The Wealth Gap and Inflation: Addressing a Growing Problem

Place/Date: - March 12th, 2022 at 5:48 pm UTC · 5 min read
Contact: Coinchange, Source: Coinchange

Throughout history, there’s been a huge discrepancy between the rich and the poor. This is better known as the wealth gap, which represents the distinction in wealth between upper and middle/lower-income families.

What’s worse is that this economic inequality continues to widen and grow, becoming far less favorable to the average person and family day by day. As an example, by the beginning of 2021, the richest 1% of Americans were in possession of the country’s entire wealth.

One of the biggest factors driving this is inflation, otherwise known as the loss in purchasing power of a particular currency.

Let’s explore in more detail exactly how inflation further drives this wealth gap and the negative effects it has on the economy and individuals as a whole. More importantly, we’ll cover how Coinchange is striving to solve this problem in order to make the world a more financially equal place for all.

The Problem with Wealth Inequality

To start, endless tools and opportunities have been put in place to help higher-income individuals with building and maintaining their wealth. Once they’ve attained this wealth, it’s far easier to generate additional capital in today’s financial system. Those who are at the bottom of the food chain have extremely limited resources and opportunities, leaving them caught in an endless cycle.

Many argue that one of the biggest problems is that the average worker simply doesn’t get paid enough. In America, the richest individuals spend a very small amount of their income, so it’s the middle and lower-income people who are spending most of what they have to survive, causing a gap between output and consumption.

This gap is filled by these individuals taking on additional debt, with statistics showing that one in five households in the United States has a negative net worth.

While lower and middle-income families continue to struggle due to these circumstances, inflation is proving to be the nail in the coffin for many.

Harmful Effects of Inflation

As previously mentioned, inflation is when the currency you hold loses its underlying purchasing power – the prices of goods and services increase over time while your wages generally stay the same. This creates an even wider gap in most households and severely devalues currencies, as people are able to purchase less than they previously could with the same amount of money.

Classic examples can be seen with almost any goods over the span of the last century and longer. Be it a gallon of milk, ice cream, or lumber, the dollar value of these products over one hundred years ago, for example, was far less than it is today.

The Federal Reserve uses the Consumer Price Index (CPI) as a statistic to measure the cost of living over time. From 2010 to 2020, it averaged around 1.7% a year – to put this into perspective, $100 in December 2020 would have only been able to buy $84.15 worth of products or services in December 2010, showing a decrease in purchasing power of over $15 10 years.

Traditional banks aren’t helping, either. You’ve probably heard stories of people earning anywhere from ten to twenty percent interest in their savings accounts, back in the day. Those times are long gone, as the average interest rates for checking and savings accounts within the United States are 0.03% and 0.06%, respectively.

The point is that inflation remains a persistent problem and is destroying low and middle-class families – the government, Federal Reserve, and other entities appear to do little to truly tackle and solve this issue.

Coinchange Closes the Gap

Coinchange was created to introduce new financial opportunities for our consumers, helping them break free from the shackles of the traditional financial system.

Our flagship product is our High Yield Account, where you can deposit supported cryptocurrencies onto our platform and instantly receive high-interest rates in return. Better yet, our special algorithm scans the top DeFi (decentralized finance) protocols that provide these interest rate opportunities and taps into those that are the most credible and have the best APYs.

Whether you want to earn passive income off of more volatile assets, such as Bitcoin and Ethereum, or fiat-pegged stablecoins, the choice is yours. With Coinchange, you’ll receive some of the highest interest rates on the market today.

So why is this so important? Because we’re giving our customers a chance to start receiving real returns, unlike traditional banks offer. They now have the opportunity to minimize the wealth gap by earning passive income in the form of interest that vastly surpasses the current inflation rate.

Put your money to work and start regaining financial freedom with Coinchange today.

About Coinchange

Founded in 2018, Coinchange Financials Inc has since become a rapidly-growing digital asset platform. The company is registered in Canada and accepted in 33 states in the US. The Coinchange app can be downloaded from the App Store and the Google Play Store.

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