So the thing we KEEP alluding to with our constant but consistent theme of trashing fiat currency is that they guaranteed to lose value over time. Inflation is a key mechanic at the heart of the system. Our fiat currencies require the expansion of the money supply or else the machine breaks. Economists sell inflation as a good thing because the steady erosion of the value of money forces people to either spend it or take risks with it in order to stay ahead of the erosion. Inflation keeps the money circulating and punishes players who store and save their money over the long term.
Inflationary currencies are great for the players closest to the money printer who can print the money they want to spend. By printing more money they are stealing value from every other holder of that money. The Cantalon effect is the name given to the situation where the people closest to the money printers benefit most from it (big surprise). In the West players closest to the printers are the central banks, the governments and the centuries old banking families (tin foil hat moment).
Normally we don’t feel the effects of inflation because the target of 2.5% a year is pretty low for the time period we experience it over. If your income does not keep up you will begin to feel the pinch over the years. You will blame yourself and your spending habits for this pressure. You will not blame the government because they spend a lot of money convincing you its not their fault. The ‘experts’ are wheeled out to explain to you why you are wrong and why it’s your fault. They will justify price increases as necessary and will suggest that you work harder in order to survive. Of course by working harder you earn more for them to tax…. Like the frog in the pot you don’t notice if the water is warmed slowly until its too late and then you boil to death. The frog getting into the hot water would jump straight out.
So how do we get you the reader to be the frog going into the water not the one sitting in it…
Repetition helps as over time these weekly touch points from The Wealth Gap should, like marketing, twig and make you more aware and take notice. Like the yellow car game, we want you to be awake to the words of inflation, debt, money printing and quantitive easing. We want you to see it in your life. We want you to notice that pack of biscuits that has had a 30% weight reduction whilst retaining the same price. We want you to see that and know its because of the government, the Bank of England and the money inflating (printing) mechanics they are using to give with one hand and steal with the other.
As we were writing this we got an alert saying every household in the UK is to get £400 to help with the increase in energy costs. Where is this money coming from? Apparently its coming from a levy on the energy companies but we are willing to bet something else will be funded by the money printers. Watch out for the key misdirection and wording like “partially funded” by Gas & Oil windfall tax etc
Inflation in action
Take a look at this image below
There is a tendered contract for replacing 8 escalators in New York with a total estimated cost of $62.2million with a completion date of 2nd Quarter 2023. Thats if its on time and under budget which is still a big IF in todays world of delivering city projects on time.
So what? Well lets just hold that number in mind $62,200,000 for 8 escalators!
The Empire State building
You should recognise this iconic building right? Another New York City project, albeit a major feat of engineering and a monumental achievement but none the less a similar application of tendered job in the city.
In their race to construct the tallest building in the world, Walter Chrysler won the contest when the 1,046-foot Chrysler Building opened in May 1930. But that distinction would be short-lived. Four months later the partially completed Empire State Building took the title away when the 85th floor was added.
Construction of the 1,250-foot Empire State Building was completed in April of 1931, three months ahead of schedule. And to the delight of all involved, the cost of this enormous building was well under budget.
What did it cost?
The total cost to build the Empire State building was
$41 million in 1931
($24.7 million was for the construction and $16 million was for the land)
The point we are trying to make is that over time it is very very very clear to see the total devaluation pace of fiat currency. It is designed to go to ZERO in value, it is expected to be “Reset” or “Destroyed” or “Hyperinflated”
Nobody talks about it because it is counterintuitive towards “stability” and “control” and “cultural balance”
For fiat currency to work it needs the total buy in of the citizens and trust in the system itself. To protect that stance governments and central banks really do not want you worrying about whether the currency they issue will be worth less (or even worthless) tomorrow. So they blame everything else while those close to the printer reap the rewards.
Whether you like it or not this is still going to happen and at an alarming pace going forward.
The only guarantee we can give is that the Fiat Currency you earn today over time will be worth less tomorrow. Long term savings are doomed in that environment so one must consider where money should sit…
We like hard assets at TWG (Bitcoin, Land, Property, Commodities) things that can’t or can’t be easily replicated or made. They should in essence hold and increase in value over time against the “valuation” of the currency they are pegged to.
Keep it simple readers, think long term and protect yourself for the future
The Wealth Gap Team