Lately, inflation is a very hot topic in the news, generating concerns and worries among households that are uncertain about their financial future.
The most common definition of inflation is a general increase in prices, meaning an increase in the value of goods and services. Every country uses a currency as a means of exchange for everything that can be purchased. Naturally, when you ask anyone for the value of something, the answer you get is a number, of which the unit is the local currency.
"Has the price of gasoline gone up?" "Yes, the price went up from $1.60 to $2.20."
Indeed, we never receive the price of a good or service in gold, silver, in stock market indexes or in anything else than money. Since our currencies are commonly used to define the value of almost everything, we can all agree that goods and services have increased in value. But should we blame raising price or money's value?
There are two ways of looking at inflation:
1. Billions of goods and services are becoming more expensive
2. Only money is losing value
This may sound simple and naive, and you may already be thinking "so what? In both cases it's the same". You are right, it is mathematically the same, money will buy you less. But I could argue by asking: if money is continually losing value while everything else is gaining value, why are people saving money in a bank account?
This is where the word "inflation" is completely misleading. If the definition of the word inflation was "decrease in value of money", people would soon realise that their bank savings are devaluing year by year. Instead, inflation is rather perceived as an external force of the invisible hand of the market, of which we are victims and against which we cannot effectively act.The main reaction of households (and what they are told to do) is to try to lower their expenses and save more money to be ready to pay higher prices. I repeat, they are trying to save money, proven by all goods and services to be one of the worst investments there is.
The principle is simple. When goods on the market increase in value while money is collapsing, it is these goods that one must hold, not money. Pryme Capital was founded in 2020 based on this simple principle. Investing is not accessible and easy for everyone. Also, opportunities are often reserved for upper class investors capable of bringing substantial capital. To solve these problems, we have been successfully providing passive and easily accessible investments to all levels since 2020.
Comments