In the last chapter “Active or passive investing” I spoke about circulating money.
I had written about the injection of liquidity by central banks in terms of advantage for investors.
New money in the system pushes high people’s spending, earnings of the company and therefore the value of financial assets like stocks.
The side effect is that the nominal value of money decreases because the value of everything is tied with his scarcity.
I.e. If there is a lot more money, this money loses value.
What does it mean for those who don’t invest? It means that the value of their bank account decreases over time.
Today interests on bank accounts are very low, much less than the inflation that affects your currency.
Another reason to invest even just in an Index fund, like I spoke in the last article.
Related article – Cryptocurrencies
Following chapter – 6. The eighth marvel of the world
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