Insights for Money & Inflation

8/14/2019 Insights for Money & Inflation

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TodayTodays talks talk

What is MoneyWhat is Money Fiat money and hard moneyFiat money and hard money US money historyUS money history

What is InflationWhat is Inflation HyperinflationHyperinflation WhatWhats happening nows happening now

Money

Inflation


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What is MoneyWhat is Money

Fiat money and hard moneyFiat money and hard money

US money historyUS money history

What is InflationWhat is Inflation

HyperinflationHyperinflation Whats happening nowWhats happening now


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MoneyMoney


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Money has three characteristicsMoney has three characteristics Store of valueStore of value

Medium of exchangeMedium of exchangeUnit of countUnit of count


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But Ultimately, we wouldBut Ultimately, we would

saysay

Mo

ney isMoney isa claim of Humana claim of Human

LaborLabor


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What is InflationWhat is Inflation HyperinflationHyperinflation Whats happening nowWhats happening now


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Money categorizationMoney categorization

Money

FiatMoney

HardMoney


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Money categorizationMoney categorization

Fiat

Money

HardMoney

Has been used toback up fiat

money until


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Old US Dollar in 1930sOld US Dollar in 1930s


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Current US DollarCurrent US Dollar


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Fiat money and hard moneyFiat money and hard money

US money historyUS money history

What is InflationWhat is Inflation

HyperinflationHyperinflation Whats happening nowWhats happening now


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Before 1933:Before 1933: US dollar is as valuable as hard money.US dollar is as valuable as hard money.

Every US citizen can exchange 25Every US citizen can exchange 25dollars with 1 ounce of Gold at any time.dollars with 1 ounce of Gold at any time.

In 1933:In 1933: Roosevelt confiscatedRoosevelt confiscated

all privately held gold.all privately held gold.

US dollar can no longerUS dollar can no longer

be exchanged with goldbe exchanged with goldby US citizens.by US citizens.

Gold standard isGold standard is

partially removed.partially removed.


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Bretton WoodsBretton Woods

Agreement, 1944Agreement, 1944

Fixedexchange rate

$35 = 1 ounce of


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In 1971, Nixon closed theIn 1971, Nixon closed the

Gold Exchange WindowGold Exchange Window


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In 1971:In 1971: Bretton Woods Agreement collapsed.Bretton Woods Agreement collapsed.

US dollar is completely decoupled withUS dollar is completely decoupled withgold.gold.

After 1971 till nowAfter 1971 till now

We are living in a world that Us dollar isWe are living in a world that Us dollar isbackedbacked by Debtby Debt, instead of, instead ofby Goldby Gold,,

which means:which means:US Fed can issue any

amount of dollar as muchas they like out of of thinair


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US Money HistoryUS Money History

1933: Gold

standardpartially

1971: Goldstandard

completelydestroyed


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InflationInflation

Most people think of Inflation asMost people think of Inflation as

rising pricesrising prices, but that, but thats not quites not quite

rightright

Inflation is always a monetaryInflation is always a monetary

phenomenonphenomenon

rising pricesrising prices is only a symptom ofis only a symptom of

inflation. The real cause is theinflation. The real cause is the

devaluation of fiat money.devaluation of fiat money.


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InflationInflation

In most cases, inflation cannot beIn most cases, inflation cannot be

simply explained bysimply explained by demand anddemand and

supply inbalancesupply inbalance for goods andfor goods and

services.services.


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Inflation is

everywhere andalways amonetaryphenomenan


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US price levels 1665 toestimated 2008


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War of1812

1812 -1814


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War of1812

1812 -1814


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200 years, Pricelevel has virtuallyno change


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Civil War

1861 -

1866


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250 years, Price isstill on the samelevel


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WorldWar I

1914 -1918

WorldWar II

1941 -1945


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VietnamWar 1965

- 1975


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Revolutionarywar

1776 - 1783

War of 1812

1812 - 1814

Civil War1861 - 1865

World War I1916 - 1918

World War II1941 - 1945

Vietnam War1965 - 1975


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US price levels from 1665 to1975


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Gold removedas monetary

reserve

1933

1971


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HyperinflationHyperinflation

Hyperinflation is inflation that is "outHyperinflation is inflation that is "out

of control", a condition in whichof control", a condition in which

prices increase rapidly as a currencyprices increase rapidly as a currency

loses its value.loses its value. Reason:Reason:

Defeat of WarDefeat of War

Economic depression.Economic depression.

People lost confidence on thePeople lost confidence on the

government and its fiat money.government and its fiat money.


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1923,1923,

GermanyGermany


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1945 -1945 -

19461946HungaryHungary
http://upload.wikimedia.org/wikipedia/commons/0/0e/Inflaci%C3%B3_utan_1946.jpg


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Hyperinflation inHyperinflation in

Zimbabwe, 2008Zimbabwe, 2008

CPI isCPI is

231 000 000%231 000 000%


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What is InflationWhat is Inflation HyperinflationHyperinflation WhatWhats happening nows happening now


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WhatWhats happening now in ours happening now in our

world?world? Are we living better than peopleAre we living better than people

of Zimbabwe?of Zimbabwe?

We are living a time of deceit.We are living a time of deceit.Gov./Bankers can deprive us ofGov./Bankers can deprive us ofour wealther byour wealther by invisible taxinvisible tax--

Inflation.Inflation. Remember: Fiat money is notRemember: Fiat money is not

money, they are paper. Maybemoney, they are paper. Maybe

after one night, you will loseafter one night, you will lose


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Paper moneyPaper money

eventually returnseventually returns

to its intrinsicto its intrinsicvalue... zero.value... zero.

-Voltaire (1694-Voltaire (1694

-1778)-1778)

No matter how politiciansNo matter how politicians


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No matter how politiciansNo matter how politicians

plead that they areplead that they are

protecting dollarprotecting dollar


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by a continuingby a continuing

process of inflation,process of inflation,

governments cangovernments can

confiscate, secretlyconfiscate, secretlyand unobserved, anand unobserved, an

important part ofimportant part of

the wealth of theirthe wealth of theircitizens.citizens.

JohnJohn

MaynardMaynard


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US National DebtUS National Debt


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300 years

for the 1sttrilliondebts

4.5 months

for thelatesttrillion


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Credit injection fromCredit injection from


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Credit injection fromCredit injection from

Central banksCentral banks USUSs 700 billions 700 billion bailout planbailout plan

Not include 85 billion for bailing outNot include 85 billion for bailing outAIGAIG. Freddie Mac & Fannie Mae. Freddie Mac & Fannie Mae

South Korea has given out $100South Korea has given out $100billionbillion

Russia has spent $120 billion.Russia has spent $120 billion.

Germany has earmarked $65 billion.Germany has earmarked $65 billion. United Kingdom has pledged $50United Kingdom has pledged $50

billion so far.billion so far. Sweden just injected $200 billion toSweden just injected $200 billion to


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With so manyWith so many creditcreditinjected into market,injected into market,

what would you expectwhat would you expectto happen in future?to happen in future?


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Insights for Money & Inflation

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