Inflation Meaning: The Silent Tax That Erodes Wealth
Inflation, a familiar economic concept, is often called a silent tax. According to the Merriam-Webster dictionary, inflation is “a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.” Simply, it means your money doesn’t go as far as it used to.
While economists and central bankers often define inflation as an increase in the price of goods, the actual definition lies in the increase in the supply of money. By inflating the money supply and controlling the cost of certain goods through massive subsidies, they create the illusion of stability. This clever tactic has led the average person to associate inflation primarily with rising prices
As Erika Rasure, a leading consumer economics expert, educator, and financial therapist, states, “Inflation is one of the main enemies of saving money. It’s not enough to keep up with inflation; you need to earn more than the anticipated rate of inflation and taxes combined to grow your wealth truly.”
Rasure’s insight highlights the challenge individuals face in maintaining their purchasing power and financial security in the face of inflation. It underscores the need for proactive measures, such as seeking investments that outperform the inflation rate, to protect one’s standard of living.
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