In today's economy, we live in a very different time. The shadow of deflation looms brightly, paling in the experience of past inflationary periods. In the face of such a situation, each of us needs to think more carefully about how to protect our wealth and prevent it from being easily lost.
When we hear the advice of "using savings to pay off someone's debt", do we feel a little uneasy? Yes, this seemingly generous act, in the context of deflation, actually hides huge risks. The experience of monetary easing is no longer a guide. At that time, we may be able to expect to grow our wealth by investing in loans and waiting for the currency to depreciate before repaying our debts. But that's all changed these days.
Deflation, it's a word that makes people smell it. It implies a continuous decline in the general level of prices, while purchasing power gradually increases in the process. Such an economic phenomenon has confused and uneasy many people who are accustomed to inflationary periods. They may still be using the old mindset and fantasizing about growing their wealth by borrowing money to invest. However, what they don't realize is that the arrival of deflation has shattered all this.
In the deflationary phase, effective demand continues to weaken, and the vitality of the market gradually fades. People are starting to tighten their purse strings and reduce consumption and investment. As a result, the money supply in the market is gradually decreasing, while the debt is constantly inflating. Many businesses and individuals have had to rely on borrowing to stay afloat. However, when money tightens, there is less new credit, which makes money in the market tighter.
At this time, if someone proposes to use the savings to pay off the debt of others, should we listen? I think every sane person would be wary of this. Because such an act is tantamount to investing our wealth into a bottomless pit. We may think that by helping others pay off their debts, we can get something in return or gratitude. However, in the context of deflation, such rewards and gratitude are often illusory. Because when the entire market is shrinking, any form of investment is fraught with uncertainty.
Now, deposits are crucial for us. It is not only our wealth protection, but also our weapon to resist risks in times of deflation. When currencies depreciate and prices fall, our deposits provide us with stable purchasing power. And if we easily put our savings into the market and try to earn a return by paying off someone else's debt, we are likely to be in a much bigger dilemma. Because in this market, no one knows what will happen in the next second.
Perhaps, some people will think that money will depreciate when held in their hands. However, in the context of deflation, such a view is clearly untenable. Because the premise of depreciation is that there is too much money supply and prices are rising. And in times of deflation, when the money supply decreases and prices fall, our savings actually increase in value. Therefore, it is wise to hold your money tightly in your hands and wait for the right time to invest or spend.
Of course, we can't just be conservative and negative. In times of deflation, while the market is full of uncertainties, it also breeds new opportunities. As long as we keep a clear head and a keen insight, we will be able to find those value depressions that have been overlooked by the market. Through reasonable investment and consumption planning, we can not only protect our wealth, but also achieve steady growth in wealth.
Finally, I would like to say this: in the context of deflation, please do not use your savings to pay off the debts of others. Because such an act could put us at greater risk. On the contrary, we should remain calm and rational and deal with the challenges of deflation through proper planning and management of our wealth. Only in this way can we remain invincible in these uncertain times. So, are you ready? Have you learned how to protect your wealth in times of deflation?