Almost everyone feels intuitive that government money is slowly losing its purchasing power. Yet it is often a shock to see the long-term figures. Since the establishment of the US Central Bank in 1913, purchasing power has fallen from 100 dollars to a meager 3 dollars. That causes enormous surprise at Elon Musk.
Is the US central bank the problem?
However, you may wonder whether the US central bank is the only problem. Of course the central bank plays a role in this problem, because they in principle create money when they buy up debts from the US government.
But in the end the US government makes those debts itself. Does the American Central Bank not do what it should do in it? Because suppose they would not intervene and had not bought those debts, would the world not look very different?
In that respect you could say that the problem lies more with the government that spends too much money. Elon Musk now seems to have all kinds of plans for DOGE, the committee that has been created to put the financial household of the government in order.
At the same time, money creation naturally also takes place at commercial banks. If people get a mortgage, then those dollars are actually created out of nowhere. In that respect, money creation is and remains a very difficult problem.
What is the solution?
As an individual it is difficult to arm yourself against this. In an ideal scenario you would of course leave your money in a savings account with a safe feeling, and then earn some interest there. Unfortunately, in the current financial world that is no longer so attractive.
In the first place because of the relatively low interest rates of the past decades, but also because of the inflation and returns on shares and real estate.
If house prices rise by 5-7% per year, then of course it makes little sense to save with interest rates of 1-3%. Certainly if inflation is also structurally above 3%.
The solution is therefore to invest, but that is not easy either. As an individual, try to come up with what a good investment is.
Claim € 10 free today and do not pay trading costs over the first € 10,000!
Grab this unique opportunity with Newsbit and Bitvavo by creating an account now via the button below. Only deposit € 10 and receive € 10 free of charge. Moreover, you can act without costs for 7 days over your first € 10,000 in transactions. Start today and take advantage of the growing popularity of Crypto!
Make your account and claim € 10 for free.
Don’t miss this opportunity to take advantage of the growing popularity of Crypto!
Source: https://newsbit.nl/elon-musk-verbijstert-amerikaanse-dollar-verliest-97-van-zijn-koopkracht/
