Some perspective on the rising prices of everything.
Inflation is finally hitting. This should be no surprise. I am not convinced that it is "inflation", it appears to be more of a currency debasement situation which can appear very similar to inflation. Here's what I mean: This is a graph of the circulating supply of New Zealand Dollars in our economy. Notice anything that is concerning?
Yep, the circulating supply has gone exponential! This means that every dollar in supply now has less purchasing power than it did before. The value of each individual dollar is less due to the greatly increased supply. Therefore, every dollar you earn and the dollars you have in the bank are worth significantly less than they were in 2020. If you look at the chart, the supply has actually DOUBLED since 2020 due to printing of new money. The new supply was created out of thin air to cover the costs of our COVID response. This is currency debasement.
This is happening in most major nations, but we are now starting to feel the ramifications of this in New Zealand. The prices of everything increases by many percent yet wages have barely moved. For example, I am a teacher that will get a 4% pay bump into next year. "Great" you may think. However, inflation numbers are at 6% annually. So I will essentially earn less purchasing power than I did last year. Anyone else that does not get at least a 6% pay rise is also in this boat.
I urge people to start thinking about increases in terms of percentages. That block of chocolate that once cost $4.99 that is now $5.99.. That's not "just an extra buck" it's a 20% price increase!
Just some food for thought. It has me quite worried about the value of my savings to be honest and has lead me to take much more risky investment decisions because the 0.5% I am earning in my bank savings is a waste of time.