Watching Warren Buffett completely change what he believes about money in a matter of months has been fascinating.

The Most Important Lesson On How Money Works From Warren Buffett

This is what Warren said recently about how money works that will test everything you thought you knew about money:

Inflation Is Taking Hold

Inflation is when prices go up and the value of your money decreases. Four dollars last year may have got you a small cup of coffee. That same cup of coffee might cost you $5 this year, as a simple example.

Why All of This Matters to You?

We’ve talked a lot of finance shop in this article. Let’s break down why the change in how money now works matters to you.

Negative interest rates

Negative interest rates can be bad for you because it means you have to pay to store your money. It also means the bank you choose to bank with may face severe financial trouble that leads them to go out of business.

The poor are being robbed by the rich who have the data to predict their moves.

Many retail investors are buying stocks using apps like Robinhood — the data tells us this trend.

The stock market bubble

Record unemployment. A global health crisis. Protests. Despite the world we live in stock markets are beating record highs. Crazy, or a disaster waiting to happen?

The change in the velocity of money

While free money is being given away through economic stimulus and large amounts of money are being printed out of thin air, the velocity of money is down. (The velocity of money just means how many times one dollar passes through multiple people’s hands.)

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