Inflation refers to the situation when money loses it's value...So turn into goods coz there's no point in saving the money as it 's gonna lose it's value anyway...So people should spend more coz it'sointless to save money......What do you feel? If you opt to spend money what all would you buy ...?
2007-03-18 18:46:54 · 2 answers · asked by rocky 2 in Social Science ➔ Economics
air tickets all over the place and lots of condoms!!
but the thing is not exactly like this. if i go to a bank to make a short/long term deposit ill ask what their REAL rates are, meaning that the return after a certain period must include both a nominal component (my $$ regaining the value it lost because of inflation) and a real component (what i earn after inflation as been taken care of by the nominal component). same with a stock. if i expect a 7% real return and inflation was 2%, the nominal return im expecting is 9%.
now i can always save with no nominal interest at all as i take longer to spend what i make than the 30 days i have to wait until getting another pay, meaning im accumulating/saving money at a faster pace than what i spend it.
that said, i wont be spending just for the sake of it... but im still buying tickets all over the pace and loads of condoms!!!
2007-03-18 19:09:36 · answer #1 · answered by chokito 3 · 0⤊ 0⤋
If you believe that spending is saving, you will soon find that you can save yourself into the poor house. If you must spend money at it's present value in order to be spared the ravages of inflation, the best way to do it is to spend it on things which will increase in value through time. That is where you will truly save money by spending it. Simply buying trendy stuff for the house, popular cloths, cars, trips, and posh meals won't do it.
Investing is saving. Squandering is waste. Don't be misled into buying consumable items that (at best) will become fodder for a flea market.
2007-03-19 02:21:26 · answer #2 · answered by Olde Spy 2 · 1⤊ 0⤋