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Dentists Who Invest

Why Is Inflation Currently So HIGH?

Inflation

The first thing to acknowledge is that inflation fundamentally arises from an overabundance of CASH and a relative scarcity of RESOURCES.⁣

We’ve seen both of these occur over the last 1-2 years.⁣

The money handouts that occurred during COVID were not really “free money” and had to be repaid at some point.⁣

The relative abundance of money versus resources it can be used to purchase means that there is an oversupply. When something is in oversupply its value goes DOWN.⁣

This is of course due to the laws of supply and demand.⁣

Central Banks can control money supply in two ways:⁣

   1. Quantitative easing. (money printing)⁣

   2. Interest rates.⁣


Increasing interest rates will make borrowing less attractive as the repayment rate (interest rate) is much higher. This means it is more expensive to borrow money.⁣

This means it is much less lucrative for individuals and companies to obtain credit (borrow). They have less money to spend and therefore money supply in the economy decreases.⁣

Interestingly, 97% of all capital is actually credit. You can imagine how much of an effect this has on money supply when it dries up.⁣

Inflation is often called “Taxation without consent” as it allows the Government to reclaim the value of our wealth without us giving the “ok”.⁣

We CAN’T control inflation but we CAN control how we protect our wealth against it. It starts with educating ourselves on money and how it works.⁣

The point of this group is to provide that information and thus empower dentists.⁣


*Not Financial Advice⁣⁣
⁣⁣
Disclaimer: The content on this blog is meant for informational purposes only and does not constitute financial advice. Readers should seek guidance from a professional financial advisor before making any investment decisions.

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