Inflation Is A Double Tax
It's been a while since I had the time to sit down and rant about any one thing. Life has become pretty busy and focusing on my future survival and what I value most in life comes into play. I am watching rampant inflation eat into my wages and savings and there is nothing I can do about it.
It feels like every time I go to the store prices increase and it's forcing me to rethink where I store my purchasing power. That has naturally pushed me further into Bitcoin and I do not regret my decision.
Life is becoming harder, I can feel it, I can see it and I feel like we're starting to approach the end game. I am far more fortunate than most in my country, I have work, and an income, and shelter and I'm grateful for it.
However, we're seeing more people pushed further into poverty and this puts further pressure on governments to increase the welfare state naturally funding it through taxes and inflation.
Pushing people further towards the edge
I speak to friends and family on how they feel about it, some don't care they feel it's just part of how things work since prices always rise each year, but for me, it's about the pace at which it's rising.
Others are taking note and are looking to invest, be it property or stocks or index funds. A lot of my friendship circles are now actively starting to invest to try and beat the losses of inflation.
These are people of modest means and they don't understand the risk they are taking to get that yield. In many cases the yield is positive in nominal terms but negative in real terms, that is the sinister creep of inflation.
The more you earn the more they take
If you're not an asset holder you're being robbed at record rates and have nothing to offset the losses. Selling your labour you can only earn so much per hour and if you cannot increase your salary or income to outpace inflation you're losing money.
In addition, the more you strive to earn more, be it increased wages or through investing you push yourself into a higher tax bracket. This is the painful part of the inflation, they light the fire underneath your bum pushing you to go and take more risks or work harder.
Only to squeeze more productivity out of you and then take that additional productivity out of you through higher income tax or capital gains tax. You take all the risk and all the burden and get to keep less of the gains.
Making money is only a part of the equation, and not a given. Even if you are able to make more money through labour or investment it's not about how much you make, it's about how much you get to keep and even more importantly how much you get to preserve.
Despite what many people think, that they up in dollar or their local currency terms, a lot of that wealth you will NEVER get to see, much less enjoy. I am not trying to be a wet blanket only telling you what I see happening.
Currency speculative attack
What I am seeing is a trend towards borrowing against your assets. This could be leveraging your home, your stock portfolio or even your Bitcoin. When you borrow money, you essentially bring it into existence, it's a way of printing money in a sense. As inflation increases, there is a big incentive to borrow since you can pay it back with cheaper currency in the future.
It seems to be the more tax-efficient approach too since you cannot tax debt. People are willing to pay the interest rate on a loan instead of paying a lump sum of tax.
They also get to benefit from the currency debasement as their debt burden becomes smaller in real terms. This way you get to keep more of your purchasing power.
I don't make the rules, I just see how people are using them to their advantage and how others ignore it at their own peril.
Moving closer to the sea change
The way I see it is that the local economy is starting to feed on itself and in doing so the Rand (Our local currency) has to be the error correction. They are printing more money than ever before to keep the system afloat, thus diluting any Rand holders and Rand earners.
Eventually rolling over that debt puts such a burden on the currency that people lose confidence and dump it completely. At that point the country will have 3 choices, to dollarise or go with another international currency, to reboot the currency, or to move to A Bitcoin standard.
The last one I think will be the least likely, because governments cannot expand power under a hard money standard.
Tough times ahead
I am not saying I have the answer, things are changing so fast and it's hard to keep up. I don't see it getting any better, I only see more of the same in bigger doses and it's up to the individual to find a way to play in the rulesets presented.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
Let's connect
If you liked this post, sprinkle it with an upvote or esteem and if you don't already, consider following me @chekohler and subscribe to my fanbase
| Safely Store Your Crypto | Deposit $100 & Earn $10 | Earn Interest On Crypto |
|---|---|---|
 |  |  |
Posted Using LeoFinance Beta
Bro, kindly tell me where to I get HP delegation for lease or against HBD?
There is no service that allows you to borrow against that coin, you'd have to convert it to a coin like Bitcoin that can be borrwed against, but selling for Bitcoin is a taxable event
I understand. Thank you!
Whoa dude nice back to posting on Leo lol I’ll read tomorrow. This ATH has me exhausted.
Lol Crazy hey, who knew?
I only know for about 50% what you're talking about, but I do know that my country also experiences this. It's hard for some people but there are also others that don't care as you've said. Do you think that if Governments go with Bitcoin as their currency the inflation would decrease?
I doubt it, they have a history of being willing to kill their currency, we've seen this with Venezeula, zimbabwe, Lebanon, and Turkey so far, and I'm sure more will follow. I think it up to the individual to divest from the traditional system, at least thats what I am doing.
When you live on a bitcoin standard, you are on the side of deflation and life gets cheaper
Lebanon is experiencing hyperinflation and turkey is now experiencing hyperinflation. They’re blaming it on the US
everyone is going to find someone to blame, because they refuse to see the money is bad, no one wants to admit it. As local currencies collapse people flee to the dollar making it stronger and further pushing down local currencies. I am sure they are going to blame Bitcoin too
I think every country is printing like crazy (if they have one) so everything is relative to each other. After all even BTC has some form of inflation (some BTC is generated from mining). However I do agree prices are going up because there is just more supply out there.
In the case of the US, the money is more or less stored in the Fed due to QE so they rely on loans to generate more money but the banks aren't eager to loan. In a way I think the US is in the best situation even if prices are going up because there is a demand for the USD. I do think BTC might be a better hedge if you want to maintain it's store of value.
Posted Using LeoFinance Beta
Yes they are printing but I disagree with the relativity, it's not some kind of hard peg, so depending on the amount of sovereign debt denominated in dollars and the risk attached to those bonds will require you to devalue even faster.
The US dollar is still the premier currency and people trust it for sure, theyll flock to it and i can see countries may consider swithcing or making the dollar legal tender.If they don't they just have a huge dollar black market, we can see how stable coins are growing due to the demand for off shore dollars
Im not one to play the forex game, I'd rather have the insurance against the entire thing and to me thats BTC
One of the best ways to understand inflation and taxes is to look at the silver dollar.
In 1964, a US silver dollar was worth a dollar. Today it is worth $18 USD. Despite the fact that the price of silver dropped relative to other goods since 1964, the government would demand payment of capital gains tax on the silver in that silver dollar.
I am glad you pointed out a big problem with debt. People don't pay taxes on the money they borrow, but they have to repay the debt with borrowed dollars.
This imbalance leads to a huge number of shenanigans.
!wine
Posted Using LeoFinance Beta
Congratulations, @yintercept You Successfully Shared 0.100 WINEX With @chekohler.
You Earned 0.100 WINEX As Curation Reward.
You Utilized 1/1 Successful Calls.
Contact Us : WINEX Token Discord Channel
WINEX Current Market Price : 0.321
Totally agree, without backing that tethers a currency to something that isn't easy to produce you can do all sorts of accounting tricks and the fact that most of the world doesn't understand how money works, it plays to your advantage.
The inflation is a bitch indeed! We are trying to figure out what we are going to do in order to secure ourselves and hedge against it as best we can. We have been trying to sock bitcoin that’s for sure but other avenues as well. One thing is buying a house and for a few reasons as well. One being to have it paid off so we aren’t forced to work out of desperation.
Well having a home with debt is a good idea as they devalue the dollar so your debt obligations are made easier, as long as you have an income that is inflation-adjusted its okay. It's not going to be easy by any means, but we all have to learn the rules of the game and try to play it as best we can
Yeah I guess that's a good point. Maybe having a minimal mortgage like 50k or something couldn't hurt. I want to own something without owing some damn place though, that way I can focus on other things.