Inflation Strikes Treasure Hunters' Dream House Find
Over time the amount of money in circulation increases, and it usually increases faster than the population growth rate so over time there is more money around for people to use. Time is not to blame, but it simply reveals how things work, namely that the dollar loses it's value over time. How fast it devalues is continuously changing, but the trend is down. Everyone knows this. Usually we think in terms of prices rising, rather than the dollar losing its value. Inflation is really the wrong word for this effect. Therefore, this writer will coin, or electronically create as the case may be, a new term for this phenomenon, called decay - as in radioactive half-life. By the way, the term "rust" was also considered, and was the runner-up in this naming contest. So, as money decays, more of them are needed in order to pay for a gallon of gas, or gallon of milk, or a trip to the doctor, or to pay for books and tuition. Some indicators used to measure this decay strategically exclude energy, food, and education, but include tin, molybdenum, and hundreds of other lesser-used commodities in order to give a stable appearance. If we revisit the home remodel incident above, we could also say that the gold did not decay, and is still 1000 ounces, no change. The dollars, however, had decayed from $630,000 to $20,000. They decayed 97%. Therefore, the guy who stashed his money in the walls of that old house did not posthumously grow his nest egg, as previously thought. But, rather, his $40,000 investment could have been worth $1.26 million in today's dollars. Therefore it actually decayed from $1.26 million down to $650,000, for a loss of $610,000, or 48%.
Some beneficial conclusions can be drawn from this incident. Aside from the benefits of ripping out old walls and telling someone you love about your hoard before you die, the point to be made here is that money decays. Money rusts. So, look elsewhere for the long-term investment or store of value.
Related Tags: money, gold, inflation, devaluation, deflation, cash. investments. diversification. rich kimura
About Rich Kimura:
Rich Kimura is a freelance writer, married father of 4, chemical engineer, and entrepreneur. He has authored numerous technical papers, has 1 patents and 2 patents-pending, and 24 years experience in the nuclear and chemical industries. Rich started 6 micro-businesses, received financial counseling training by Crown Financial, and teaches on both subjects. To see more free tips and sharing of personal experiences in home businesses, work, money, finances, relationships, spirituality, and other topics, visit Cirrovista at www.Cirrovista.com
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