• Thu. Jun 13th, 2024

Is hyperinflation the new Norm?

Jul 6, 2023

The era of 2% inflationn is a thing of the past. Instead, we seem to be heading toward a dangerous path of hyperinflation. If you’re considering opening a high-interest savings account, hoping for a 4.6% APY, let me explain why that may not be a viable solution. While some banks are offering these seemingly attractive rates, it’s crucial to note that many of them are short-term offers lasting only six months. Let’s take a look at banks with the highest APY, but let’s also rewind to 2019 to provide some context.

In 2019, Access Bank offered a 1.3% APY, Discover Bank provided 2.1%, Allied Bank offered 2.2% APY, and Synchrony Bank had 2.25% APY. Clearly, the APYs have experienced significant changes since 2019. The current APYs, which hover around 4% for a short duration, are barely keeping up with inflation, which stands at 4.1%. This indicates that we are on track for hyperinflation.

To combat inflation, aggressive monetary policy and reducing the money supply are the only effective measures. Currently, only about 3% of the money supply has been withdrawn, and even that small amount has caused banks to collapse. To return to the APY rates of 2019, more than 24% of the money supply would need to be withdrawn. Considering the consequences of losing just a few banks with a 3% reduction, imagine the catastrophic effects of a 24% withdrawal. It would be an absolute train wreck.

Therefore, it is highly likely that these high rates will persist and may even increase during certain periods. Merely trying to weather the storm will not help you beat inflation. To combat inflation effectively, we must consider other options like downsizing the government and cutting spending significantly, it is the only viable path out of this predicament.

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