Inflation - A Hidden Tax : What Is Inflation & Why Children's Savings Accounts Are Unwise!
We hear the term inflation regularly in our media. Why are so few people able to accurately explain what inflation is?
As I've traveled around our world, I have asked hundreds of people if they understand the concept of inflation? Only a very few people are able to answer this important question correctly.
Inflation is so intimately tied to our welfare that it is vital we understand it. Why don't we? The famous industrialist Henry Ford is quoted as saying:
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
What Is Inflation?
The former US politician Ron Paul gave a succinct explanation of inflation as:
"More money = less value."
My simplified explanation of Inflation is:
When you double the amount of money in circulation you reduce the real purchasing power of the existing money by 50%!
That is inflation at work!
How Is The Money Supply Increased?
Inflation is fundamentally managed by those who create the money. The central banks in the vast majority of countries are privately owned and they control the issuance of new money. This is extremely dangerous and costly to our societies and I will expound this knowledge in a future post!
To use the US as an example: when the privately owned Federal Reserve prints money they are increasing the inflation rate. In real terms they are reducing the purchasing power of anyone who holds US dollars.
Who Benefits From Inflation?
So who directly benefits from inflation? The primary beneficiaries of inflation are the central banks and those who receive the new money before it can filter into the rest of the economy and raise prices.
In the case of the US economy the Federal Reserve creates new money and some of the first recipients of that money are the government, banks, defence contractors and private suppliers with good political connections. The truth is this money will never be repaid. The true cost of the new money will saddled on the existing holders of US dollars.
This process is enacted in one form or another all around the world!
Who Loses From Inflation?
The simple answer to this is almost everyone!
We pay our income taxes, road taxes and many more. However one of the major taxes we pay is never explained to us. We hear about it all the time: "the inflation rate"!
You can study business and economics at the world's best Universities but they never teach you the true meaning and cost of inflation. Inflation is so important to our economic welfare yet it is a hidden scam to defraud us of our savings. If only 30% of our populations understood how we were being manipulated we would have a "revolution before tomorrow morning!"
Why Bank Accounts For Children Are Not A Good Idea!
When I was a child my parents took me to a bank and helped me open a savings deposit account. I know many people who had similar experiences in their childhood. I even know of schools in certain countries who encouraged students to open bank accounts as part of the curriculum. The teachers weren't corrupt they just didn't know better!
When we understand the mechanism of inflation we can see why we should not invest in children's bank accounts. The bank's interest rate is never above the inflation rate otherwise they would loose money. Banks are in the business of making money!
When the interest rate on saving deposits is less than the true rate of inflation and the child wishes to withdraw their savings, the real purchasing power of that money will be less than when it was deposited!!! =(
There is a lot of valuable information that I wish to impart on this subject in future posts. Posting here on Steemit I am aware that many of you will understand this knowledge and that makes me very happy!
Crypto-currencies like Bitcoin and Steem allow us to free ourselves from this situation by owning a share in the creation of our own currency. I am interested in providing this information to those who don't yet understand the process of money creation and how it inevitably taxes us.
I look forward to discussion of this topic and reading your comments!
Further study references can be found here: 1, 2. 3, 4, 5, 6, 7.
Images courtesy of: 1, 2, 3, 4, 5.
Great Post, inflation is definitley a tax, people just accept its how things work and never question why. Government are not interested in helping the commoner, they are purely interested on staying in power and to do that they need to ensure we remain weak, the easiest method to weaken a population is through inflation. This post deserves more attention than what its getting. ReSteemed!
"The Fed fights inflation" reads the headline. Yet, they created it??
Hahahaha.... it is crazy isn't it? Upvoted! =)
Yes, insanity. @ironshield
@jockey the system is even more corrupt than your post describes.
The Federal Reserve does not, in fact, actually print more money.
It physically does not exist. I've read estimates that say there is only about 10% of the US dollars actually in existence (i.e.paper or coins).
It's all just digits in the Fed's ledger.
When someone borrows money to buy a house, they're not borrowing money that another person has deposited with the bank. The bank "creates" that money, as an I.O.U., which instantly becomes debt for the borrower.
New banks being built in the US generally don't even have a vault. Banks request that you put in an order ahead of time if you want more than a certain amount of cash ( say more than $5,000) because they have to order it.
Yes mate you are totally correct!
I always love to hear your input!
This is such an important topic I thought I would ease into it! I will be posting further about the truth of our current financial structuring soon!
Cheers buddy! =)
Upvoted and I followed you from the beginning! =) J
Thanks for confronting a truth most people cannot.
They print and mint 24/7 - but compared to the digital ledger (imaginary money), it's a 'drop in the bucket'. @ironshield
Exactly, that's another reason behind the push for a "cashless" society.
They're deathly afraid what would be exposed if there was a run on the banks.
A run on the banks is a nightmare scenario for everyone, the banks and us. @ironshield
And it would take about 15 minutes for them to be completely out of cash.
What amazes me the the imaginary dichotomy between INFLATION or UNEMPLOYMENT. As if you MUST have inflation to keep unemployment low. The official BS answer is:
Higher wages is NOT what causes inflation! Inflation forces employers to increase wages because cost of living increases - workers need more dollars for their work as inflation causes dollars to become worth-less.
Economists are trying to convince us (as they were taught) that inflation is the sign of a healthy economy and holds UNEMPLOYMENT at bay. What a lie from the pit of Hell. @ironshield
Note how they have been very specific to cast inflation from only one perspective, the perspective of price. By limiting the perspective to this one viewpoint, they hope to blind the people to what is really going on.
Truthfully, it is a somewhat complicated concept. Look at Weimar Germany and its hyperinflation -- most of the people didn't understand what was going on. I actually think that most of the monetary authorities responsible for the catastrophe didn't even really understand what was going on -- intellectual brilliance, after all, is not a requirement for government service, and in fact is often an impediment to government service.
The Weimar government, just like the Venezuelan government today, blamed "speculators" for the effects of inflation. The people only knew that shopkeepers, who were often Jewish, kept raising prices. Thus they had a deep seated anger against the shopkeepers, whose greed they blamed for their money losing value, and this anger eventually surfaced through the medium of the Nazis, who were willing to point fingers at the Jews as a sector of society that had damaged society. The German people didn't necessarily harbor a white hot racism, they were just wounded badly by something they didn't understand and were encouraged to point that hatred at a particular ethnic group.
Inflation is just dilution. Plain and simple.
Think numerator and denominator. The denominator is the bottom number. It tells you how many of something you have in the total population or the total set that you are looking at. The numerator is the top number. It tells you how many out of the total number of things your are looking at that you actually have.
Take the fraction 1/10. This fraction means you have 1 thing out of the 10 things that there are in total.
So now, if you increase the denominator to 20, your fraction is now 1/20. Which is half of 1/10. So you can change the number of things you have by either changing the numerator, which is what you hold in your hand, or by changing the denominator, which is a more tricky way of changing what you hold in your hand because it changes the value without ever touching the thing in your hand. Which is also why many people don't understand it.
Printing money adds numbers to the denominator. Which is why many people don't understand it.
This post has been ranked within the top 50 most undervalued posts in the second half of Jul 26. We estimate that this post is undervalued by $15.10 as compared to a scenario in which every voter had an equal say.
See the full rankings and details in The Daily Tribune: Jul 26 - Part II. You can also read about some of our methodology, data analysis and technical details in our initial post.
If you are the author and would prefer not to receive these comments, simply reply "Stop" to this comment.
I like what you write. It's very interesting. I was upvote you, expect you also upvote and follow me.
I will keep track of you long upvote you. Please help each other! Thankyou
Thank you for this post, get the truth out there. @ironshield
very good friend
Great work, resteemed