1/27/2011

Beating the inflation beast

Govt policies have long term implications, some good and some bad, and some effects can be very extreme. Today everyone knows that Singaporeans are asset rich and cash poor. Everyone knows why. Singaporeans used to be very rich in their savings. Today, not many can smile at their CPF monthly statements as most have been depleted by you know what. Whatever little left will be schemed away and becomes untouchable. It all started when someone realized that Singaporeans have a lot of savings. Then schemes started brewing. How to get hold of this money while they laid idle in the CPF accounts? The rest is history. Today practically everything is priced to empty those savings. Of course they don’t said it this way. They said, Singaporeans can afford to pay because there is money in the CPF accounts. And everything is priced, carefully calibrated, to be affordable according to how much money there is available in the CPF accounts. Brilliant but disastrous. Clever but very short sighted. On one hand encouraging the people to save and on the other helping the people to spend at double quick time. Then utter the big surprise, why money not enough? Now there is a problem when it should not be. So we blame the inflation beast. It is all because of inflation. And inflation eats up a life time of savings at 40 to 50% of one’s income. If only time can be unwound to bring back to where it started and this asset inflation nonsense be killed before it gets wilder. So how? How to return to the time when housing was really affordable, medical fees affordable etc etc and people’s savings keep growing and they can smile at their CPF monthly statements? The inflation beast needs to be beaten. But there is no way to bring down the price of housing or medical fees. Doing that will be even more disastrous. Perhaps inflation can be beaten by inflation. How about inflating the CPF accounts of Singaporeans to the tune of $300k or there about? This will return some cash to the Singaporeans whose savings have been whittled away by inflation. And it will help Singaporeans wanting to buy those inflated HDB flats or pay for those inflated medical bills. It will cost he govt nothing. It is just printing money like all countries are doing. Follow our role model America and we can’t be wrong. When the rest of the world is printing money, we will lose out if we don’t. The buying power of our dollar is shrinking in a frightening way for domestic purchases. This must be done right. And there is no need to throw the whole amount to all Singaporeans. It can be carefully calibrated to the young and old, and to new and old citizens. We cannot repeat the silly thing by throwing all we got to new citizens. More thoughts can go into this little idea of inflating the CPF savings accounts of Singaporeans to fight the inflation beast. And the amount must be meaningful to right the excesses of the last 30 years. Let’s see what Tharman is going to say during his budget speech. Would it still be $1 for you and $1000 for me again?

12 comments:

Wally Buffet said...

Walau, you're a brilliant eekongnomist Mr. Bean.

I especially like the part about inflating our CPF accounts. This really can be done because like the banks, when someone asks for a loan, they merely credit that debtor with the sum of money from thin air so what's the difference with the CPF?

I really would love the prospect of getting 300K in the CPF for me to buy more stocks after all if there is a big crash and this day ain't very far away, what I'm losing ain't really my money. It's Ah Kong's!

The only thing I'm really interested in the budget is what's in store for dead broke retirees like me.

Hehe. :o)

Anonymous said...

After sucking out so much money from the CPF to pay for housing and medical fees, it is time they put it back.

Also a lot of money oledy embargo, cannot used or used by some organisations for investment. Pay back time.

Good thing abt CPF is that the govt can decide how the people use it, when and how much. All can be managed. Some can't be used immediately, some for a long time. Now the talents can tinker their super brains to make it works.

Anonymous said...

Maybe they'll even do a U-turn of handout for lao peng's NS contribution to win votes...though i doubt it'll be $9k

Anonymous said...

The only way to beat inflation here is to leave Sin.

Wally Buffet said...

That's not a very smart way to beat inflation by running away because this malignant disease is everywhere. Besides being the first to use nuclear weapons, the Americans also have the dubious honour of being the first country to unleash world wide inflation by flooding the world with QE cheap money. Fuck them!

Next to global warming, inflation is the more ferocious beast. The other is a red herring.

Who the fuck cares about the Earth, the rivers, the lakes, the weather and the leaking atmosphere?

I am more worried about the cash still in my CPF turning to Imperial Japanese Bank Notes of World War II vintage.

What is really needed to tame the beast is a NEAR catastrophic collapse of the world financial system triggered by the property bubble in China. Then all of us will heave a collective sight of relief and look forward to the day when we can get an umbrella and a cheque from the CPF that is worth something.

Anonymous said...

At least buy a mansion or a small piece of land in Lijiang or Shangrila now while they are at giveaway prices and the Sin Dollars at it's super value now mah.

Chua Chin Leng aka redbean said...

The risk of our CPF savings. Some cannot touch and as good as gone. Those we think are there, yes, may become banana currency.

Our effort to save could all be in vain.

Anonymous said...

Play safe and chabot(get away) first lah.
Why behave like frog in a slow cooker? Willingly to be cooked?
Why so stoopid? Get the best value for your money! You can come back once a week when all the budget airline fares become cheaper than taking a taxi ride in Sin.

Wally Buffet said...

You're too late bro.

To buy the same imperial palace as mine, you now really need a king's ransom.

You can no longer exchange your 3 room HDB for it.

Inflation, like cancer has even metastasised to the remotest corners of the Earth.

Hehe. :o)

Chua Chin Leng aka redbean said...

At the rate money is being printed, saving is the biggest con job. Holding on to that piece of gold or some object is the real thing.

One day everyone will end up as billionaires but the money only to be used as toilet papers.

Anonymous said...

I heard Barclays (if I am not mistaken) is closing down its wealth management section and retrenching about a thousand workers. Does not surprise me, and I think many others will follow suit.

People are starting to realise that they have been conned into saving for retirement, only to find their savings decimated by inflation day by day. They could never retire.

Now, who would want to save for decades, only to find out that their savings are turning into rotten bananas when they are about to touch it.

This is happenning in US and Europe to those about to retire hoping to live on their savings only to find that they have been just living a retirement dream for decades that failed to materialise.

We in red dot are in the same boat.

Matilah_Singapura said...

Only one solution: reign in the expansion of he money supply - especially the creation of CREDIT.

...or just continue as per normal and wait for the eventual "correction" aka CRASH to sort out the smarts from the stupids.

Meanwhile Singapore continues in 2nd place. Surprise, Australia now in 3rd place... in spite of a welfare state. Impressive.

Have a look