wages have barely budged for decades. As a result, people are tricked into thinking they are being paid more, when in fact their real wages have been flat or falling for decades.
This chart illustrates why having a financial education is so important. Don’t you think it’s time to do something about your situation? Isn’t it time to take control? Don’t be a victim of the monetary system. Learn the new rules to the game.