Preface
"The general trend of the world, together for a long time, must be divided, and for a long time, it must be united." When describing the cyclical law of history, this sentence applies not only to the succession of emperors and generals, but also to economic phenomena, and the inflation we face today is part of this cyclical law. Inflation, in simple terms, is the fact that money becomes less and less valuable, leading to a general increase in prices. This is nothing new, but why is it suddenly a hot topic in 2024?
Looking back at the past few years, the global economy has been in a downturn, with many countries adopting quantitative easing policies and printing large amounts of money to stimulate the economy. When these liquid currencies circulate in the market, they inevitably lead to price increases. From commodities to everyday goods, the momentum of rising prices seems unstoppable. Domestically, with the adjustment of economic policies and the increase in infrastructure investment, the market expects inflation to further intensify.
So, does all this really mean that our cost of living will continue to rise? Has the property become the safest haven? Or is this just a normal fluctuation in the cyclical law, and how do we deal with this economic phenomenon?
Body content
In 2024, inflation will no longer be an after-dinner topic of discussion among economists, it has entered the daily life of ordinary people. Every time the supermarket checks out, the string of rising numbers is not only a change in the price tag, but also a wake-up call in the heart. However, all this is not an untraceable emergency, but the inevitable result of the superposition of many factors.
First of all, excess liquidity on a global scale is one of the main reasons. Over the past few years, in response to the economic slowdown, central banks have turned on the money printing press, and large amounts of money have been put into the market. These seemingly intangible currencies actually cause real volatility in the market. When the money supply exceeds the demand for economic growth, the purchasing power of each currency decreases, which in turn pushes up prices.
Then, domestic economic policies have also contributed to the formation of inflation to some extent. In recent years, the state has vigorously promoted the construction of infrastructure, from highways to the construction of large urban agglomerations, and huge investments have not only promoted economic growth, but also increased the demand for funds in the market. On the other hand, the continued popularity of the consumer sector, especially in the real estate market, has pushed up the price level of related industries.
Against this backdrop, the performance of the real estate market is particularly remarkable. In inflationary conditions, monetary assets tend to lose value quickly, while physical assets, especially real estate, are often considered preferred for value preservation. The value and scarcity of the land behind the house is not just a brick and a tile, which makes it more stable and reliable in an environment of rising prices. As a result, many investors and ordinary families have begun to turn their funds to the real estate market, hoping to avoid the shrinkage of funds.
But is the "store of value" function of the real estate market really impeccable? Perhaps this may seem the case in the short term, with the steady rise in house prices, the assets of investors and home buyers seem to be effectively protected. However, the real estate market is also fraught with uncertainty in the long run. Policy adjustments and changes in the relationship between market supply and demand may have a significant impact on housing prices. In addition, the liquidity of real estate is relatively low, and it may not be easy to liquidate quickly in the event of a market reversal.
While inflation brings many challenges and uncertainties, it also reminds us of the need for more prudent and diversified investment strategies. Putting all your eggs in one basket, whether investing in real estate or other assets, can be quite risky. In such an economic environment, diversification, finding new growth sources and keeping money liquid may be a better strategy to fight inflation.
Sublimation at the end
The tide of inflation has arrived, and everyone is looking for their own way to deal with this irreversible economic phenomenon. Some people choose to invest in real estate, hoping to use its stability to hedge against the risk of currency depreciation; Others are looking for more diversified investment methods, such as stocks, bonds, and even emerging digital currencies, in an attempt to find stable income in a volatile market.
Whatever approach you choose, it's important to understand and accept the natural laws of the business cycle. As the ancients said, "when the water is clear, there are no fish, and when people are observed, there are no fugitives", and it may be unrealistic to pursue perfect value preservation in inflation. Changes in the economic environment are always accompanied by risks and opportunities, and wise people always learn to find their foothold in changes.
In addition, the role of the individual and the state cannot be ignored. Although personal strength is limited, reasonable personal financial planning and investment layout can reduce the impact of inflation to a certain extent. At the same time, the role of the government and policymakers in macroeconomic regulation and policy formulation is crucial, and their strategies and decisions will directly affect the direction of the economy and the well-being of individuals.
Finally, in the face of the future, we need not only financial wisdom, but also psychological preparation. The market is always fluctuating, life is always changing, and maintaining a normal heart, neither blindly panicking nor overconfidence, may be the best way for us to survive in this complex world. In this way, we will be able to keep a clear head and make the most appropriate decisions regardless of how inflation changes.