Ok, full disclosure here, I’m not a CPA, nor do I hold any other formal financial title, I haven’t even finished any academic studies in the field of finances.
With that said, I encourage You to do Your own research and think deeply about what You find, and so discover Your own truth.
I very much acknowledge the importance of the field of finance and economics, though, actually I consider it to be one of merely two areas (the other being health) way too importan to outsource.
We all know that inflation is escalating in most regions of the world at this time, and most people are made to believe, this is due to rising prices on consumer products and commodities. Which basically is exactly what we’re suppost to believe.
Now, let me ask You to think about a few facts that are not talked about that much, yes?!
- The meaning of Fiat: Most people have heard the term ‘fiat currency’, yet not everyone knows the meaning. ‘Fiat’ is Latin, and basically means: ‘because I say so’. Most currencies are ‘fiat’ and therefor solely based on trust in the issuing country/region, should that trust diminish, the value of the currency is automatically debased.
- The development of technology, etc: Over the last decades, advancements in technology, logistics and other areas have been nothing less then mind-blowing. From a view point of logic, this should mean that everything actually gets less and less expensive to produce and transport goods, right?! So why is everything getting more and more expensive?
- The printing press: Admittedly I have read different numbers regarding the ‘creation’ of new USD over the last few years, reaching from 25% of the circulating supply having been added in the last 2yrs (12.5% yearly increase in supply) to 42% of the circulating supply added in the last 18 months (almost 30% yearly increase in supply)In alignment with the law of supply and demand, this kind of a major dilution of any asset class would lead to a massive decline in value.
- National debt: A the time of writing the combined national debt on a global scale exceeds the global GDP by a factor of 3-4x.This means that there’re basically just two solutions for most countries and/or regions: a) default, that is just not paying the debt, and b) issuing additional currency to pay of the debt, thereby devaluing the native currency
I’m sure I can come up with several more indications that the current state of inflation has absolutely nothing to do with increasing prices (except, of course, by causing them), yet I’ll cap it here. Still I would like to encourage You to explore the issue, and I ask You to get back with Your own observations and thoughts.
On a final note, I just want to point out that the only entities that benefits from the current state of inflation is identical with the entity issuing the currency, and of course, everyone else with a lot of debt related to income producing assets and/or businesses.
So, basically the state devalues the buying power of its citizens to cover up its past financial decisions.
I sincerely hope that You enjoy the read of this third post in a series of thoughts with regard to ‘That Small Still Voice’, and benefit from contemplating the content.
Please let me know!
p.s. The Master Key Experience (MKE) can help you on this journey of self-directed thinking!
Very enlightened, Claes. Plenty of food for thought here. And I thought Fiat was just a brand of cars:)