Why do we call inflation a con? Its very simple really - inflation robs workers. It’s essentially a hidden tax. If you look at the last two to three decades, it seems like workers wages have gone up nicely. They must be much wealthier, right. But, if you measure workers wages based on their actual purchasing power, i.e. adjusted for inflation, workers incomes have remained stagnant. Indeed, since the financial crisis began, workers real incomes have gone down.
 |
| High Inflation is a Tax on Workers |
Let's the UK as just one example. The latest inflation figures out of the UK show inflation at 3.5pc. Indeed, inflation has remained at 3pc or higher for 28 straight months. That means over this 28 month time period, inflation compounded has gone up a total of 8-10pc in total. Meanwhile, actual salaries and incomes are flat or lower. What does this mean? It means that UK workers' real incomes - i.e. what their salaries actually allow them to buy - are lower by this same 8-10pc figure. Is it any wonder than that real wages in the UK are back to the levels of 1997? Talk about a lost decade. And the UK is not alone unfortunately, the same basic calculation applies to the United States and other western countries. Finally, due to budgetary pressures, we can expect taxes to go in only one direction - up.
Taking all of this into account, its no surprise that most people feel poorer and hard-pressed. Whilst the rich may move to tax havens such as Dubai or Monaco, the average individual can still consider the option of protecting their financial future with real asset investments. This blog will show you a number of options for doing so.
No comments:
Post a Comment