Recently a relatively new faucet in my home is going to break. Its durability seems much weaker than the last one.
We’ve seen quality degradation on many products. If we’d like to purchase goods with the same quality, the price could be much more expensive. That means, the actual inflation rate could be much higher taking quality into account.
…But the system is probably working well
Once we notice the potentially higher inflation rate with most of the people can stand current situation, it indicates the society is working well.
Numbers are relative and sensitive to the context. The effect on the reality is yet the point. As long as it doesn’t result in public panic, the higher the inflation rate, the more efficient the market should be. First, currency has to be put into investment to avoid from value lost. Second, strongly productive workers can still successfully reach salary raises via negotiation, while weak ones cannot.
Set annual growth rate >= 5%
The world economic grows roughly 2% a year, and the acceptable inflation rate according to current calculation is 2%. In a very roughly count, our investment or income per year should grow 4% to maintain our economical status.
From today, seeing the faucet breaking, I feel 4% not enough.
I don’t do further study, but I heard professional investors averagely perform 5%. Without thinking too much, 5% as the goal sounds nice.
Let’s set our target annual growth as 5% then.