How to combat inflation

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How to combat inflation

Raifu
Administrator
This post was updated on .
Loads of people are probably wondering how to combat inflation. So, let's address that—

Would you believe that we're already combating inflation, but not on purpose?

Think of it this way: The less you can do with your money, the less that money is worth. The more you can do with it, the more it is worth. (Inflation-wise.)

Okay, so in the USA, what's the standard of living? Let's analyze things pre-pandemic, since that kind of mixed things up a little.

Here's my perception of what the standard of living has been for other people in recent years (not necessarily for me):

* Food (grocery store visits, frequent restaurant trips, ordering pizza frequently, tipping the deliverer, or the servers, etc.)
* Personal care products (a whole lot of them)
* Child care products
* Cleaning products
* TV and movies (Prime Video, Netflix, movie theater visits, cable, etc.)
* Smartphones (along with phone services), tablets, laptops, desktop computers, e-readers, etc.
* Cars
* Gas
* Many kinds of insurance
* Fees
* Taxes
* Real estate / housing / utilities
* Business expenses
* Pesticides/herbicides
* Lawn care
* Pet supplies and services
* Appliances, devices, etc.
* Supplements
* Travel abroad
* Vacations
* Visiting family or friends far away
* Saving for children's educations
* Education

And so on and so forth.

How much of that is actually 100% necessary to sustain life? Well, it probably depends, but by and large, these things are necessary (and necessity is in the eye of the beholder):

* Food
* Water
* Safety
* Somewhere to live

Imagine if those were the only things people could buy, suddenly. What would happen to all the money people were spending on other stuff? Well, it would cause a lot of inflation, that's what. It would cost a lot more to buy food, since there would be so much more money not being spent on other stuff.

So, how do you handle inflation? You increase the available desirable goods and services that people want (especially if they lack physical presence, and especially if they're not necessary). The more things you can buy, the more your money is worth.

Yeah, there are probably other ways to deal with inflation (e.g. destroying money, reducing the need for money, changing the currency, etc.). …

Digital goods are particularly interesting because they lack physical presence, and there's no limit to them. They don't need to be manufactured over and over again. So, new people can keep on buying them forever.

You might be under the delusion that people buying more digital goods means they'll be using just as-many-digital-goods-as-they've-purchased the same amount they would use one digital good, for each thing, if they had only one good. But, that's not the reality. If someone buys a billion digital movies, they'll probably still watch only a a few to several movies a week (and a lot of those might not be from among those they own anyway). The supplier of the movies isn't going to have to increase server capacity exponentially, in order to accommodate a ridiculous amount of increased viewership from that individual. There's no reason not to worry about viewers owning too many movies in this regard. The more movies they buy, the less they probably watch any one in particular. One person usually only watches one movie at a time. You won't see a thousand movies streaming at once from one person's account. Maybe two or three at the most.
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