By Henning Lindhoff – Wealth Protection Up-to-Date (Germany) –
Today I want to talk to you about inflation. Sad to say, new numbers on irrational multiplication of money reach us every month. That is why we always have to keep the background in mind…
Also in September, prices of the Eurozone increased. This time they rose 0.4 percent. The fact that they “only” rose 0.4 percent is especially, ladies and gentlemen, thanks to the still quite low prices for energy.
However, the price of oil is rising again on the stock market. What do you think will happen when we feel its influence in our everyday life again?
Rent is currently not much affected by inflation, too. However, they play an important role in generating the inflation rate, and contribute 21 percent to this rate in Germany.
Here in this country, rent, water, power, gas and oil fuel together make up 31 percent of the inflation rate!
These prices are relatively stable at the moment. For now…
However, this will probably change when the European Central Bank also flushes these industries with their money.
Let’s take a look at the inflation rates of the last months:
Inflation’s engine is running: and gains more and more speed since summer…
What we can see: since June, inflation is speeding up. I cannot tell you if this may cause inflation to break into real economy.
Nobody knows when our monetary system will start its final struggle to survive.
I assume that the bankers at the ECB have not shot all their bolts yet, and that we will have to cope with financial repression for some more years.
But, at this point, I can explain the widely unknown background to you to clear things up:
Since: inflation does not come from nowhere.
Price increase is not a principle.
Let’s start with a short explanation of the term: what we as citizens are made to believe to be inflation is actually price inflation. There is a small but important difference between those two concepts.
Inflation (Latin inflatio “swelling”, “to swell”) originally only refers to the expansion of a certain amount, in this case, the amount of money.
Only the second step of central and commercial banks expanding the amount of money leads to price inflation.
Prices only rise when the increased amount of money enters the market and faces goods produced in limited amounts.
However, except for the small number of representatives of the Austrian School or national economics, neither journalists nor so-called experts dare to make this small but important distinction.
And they have a good reason as this way of reinterpreting the term inflation cleverly excludes the real reason for increasing prices. It hides the actual evil, the expansion of uncovered amounts of paper money, and covers who is responsible: politicians and high street banks in charge
This chicanery is deeply connected to the illusion that more money automatically represents prosperity and a high living standard.
As it happens, during inflation only nominal incomes increase, i.e. the number on your accounts current. However, this does not improve the availability of goods since production of goods increases much slower.
Prices rise particularly due to this imbalance between the amount of money and of goods.
Dear reader, please do not listen to the nice words of our politicians and bankers of the CET.
Our current monetary system is not healthy.
Therefore, I always advise you:
Put an end to paper money!
Turn to real value: gold, silver and stocks of down-to-earth companies!
That is your first important step to achieving a more sustainable investment strategy and saving your capital in the long term.
How can you protect your capital from this disastrous monetary policy? Are there any alternatives to gold and silver? If so, which? Write me an email to firstname.lastname@example.org. I am looking forward to interesting conversations!