“In times of great change, the beginner’s mind has the advantage,”
That’s something worth remembering, whether you’re a novice investor or a seasoned pro. In the world of personal finance, it’s easy to get lost in the art of budgeting or tangled in the tools of trade like shares, property, or index funds. Yet, the true essence lies not in the tools, but what you’re striving to build. Success or failure isn’t confined to individual efforts but is part of a larger puzzle that deserves thorough comprehension. Today, we’re on a journey, examining an intriguing idea – how naturally occurring deflation, can lead to true wealth.
The Puzzle of Inflation
The current era is witnessing an inflation period that’s hard to ignore, raising a fundamental question – why is there a mandate for central banks to create and maintain inflation at 2-3%? Why do we believe in a system where we need more money to buy the same things over time? The Reserve Bank of New Zealand and other central banks have the authority to both combat inflation with high interest rates and create inflation too. They actively and purposefully devalue our currency, leading to a society where those holding assets catch tailwinds and the rest, struggle with headwinds.
The Deflation Proposition
There’s another perspective worth considering – deflation, the opposite of inflation, where your dollars increase in value over time. Jeff Booth, author of ‘The Price of Tomorrow: Why Deflation is the Key to an Abundant Future’, suggests that a deflationary future, fuelled by unstoppable technological advances, could create a new kind of abundance. He challenges conventional wisdom and shakes the foundations of our economic and societal understanding.
Implications of a Deflationary Future
A deflationary future isn’t just about money retaining or increasing its value; it’s much broader in scope. For example, have you considered the link between inflation and climate change, or the concept of housing costs under a Bitcoin system, or the impact of a deflationary environment on AI-induced job losses? You may have heard this before but the promise here is simple, if you fix the money, you can fix the world. Technology naturally creates abundance and considering the rate at which technology is advancing, it’s now possible to get seriously optimistic around our future on this planet.
Inflation or deflation, both are part of a much larger economic puzzle. It’s not just about preserving your wealth, but comprehending a complex system that impacts all aspects of life. Central banks and government have been siphoning off the value that deflation can bring in an attempt to centralise power and keep us poor. Once you come to terms with that idea, it’s then possible to move forward. Keep an open mind, challenge conventional wisdom, and remember, in times of great change, the beginner’s mind indeed has the advantage. I hope you find this exploration as insightful as I did, and if you do, I look forward to hearing your thoughts.