The world is a pie

I just watched a video in which a guy was explaining how the purchasing power of the american dollar has plummeted over the past few years. Which, for the most part, is due to inflation. He made some comparisons of the the gold standard (money which is redeemable in gold at any bank) with the current American Fiat currency (currency which value is purely based upon our faith in the governmen).

Yeah okay, right off the bat, we've all heard his this before (at least I hope you have), why bring it up?

Well since this shocking....paradigm shifting news hit me, I mean...the news that basically is the mechanics behind our inherrently extremely flawed and manipulated economy... I've thought of a couple things to add to this argument. And it's been a long time since I wrote about anything really worthwhile, so here goes.

I postulate/argue, that it is not only just the inflation of the currency that is causing the prices of things to go up. Yes, it has a significant factor in all of this, and YES, the currency is losing purchasing power to point where a single dollar is almost pathetic. And YES, people wages are not increasing at a rate which is rapid enough to compensate for all of this. 

However, another factor as to why the prices of things are going up, is that the human population is increasing every day. It's on a steady climb and combined with the fact that the world isn't growing bigger with us (the planet is staying the same size) that means that there are less resources per person to take advantage of within their lifetime.

Imagine the world is a pie. And you have 4 billion people taking a slice from that pie. In that situation each person gets a slice of a certain size. Double the population, and each person get's half a slice. If somebody wants to get the same size of slice as people got back when it was 4 billion people..that means either everyone else has to get a thinner slice, or somebody has to get no slice at all. 

This is why it's good to live in a first world country. We are fortunate to enjoy our own status quo, while many other people get nothing at all. This is why it's even better to be super rich. Some members of the super rich can use their purchasing power to manipulate the market and get a bigger slice of the pie, but they also screw everyone else over in the process. It's a very simple way of looking at things, and it's a very simple way of explaining what's happening to all of us today. 

The same way in which the inflation (expansion/growing) of any dollar (be it canadian, american, chinese etc) leads directly to a decrease in the purchasing power of that dollar (takes more dollars to buy the same things), the increase in the population means it takes the purchasing power of many people to buy the same thing that one person could have bought several generations ago. . . which means those people need to learn how to share. . . some food for thought.

Another thing I want to add is the fact that we're burning through our resources faster than we are finding more of them. Yes we are finding more of them, but not at a rate to compensate our daily consumption, and even scarier is the fact that our daily consumption has been rising. This is clearly unsustainable. As mentioned before, the world is like a pie. However, the pie itself is shinking in some areas. Like oil for example. We are running out of oil. We are also running out coal. Yes, there is more coal out there, but we need to dig deeper and deeper into the earth to get the coal. At some point, the amount of energy that the coal provides will be insignificant compared to the amount of energy it took to dig it out.


 So, if you've got a increasing population, an iflation in the currency that they use, and a DECREASE in the amount of planetary resources (or pie) then people are getting even thinner slices than in the situation where you're only considering economy and population.

There is no easy solution. And a gold standard itself has it's own issue. Take hoarding for example. If a lot of people horde their gold, that means that there is less gold flowing through the market. That means that all the gold in the market gains more purchasing power to compensate for the missing gold (this is the opposite of inflation: deflation). That means prices drop. Then...whoever has horded their gold gets an edge over everyone else who was spending their gold! Derp. :) A gold standard can be manipulated, just as a fiat currency can. So yeah, there is no easy solutation. I don't know what we're going to do in the future, but I'm not one of those people saying "yeah! Return to a gold standard" nor am I one to tout my horn and say "Keep the fiat currency!" they both have their flaws. 

If the population were to stop growing or even shink, it would help for awhile, but all it would do is make what's left of the non-renewable resources last longer. Whoever was still alive would need to invent themselves out of that situation, or change culturally to become independant from non-renewable resources. 

All in all, we don't neccessarily have to change. We can continue on this path, and we probably will for years ahead. All that's going to happen is that the gap between the middle-class and the rich will get larger, the pie that represents non-renewable resources will get smaller, and the population will eventually consist of even more people than ever, who are getting none of the pie at all.