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Is it necessary? How does it feel to flagged a poor person like me. If you check on my profile you can see that Im just a rat trying to go around on a millionaire's house hoping that I could find something for my family

I think @smooth was flagging you, because you were begging some people.
Just imagine if many start doing this, then steemit would not be a nice experience anymore. Of course not every begger should be flagged at once. I think we all have to learn how to use these new revolutionary system in an fair way. And we all need patience with each other to do so.
I for my part think that it would be good to have something like a yellow card - warning that we can give. Maybe it would be even enough to first try to talk to the people before flagging them. As said we all need to learn. Wish you and your family all the best!