Don’t try to tell me my wages are sharply increasing either, because they’re not! Nor are my friends, family, or neighbors.
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Inflation. The government giving people stimulus money along with less things being made during pandemic. Prices are based on supply and demand. Demand remain about the same or went up while supply went down. Because there are less things, we are “willing” to pay more.
Say I have 2 oranges and you have 2 apples. We are willing to trade 1 for 1. What if I have 100 oranges and you only have 2 apples. You’d want more oranges for your 1 apple. Money is just a placeholder for value. There’s more money going around than good.
It goes to corporate CEOs, who spend the money on
Y- early salaries for workers
A- nnual tax cuts
C- harity projects
H- ousing for the homeless
T- ree planting projects
S- ponsorships of educational and entertainment centers
It’s not that hard — profits are also high.
It’s trickling up into off shore accounts, where it’ll never be spent again. Or the value is being stored as tokens such as modern art. Some of it will be paid back to workers, briefly, as the ultra rich buy ultra lavish things, such as personal high rises and enormous yachts.
On the whole of it, money circulates around the economy, going from person to person, entity to entity, in all sorts of willy nilly fashion.
But, there’s a tendency such that a wealthier entity is capable of spending less and keeping more. They are also better able to adjust prices. So, slightly wealthy people *tend* to hold onto money better than the median, and the median can hold onto money slightly better than the poor. Small businesses can set some prices, but only relative to what big companies set. High earners can argue for wages better than the median. And so forth.
But no matter what, there is a big fish, a fat cat, somewhere, and the money is gravitating to whatever/whomever that is.
Right now there are not even thirty mega corporations that *directly* control the vast majority of world commerce. Of course they *indirectly* control all commerce. Almost all commercial food production can traced upward to about 3 groups. These are the places where money goes to die.
Coronavirus supply disruptions due to sickness and lockdowns have made everyone poorer. Less goods being produced means inflation.
Inflation is kinda complicated and has a bunch of different causes, but in general you can think of it as just costing more money to produce the goods/services you’re buying. Usually due to a combination of increased cost of components and increased logistics(shipping). Either that or the currency you use to purchase them has gotten less valuable.
Things aren’t just getting more “expensive” because if supply constraints . Your money is losing its worth too. Your money is worth less every month.
That’s essentially what inflation measures. The reduction in worth of a currency.
So when the fed announces that inflation for January 2022 is 7.5% which is the highest it’s been for forty years, it’s time to start learning a little about personal finance and be smart about it.
Its not going anywhere really, all prices have gone up. The store that buy the stuff they sell they have to pay more, the people they buy them from have to pay more.
Lets take a single apple as an example: the person that grows this apple has increased costs, rent, water, tools and machinery costs him more money, the truck that drives it to the store also costs more money because gas costs more, and now when you buy it in the store it costs more money.
In yachts, mansions, like their 4th or 5th mansions because 1 isn’t enough. Unless you’re a peasant, then you don’t even deserve a house apparently. Nowadays houses are for the rich only.
Some of it is eventually going to people who found a way to extract a profit from pandemic-related supply, certainly. But when prices rise across the board, the people you pay that money to are themselves paying more for everything. That’s just how inflation do–everything gets more expensive for everybody.
I think this is thinking about it backwards. The fed printed massive amounts of extra money over the last two years.
https://techstartups.com/2021/12/18/80-us-dollars-existence-printed-january-2020-october-2021/
The question is then, if you print money out of nowhere, where does the value come from? The answer is from the existing dollars. If you print a bunch new currency, the existing currency has less value and you have to use more of it to pay for stuff.
Overall, there is no extra value just because prices went up. The dollar is worth less so you have to use more of it.
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