Inflation is actually one of the biggest reasons large corporations are so powerful in society. The government and big banks use inflation to force people to spend their money and go into as much debt as they can afford.
But how does it all work? Before we answer that, let’s first look at a parable. Some things are best learned in a story format, and inflation is one of those.
The Saver and the Slave: An Inflation Story
There were once two men who were neighbors. Their names were “Jack” and “John”.
Jack was a saver. He spent his entire life saving every penny he could get his hands on. He saved money with coupons, saved money by buying stuff only in off-seasons, saved money by spending as little as he could, etc. He was a saver. By the time he was 45, he had saved exactly $100,000.
John was a spender. He spent every dime he ever earned. Back in his 20s, he even took out a $100,000 loan, and bought two houses with it. He never used coupons, never looked at prices before buying anything, and wore nicer clothes.
During this time, inflation started to hit in. Inflation was fairly high. By the time Jack and John were 45, inflation destroyed 90% of the value of the US dollar.
For Jack, this was disastrous. He spent his whole life saving $100,000, and suddenly it was worth only 10% of what it should have been worth. This means that rather than having 100k it was as though he only had 10k. Not enough to even buy a house.
For John, this was perfect. He spent his whole life spending his money, so he didn’t see his money lose value. He took out a 100k loan, but his loan was only like he had a 10k loan now — and he still has two houses. John ended up selling one house, paying off the loan, and walking away with a free house, and 90k.
Inflation Destroys Debt and Dollars
Inflation doesn’t destroy wealth —
inflation destroys dollars. This means
if you’re in debt, inflation makes your
debt less and less. If inflation is 10%,
it’s like your debt is getting 10%
smaller every year. If you’re a saver,
inflation makes your savings 10%
smaller every year.
Every year people in debt see their
net worth increase because of inflation.
Every year people who are savers see
their net worth decrease because of
inflation.
Inflation doesn’t hurt everyone equally —
it just hurts people with cash, and forces
them to spend their money and get into
debt. Inflation essentially forces people to
become slaves to banks and to not have
money.
In an inflationary society, people who are
willing to go into debt to buy houses,
businesses and such are at a huge, huge
advantage over people who just save
their money. Savers are penalized.
Spenders are rewarded.
What This Really Means
Because inflation makes debt more
attractive, an economy with inflation
will see a much higher level of debt
than societies with less inflation. This
leads to the economy becoming much
less secure, and sets us up for financial
catastrophe.
Inflation is one of the reasons so many
people purchase houses and property
even before they have the money —
inflation makes cash less profitable or
secure.
There’s a reason the government and
large banks support creating inflation.
It pushes individuals into debt. It makes
consumers slaves to creditors. It transfers
wealth from savers to people in debt.
It stops frugal people from being able
to make ends meet unless they have
large incomes.
This all means several things:
a) Investing makes more sense.
Savings accounts don’t pay interest
that’s higher than inflation. This means
that most people will use the stock
market to build up wealth over time —
they have to take part in the financial
system. Plenty will get fleeced in the
system. Big financial institutions make
more money this way.
b) Debt makes more sense. This
should be obvious. You’re using
inflation to essentially get free money.
Most debt comes from banks,
meaning you’ll be a voluntary debt
slave to a bank because it’s profitable
to become one. You’re shackled to
the system.
c) An independent retirement is
difficult. Being able to save your own
money for retirement is much, much
more difficult with inflation. If it wasn’t
for inflation, social security would be
much less likely to exist. This means
inflation makes the people more
dependent on the government. The
establishment loves this.
If you save $1,000,000 for
retirement over the course of
50 years, and inflation is 4.07%…
you actually only save $136,000
in today’s money, which probably
won’t be enough to own a nice house.
Does this mean you shouldn’t save?
Does this mean you should go into debt?
Not quite. I’ll be writing what you
should do in the future… hint: gold
is a great inflation hedge.
Right now, inflation is skyrocketing.
Gold is exploding. Silver is exploding.
The dollar is dying. This is all happening
in a way that is destroying savers,
rewarding debt, and creating an
economy that is based on debt and insecurity.
Inflation doesn’t destroy wealth —
inflation destroys dollars. This means
if you’re in debt, inflation makes your
debt less and less. If inflation is 10%,
it’s like your debt is getting 10%
smaller every year. If you’re a saver,
inflation makes your savings 10%
smaller every year.
Every year people in debt see their
net worth increase because of inflation.
Every year people who are savers see
their net worth decrease because of
inflation.
Inflation doesn’t hurt everyone equally —
it just hurts people with cash, and forces
them to spend their money and get into
debt. Inflation essentially forces people to
become slaves to banks and to not have
money.
In an inflationary society, people who are
willing to go into debt to buy houses,
businesses and such are at a huge, huge
advantage over people who just save
their money. Savers are penalized.
Spenders are rewarded.
What This Really Means
Because inflation makes debt more
attractive, an economy with inflation
will see a much higher level of debt
than societies with less inflation. This
leads to the economy becoming much
less secure, and sets us up for financial
catastrophe.
Inflation is one of the reasons so many
people purchase houses and property
even before they have the money —
inflation makes cash less profitable or
secure.
There’s a reason the government and
large banks support creating inflation.
It pushes individuals into debt. It makes
consumers slaves to creditors. It transfers
wealth from savers to people in debt.
It stops frugal people from being able
to make ends meet unless they have
large incomes.
This all means several things:
a) Investing makes more sense.
Savings accounts don’t pay interest
that’s higher than inflation. This means
that most people will use the stock
market to build up wealth over time —
they have to take part in the financial
system. Plenty will get fleeced in the
system. Big financial institutions make
more money this way.
b) Debt makes more sense. This
should be obvious. You’re using
inflation to essentially get free money.
Most debt comes from banks,
meaning you’ll be a voluntary debt
slave to a bank because it’s profitable
to become one. You’re shackled to
the system.
c) An independent retirement is
difficult. Being able to save your own
money for retirement is much, much
more difficult with inflation. If it wasn’t
for inflation, social security would be
much less likely to exist. This means
inflation makes the people more
dependent on the government. The
establishment loves this.
If you save $1,000,000 for
retirement over the course of
50 years, and inflation is 4.07%…
you actually only save $136,000
in today’s money, which probably
won’t be enough to own a nice house.
Does this mean you shouldn’t save?
Does this mean you should go into debt?
Not quite. I’ll be writing what you
should do in the future… hint: gold
is a great inflation hedge.
Right now, inflation is skyrocketing.
Gold is exploding. Silver is exploding.
The dollar is dying. This is all happening
in a way that is destroying savers,
rewarding debt, and creating an
economy that is based on debt and insecurity.
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