Inflation. Growth, bigger numbers are ever the news. Today’s headline on msnbc is:
7 billion people: A milestone to celebrate or fear?
It’s not just population inflation. The European Union is immersed in a two-front battle: resolving the massive debt crippling many of its countries, and the resultant PR battle to convince the rest of the world that they (the EU) have it all under control. But the populations of these troubled countries blame their governments. It’s the government’s fault.
Occupy Wall Street protesters call themselves the 99%, and blame the wealthy 1% for their woes. It’s the wealthy’s fault that wealth is inflating among themselves, and not for the 99%.
Why is the debt so bad? Just laying aside the obvious fact that any person or entity should have the money in hand before making a purchase, debt also involves using another’s money to make a purchase. And that other person or entity or bank ALWAYS wants a fee in exchange for use of their money. The fee is called interest.
Simply put, interest causes inflation. Self-induced inflation. Your $200,000 house, at current interest rates, will cost you about $400,000 once you pay it off. Your car loan will cause your $29,000 car to cost about $35,000. And the astonishing $1.6 trillion that our government currently plans on borrowing just to pay its bills will probably end up costing about $3.5 trillion.
Our government currently has a total indebtedness of $14.8 trillion, most of which has been racked up in the last 12 years. How, then does our government manage to keep a “good credit rating”? Only by promising to pay interest to those who hold our debt (our biggest creditors currently are China and the U.K.).
Banks and creditors seem to be the only ones winning in these self-induced inflationary times. Everyone else who willingly gets into debt loses bigtime.
So whose fault is this interest-spawned inflation? Yours. For 3 reasons:
- You elected our politicians. It could be that they’re career politicians. It could also be something in the Washington D.C. air. But something about a politician’s strong desire to give resources to potential voters, combined with the authority to tax the electorate, promote the election of politicians who continue to vote themselves the privilege of ensuring that an already-inflated charge of $700 for a hammer will instead cost $1,500, with interest-induced inflation.
- You insist on buying now and paying later. Perhaps you feel you’ve fallen victim to slick advertising, and the ever-deceptive 0% interest rate. Without reading the fine print, which would tell you that if you elect to NOT go for a 0% interest rate, the item you’re buying would actually cost you significantly less, you decide to use someone else’s money now. That $350 32″ LED Flatscreen will cost you $520. Your choice. Astonishingly, Americans now pay nearly 37% of their paychecks to banks for loan interest!
- You’ve decided that it’s not worth it to save money. Believe it or not, there was a time in our country’s history in which people saved money before they bought something. Banks weren’t institutions to lend money. They simply kept gold or silver in their vaults safe for when you wanted it back. During those days, inflation was almost non-existent. Paying for something in cash brings what in 2011 is an unknown power in the negotiating process. Unadvertised discounts await the cash buyer. Sadly, most Americans haven’t felt the cash-endorphin rush when buying something large. Why not? Because they lack the patience. They’d rather pay $35,000 over time for a $29,000 car. So they simply do not understand the habit of saving money regularly.
Many Americans resent the wealthy, yet strive to emulate them. Since they cannot afford to buy that nice car or house with cash, they willingly submit to the self-induced inflation taskmaster by getting into debt.
One frightening final thought: Nearly 50% of the population receives some sort of government entitlement. This means that a nearly deciding electorate could literally vote themselves virtually unfettered access into the pockets of anyone they, or their political representatives, deem to be “wealthy”. It’s truly a shame. We have ourselves to blame in general for this mess. If you still have the good-old American goal of becoming financially independent in your future, just remember that goal when casting your vote for a politician who promises to use debt and its interest to give you more.