© 2019 All rights reserved
Why is there still talk about CPI inflation in the mainstream media and on economic portals? We still hear that the inflation target has been achieved. Do we understand that? Is it good that countries and banks want inflation to be positive. After all, inflation causes a decrease in the purchasing power of our money. To put it simply, there is one unpleasant fact: we buy less each year for the same amount of money.
Inflation is a very confusing and economically difficult subject. This is due to the fact that the real sense of inflation and its value by central banks is deliberately obscured. Why is this happening? It is simple. Imagine that Prime Minister of country x says that this year the central bank has printed 20 billion units of currency and so for a hundred units of currency we will buy 2 instead of 4 loaves of bread. This is how inflation works. The state prints money to fulfill election promises (benefits, free health care, roads, schools and others), pay its employees, pay the international debt and prepare new elections. Will people be happy and choose this government for the next term? Of course not.
Another aspect of inflation is the real inflation rate. There are many organisations in the U.S. that study inflation unofficially. The best known is the Chapwood index. For many years this organization has been collecting information about changes in the prices of food products, services, fuel, electricity, school, tutorials – everything that affects our real cost of living. According to this index, prices increase on average from 9 to 11% per year.
Official CPI inflation is 2%. Why is it so. It’s simple. For more than 20 years, CPI inflation has been calculated on the basis of creatines, taking into account only those prices that increase least. People get information through the media that inflation is 2%. But why do we still think that we have less and less money. It is simple. Wages are rising just like official inflation by 2% a year. 10%-2% =8%. That’s how much less we earn each year. Of course, this is just an example. It looks a little different in every country. However, the truth is unpleasant. We are deliberately deceived by the authorities so that we can repay your debt.
By printing money, the Central Bank dilutes the currency. The more products on the market, the cheaper they are. The same applies to the currency. It loses its value overnight. So how to save?
Above all, we must preserve the value of the savings that we have already made. In another article on the purchasing power of money, you can read why we need to do this. At this point, however, we need to focus on the fundamental issue of preserving the value of our savings. That is absolutely fundamental. I stress this very strongly because we live in times of widespread disinformation. Official TV stations and newspapers, especially the economic ones, are constantly flooding us with information streams. Nothing really comes out of that. The reason is that by focusing on very many details, we are losing the overall picture.
The media only provide a convenient and secure version of the information. They cannot tell us that inflation is 10 per cent per year, because every moment protests would break out and workers’ wage demands would be much higher. That is why the media present us with CPI inflation, which unfortunately is far from the truth. And it looks more or less like we lose 8 per cent of our savings every year on average. Do you feel slightly scared?
If not, stop reading this text and quickly go to the nearest supermarket to spend all your savings. I`m giving you such absurd advice because a person who is not frightened by an annual loss of 8 per cent should not save at all. After 5 years, $65 is made out of 100 dollars of such savings. Now you can see it better? Buying a new sofa, a TV set, a suit or a beautiful dress is a much better idea. Thanks to this, the money can be used well. A suit may even help you to work or find a rich wife, and a dress will turn the head of a wealthy handsome.
If you still read this, you may be a little bit worried. If so, it is very good. I ask you to leave your comfort zone and think that someone is robbing you by 8 percent a year. Surely this vision is not what you dreamt of. The most difficult thing for an adult person is to accept the fact that his or her vision of the world, built over the years, is wrong. I, too, was such a man. Gradually, when I studied the secrets of the financial markets, the economy and global financial policy, I became more and more depressed. It was a painful process and quite a long one. I am already in a very good mood.
First of all, do not try to break through the wall with your head. I already know that I do not have a chance with fat financial fish. They are the ones who control the economies, central banks, interest rates and they are the ones who can cause the bankruptcy of your country. There is no such thing as self-regulation of the financial markets. Capitalism is about getting rich at the expense of the poor, who become even poorer.
What can you do to prevent your savings from being eaten by hidden inflation? The most important thing is to accept this fact. If you digest it and your anger passes you will be ready for the second step, i.e. education. That’s why this service was created. Surely each of you has heard about diversification. This is the basis for savings. There will be separate publications on diversification. At this point you need to know that diversification protects your capital. Provided that you do not keep all your savings on bank deposits. Even if you have these savings in 6 different banks, they will still have a similar interest rate. You can be sure that it is well below real inflation. I recommend that you read on the Internet about the real inflation rate. It is not easy.
The conclusion is that, despite the diversification of capital between different banks, you are still losing approximately the same amount. And what if you hold capital in several different currencies, you will ask. A great idea. Only in which currencies, when to buy them, when to sell them, what part of your wallet to keep in a given currency. The matter becomes very complicated. Here again, further education is needed. You can also find articles about currencies on our portal. At this point, however, you need to know that this is a very difficult subject. Currencies are very volatile over time and are influenced by a multitude of economic and geopolitical factors. Additionally, the world is changing. We are slowly entering the world of digital currencies. It is very likely that a new monetary system will soon emerge, which may very much change the perception of currencies.
At this point I think that if you want to diversify your savings into different currencies, choose currencies that are perceived as the best and safest in the world. Undoubtedly, the Swiss franc (CHF) and the US dollar (USD) are among such currencies.
When talking about protecting capital against inflation, it is necessary to adopt the rule that every currency finally dies. This applies to all currencies because in every country in the world central banks print currencies like possessed ones. Even the central bank of Switzerland does this. In such a situation it is good to convert part of the capital into other assets. Here we come to the essence of saving. It is never the case that one asset is still valuable. One thing is certain, however, that certain assets store value over time and thus resist inflation. Such assets are gold, silver, real estate, stocks, bonds, companies and even cryptocurrencies. Each asset has its advantages and disadvantages, which we will gradually bring closer to you.
I would like to point out right away that there is no ideal solution. Surely, however, the diversification of your capital between different asset classes will surely eliminate the effects of inflation. Even such hidden inflation entails an increase in the prices of different asset classes. You are sometimes surprised why real estate is still getting more expensive, why gold is so expensive, why currency crypto starts to react strongly with price changes to price movements in the financial markets. Because these assets are a means of escape for capital that escapes from the financial markets with ordinary money. Big players are looking for a chance to multiply capital, but above all they do not want to lose it. That is why we will follow the big players and their smart money.
Scan the QR code or copy the address below into your wallet to send some Ethereum
© 2019 All rights reserved