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After another month of sharply rising prices, inflation hits 8.2%
A rate of inflation of 5% per year is not good, and it is not the same thing as prices going down. Since inflation makes us poorer over time, we are getting poorer faster.
The International Monetary Fund (IMF) has warned about the optimistic predictions for 2023, saying that it is likely to be a much harder year than 2022.
What would cause that? Most economists and strategists see the recent drop in price inflation as a sign that the economy is getting better. But the outlook is about a lot more than just a slight drop in price inflation rates.
Price inflation builds up over time, and estimates for 2023 and 2024 show that both core and headline inflation will still be very high in most economies. The economy will get worse the longer it stays this way. People have been living off of their savings and borrowing money to keep spending at the same level. But this can't go on for a long time.
Politicians all over the world are trying to get us to believe that an inflation rate of 5% per year is a good thing, even though it is a disaster.
From what we know now, US citizens will continue to have less money to spend. The Bureau of Labor Statistics says that from November 2021 to November 2022, the average real hourly wage dropped by 1.2% when taking into account the seasons. But these bad numbers aren't nearly as bad as the ones for the euro zone. In nominal terms, wages and salaries per hour worked went up by 2.1% in the euro area in the third quarter of 2022. However, in real terms, they went down by a shocking 7.1%.
In 2023, a lot of people will be poor because governments will still be spending money and raising taxes, which will destroy real disposable income even more.
During the so-called recovery from the pandemic, the middle class is being wiped out at a rate that has never been seen before.
The worst policies have been put in place, and all of them have hurt real wages and savings. Printing more money and raising taxes haven't made the rich poorer, and they haven't hurt them either. The middle class is once again taking the brunt of the bad effects of the tax hikes that affect most people.
Politicians always say that their interventionist policies will only hurt the rich, but you end up paying for them. They know that people in the middle class work for a wage and try to save money for the future. The ultrarich also have a lot of debt, but they can get through a time when taxes are going up by moving money around and looking for ways to keep their wealth. People who depend on a salary and a bank account can't get away from the global policy of making people poor.
We need to point out the obvious: making money out of thin air is never neutral. It hurts wages and savings in bank accounts, and it only helps governments with big budget deficits and people with a lot of debt. Whenever taxes go up, it hurts the middle class and makes it harder for people who are working hard to get ahead to invest and save for the future.
Interventionism always says that every dollar the government spends benefits society, so it is a good thing. The idea doesn't make any sense. Growing the government's bureaucracy and spending on benefits doesn't help growth or productivity, and it ends up being a huge transfer of wealth from those who work to those who don't. It's one thing for a part of the productive sector to be used for social issues, but it's a completely different thing to label all government spending as "social" and turn the productive sector into a cash machine that the government can use at any time.
When you believe that the government will give you free stuff if they make the rich pay more, you give the government a reason to think you are rich and take more from you.
This is what you get when you want more government. A take-what-you-can-get way of thinking that always blames those who invest and create jobs for the problems while making a bigger government bureaucracy to run the "benefits" you never get.
Interventionists will try to convince you that everything and anything is to blame for inflation, except for the one thing that makes all prices go up at the same time: printing money at a rate that is much higher than what people want.
At 5% per year, inflation is not a good thing, and prices are definitely not going down. Since inflation makes us poorer over time, it means that we are getting poorer more quickly.