This is a trench that my dad and I recently hand dug in my parent’s backyard.
It was to address a small drainage issue they were having.
This is my dad inspecting my work… he’s not overly impressed, lol.
My father is 73 years old, and he basically dug most of the trench on his own.
He is a workhorse!
I very much envy is work ethic, and whenever I find myself getting lazy, I think of how hard my parents have worked over the years to provide for their family.
My dad didn’t even ask for help with this project…
I just happened to call my mom on the way into work, and she told me what my dad was up to…
I immediately changed my plans for the day and decided to give him a hand.
As I was helping him, I couldn’t help but feel grateful for being able to so quickly change my plans that morning.
When I reflect on the pros and cons of transitioning from an employee in the corporate world to being self-employed….
…the ability to have full control over my own day, is far and away the greatest benefit to being my own boss.
That said, I recognize that most do not have this same control over their day (that was me not long ago).
And between work, family, and everything else… there is very little time for anything.
So it’s not at all surprising that people have been completely caught off guard by the run up in prices of nearly everything in their lives…
And most have no idea why the prices keep climbing.
The reality is that it’s not that THINGS are going up in value, but rather the dollars that we use to purchase those THINGS, is actually going down in value.
As governments create more new dollars to put into the system, this reduces the value of the existing dollars already in the system.
To help you visualize it, picture this… you walk up to a fruit stand to purchase a watermelon that is selling for $2.50.
You really want a watermelon and are willing to spend all the change in your pockets to purchase it.
You have only $2 in your pocket.
You offer the seller $2, and they accept.
Therefore, at that point in time, the watermelon is worth $2.
Now ask yourself this… What if you had $2.50 in your pocket…
… is there a good chance that you would be willing to part with the full $2.50, to get yourself a watermelon?
The answer is likely, yes.
Therefore, did the watermelon go up in value or was there just more available money to purchase that exact same watermelon?
In the end were you any further ahead having $2.50 in your pocket when you walked up to that fruit stand versus if you had only $2?
The answer to both those questions is no.
Now what happens if two people walk up to the fruit stand wanting to buy the watermelon, one with $2 in their pockets and another with $2.50?
In this case, the $2 no longer buys you a watermelon, and now an individual with only $2, is officially in a worse position.
This is a very basic example of a way more complicated money problem.
Most of us don’t have the time to try to understand this problem.
Nor should we have to.
But this problem is precisely why everything seems to be getting more expensive, and why those who do not own hard assets, or are not seeing their incomes rise, continue to feel like they are falling behind.
More than ever, I think it’s important that everyone understands the current money game at even its most basic level.
By no means am I an expert, but by way of these emails, I hope to at least shed some light on what I think is going on in the financial system.
Hopefully, some will find this helpful.
Until next time…
– Vince
