In a high inflationary environment, investors could mistake spikes in volatility for an opportunity to generate profits by investing in assets that are historically low priced but are hopefully on the rise. Alternatively, people may take the easy way out and invest in already-growing stocks or securities.
About every third of household in the U.S. owns a financial asset as collateral for their pension accounts, annuities, or 401ks
Financial assets have long been considered to be reliable "safe-have" investments, drawing an almost steady torrent of cash from those who can afford it, but such assets may no longer be a safe haven for investors and owners during the volatility due to inflationary environments. Ownership and liquidation ability of financial assets are increasingly becoming subjects for market observers around the world after certain international leverage loans began to have much higher risks than expected.
Let's discuss two factors of trade liberalization which may explain how risk exponentially exploded after certain nations became more integrated into international markets facilitating extended money financing strategies:
Demand induced by cheaper imports via protectionism;
Oligopolist behavior with merged markets that cannot provide consumers with opportunities to shift products
Inflationary periods can lead to currency devaluation which usually has a substantial impact on the well-being of the country that suffers from the said phenomenon. It is also seen to be more unfavorable for the working class when compared to the middle class which can lead to negative consequences for lower-tier humans in society.
People have been having their career plans shaped by inflation for a long time and are studying inflation calculator apps. We will progress each day until we wake up and wonder how it was that we used to buy such a lavish lifestyle in just a few years.
There will be a lot of trading, investing, and proactively buying property in the future. Even though there is going to be manifold uncertainty but in the end, if the UK government manages its currency wisely, Brits will not just get richer, but also less poor.
While these latest trends appear sustainable enough for now how long this would last is hard to say. The working class can lose purchasing power in inflationary environments as well as their paychecks. This can get worse when an actual recession hits that not just gives out a lack of surplus cash from bank sales as well some people losing their jobs to automation and other restructuring projects they might have scheduled ahead.
An asset-rich household is likely to thrive during high inflationary environments. An asset-rich household is going to have a better amount of assets and other investments than cardholders during gold time periods when credit difficulties escalate and interest rates go up.
The working class will always spend money even though they may not increase their salary. However, bear markets are a threat to the balance of income and spending. The working class becomes a victim of rebalancing hidden taxes.
In this post, I will focus on the working class or middle class as they may also be referred to. They often contain a number of people who either have low income or some asset and there’s work.
So what can we learn from this segment in a high inflationary environment? Governments will typically garner popular sentiment via public announcements claiming there is plenty of work available and that individuals should stay optimistic. In reality, the working class within a country could potentially lose purchasing power if their earnings are not increasing by keeping pace or even surpassing inflation rates already in place - up to 3% higher than the general population. The reason why this occurs is that their wages have not increased proportionately to these inflation rates. This would create issues as an individual becomes better off financially but unable to improve their lifestyle and maintain it for themselves during these high inflation periods due to harsher prices exponentially outpacing wage growth which would present more winners and losers than before.
I feel so stuck between the two of them - me as an ordinary worker and people who live off my money. I'm just trying to make it and am not doing well at this.
Going into debt is not a valid option because you might daydream that your wage will be big one day and you want to retire from this life of rent, utilities, water bills, loan payments, school fees, and more...
The problem with the middle class is that they feel a sense of entitlement. But economic dependence limits their ability to do better.
In capitalist societies, where financial investments are encouraged (known as widespread ownership), people become very dependent on the incentive provided by money, making it even harder for them to try and make it in a world that does not give financial education and opportunities to everyone equally.
The upper class creates for itself liquidity for their investments – often through gold or other physical assets. Bloated coffers can make it easier to rise from the lower rungs of society because society knows what they spent their money on - i.e., tangible goods like cars - so people know why they are envied or reviled. With low liquidity, however, one cannot just go buy whatever he may want when he feels angry or afraid when his company’s profits enter a recession phase and engineering degree-holders must fight just as hard as lowly secretaries and store managers.
In the era of the internet, we can cut down on the middleman. If we can invest online, we should be able to live with less money by achieving more consumption in life. It may seem like a win-win situation for those who are really clueless about various aspects of personal finance. Money management becomes a game of strategy sometimes when it is not only how much you shoot, but how you make sense of shooting straight while playing ping pong at the end of the hand.
I want to bring to light my personal impression of being part of the "middle class." Even if wealthy people keep saying they want us to feel alive with open doors for us and not guarded over by bureaucracy because that's what is better for society, it rarely happens nowadays because there are too many people in between elites and the poor who insist on having this luxurious lifestyle where they claim superiority over people under them economically and socially.
My journey to the world of crypto.
NFA: Not Financial Advice!
