Inflation & The Money Printers: How Much is Too Much?
In some kind of perverse world, you could be forgiven for thinking:
- Inflation & The Money Printers is some tacky band from the 80s and
- The government is throwing us a line: saving us by giving out so much cash (AUD $30B for civilians to be exact)
Every family ‘affected by Covid-19’ is paid extra money, and we in Australia get apparent access to $10K of our superannuation, now and in the new financial year after June 30, 2020.
You could be forgiven for genuinely thinking this will help. In the short-term it will. What about the longer term? Will this cause inflation? How much inflation are we willing to accept?
Oh and by the way, that 30B is only a tiny portion of the total package, most of which is destined for the bottomless pockets of banks and big business:
The government has announced a second major economic rescue package worth $66bn, on top of an initial $17.6bn package and more than $100bn in emergency banking measures to prevent against a credit freeze. Reports: The Guardian
What Are The Real Costs To Us For This CV19 Party Bag Hand-Out?
I don’t mean to be glib here, and I don’t mean to say we people don’t need help. But did you ever stop and wonder where all that money is coming from?
Twitter is littered with tales of doom about how the Mar 24th 2020, US bailout of $6T (6 trillion) is going to play out in their economy (AKA House of Cards). Most of us have no real concept of how much money that 6 trillion actually amounts to:
6,000,000,000,000 = six trillion, which, measured in seconds in time = 189, 276 years!
(1012 sec) / (3.16 x 107 sec/yr)
Then guess what? Just a short time later there’s more being created from thin air!
April 09, 2020: “Federal Reserve takes additional actions to provide up to $2.3 trillion in loans to support the economy.”
Where Does It All Magically Come From?
“They say that money doesn’t grow on trees but the truth is that the modern banking system creates currency far faster than trees can grow. Most people don’t have a clue how currency is created. Economists and bankers make it sound so complex that people think they can’t understand it.
~ Mike Maloney, Hidden Secrets of Money
It’s literally as simple as adding zeros on a screen. You don’t even need to print the physical cash to get it out to be spent anymore, it’s all online!
Our Grandkids Will Have To Pay
Future generations pay for today’s debts:
“To pay for that deficit spending the Treasury borrows currency by issuing a bond. So what’s a bond? If you think about it a bond is really nothing but a glorified IOU. It’s a pretty piece of paper with numbers printed on it that says loan me a trillion dollars today and I promise over a 10-year period, I’m going to pay you back that trillion dollars plus interest. But what you need to understand is that treasury bonds are our national debt.
“These glorified IOU’s are to be paid back by you and I and our descendants through future taxation. Therefore, when the government issues a bond it steals prosperity out of the future so that it can spent today.”
~ Mike Maloney, Hidden Secrets of Money
What Is Inflation In Simple Terms?
Wikipedia: Inflation means that the general level of prices is going up, the opposite of deflation. … Inflation changes the ratio of money towards goods or services; more money is needed to get the same amount of a good or service, or the same amount of money will get a lower amount of a good or service.
So basically, with prolific money printing (or adding of zeros to numbers on a computer screen), everyday cash amounts in circulation increase in number, but reduce in value. If there’s $100 around and then another $30 appears on the scene from no-where, what you would have bought for $100 now costs you $130. The price has gone up but your original hundred bucks now needs another thirty in order to get the same thing: it’s lost value and spending power.
This is what people mean when they talk about the devaluation of our dollar.
What this implies for the average person on the street who doesn’t ‘get’: banking; finance; economics; the Federal Reserve; governments; corporations; data-owners; multinationals; stocks; bonds; futures and the rest of it is…
“The money being handed out today is going to be charged to us tomorrow in the form of taxes, compromised lifestyle (we can buy less with our cash) and huge debt which slows down our economy. The more people milk the system (including major corporations who are already largely tax-exempt), the more we’ll be crying over that spilt milk in the future.“
~Abheeti Kathryn Pass
If you, like me, don’t have a PhD in World Economics, or even a more-than-basic understanding of what these organisations and their antics mean for your pockets, including:
- living standards
- kids’ future
Then… we might need to get some more perspective.
You can follow the full Tweet here, but what interested me especially was this last point:
“I’ll probably get out of cash soon.”
~ Ari Paul
This first Tweet got over 5300 likes. By the time we get to number 5 in the thread, there are 641. In any case, I think we can agree that people the world over have thin faith in the System, and it’s time for Plan B!
We’re Not Making Financial Suggestions Here
But, you do know what the definition of insanity is yeah? You’ve probably heard Einstein quoted ad infinitum… possibly never before however, has it meant to so much:
If you continue waiting for some well-meaning political rhetoric to fish you out of financially murky waters now or in the future, you could just be insane.
Even the real estate guru Robert Kiyosaki doesn’t even mention housing in a recent Tweet, but does say in no uncertain terms to get in for physical gold, silver and Bitcoin because the ‘dollar is dying’:
I want to be in America.
Ok for me in America.
Everything free in America.
For a small fee in America.
From Broadway’s West Side Story
What Does This All Mean For The Average Australian?
It’s all very well for the American market. Everything’s bigger, badder with more guns in America, right?
Think back to the 2008 Global Financial Crisis. Some people say it didn’t hit Australia to the same extent as it did in the US, however, whatever happens there, ripples out and affects everyone across the globe.
We ourselves lost our family home, which had crashed in value and we have spent over 10 years playing the FIFO LIFO*, paying off an empty debt for a house we sold at a $60K loss. We opted for this instead of bankruptcy. I’d say the GFC hit here too…
(*Fly In Fly Out: mining employment equating to the absent FIFO parent losing anywhere from 50% – 2 weeks at home, 2 weeks away, to 80% of their children’s and family lives – 1 week at home, 4 weeks away).
Time is a gift. Once borrowed, it can never be repaid.
What’s happening now in Australia and the world, in response to the Covid-19 pandemic with unemployment, crashing economies and banking games is akin to the 2008 GFC on disaster steroids.
Adam Poulton, Founder of Get Paid In Bitcoin, comments:
This means, for every man, woman and child in Australia, the Reserve Bank of Australia has just created over $1,000. This is just new currency. It has no magic qualities and does not improve production in the Australian economy.
It is also printed with no inherent value. It gains value instantly once it’s spent for the first time. This happens when someone gets a new loan – ie. buying a house with a mortgage, or a business getting a loan for an acquisition.
This $30B, as it is spent into the economy, will gain its value at the expense of all other currency currently in the economy. The current number of $ in circulation is about $2,200B.
So, in theory, an increase in the money supply from $2,200B to $2,230B will decrease the value of each $ by about 1.3% for this QE alone. This adds to the normal growth in money supply of about 8-10% per annum as outlined in my previous tweet:
As a competing money in an open marketplace, Bitcoin has the corresponding features:
- A fixed money-supply
- A predetermined distribution of new money that’s currently about 1.8% pa
- No central authority that can issue new money at will
These features give Bitcoin unique abilities and advantages over Australian dollars for some uses such as online spending and saving.
Now Let’s Get Into What QE, Or Quantitative Easing Is:
Wikipedia says: Quantitative easing (QE), also known as large-scale asset purchases, is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to add money directly into the economy.
And an Aussie journalist from Business Insider from way back in 2013 says:
Despite its sophisticated-sounding name, QE is nothing more complicated than the Fed buying “assets” from commercial banks and other private financial institutions. I put assets in quotes because the Fed does not buy things like land, Stradivarius violins, diamonds, gold, or silver from these institutions, but rather various forms of debt.
The main forms of debt purchased are Treasury bills/notes/bonds and Mortgage Backed Security (MBS) paper.
This means that we get into deeper and deeper debt. In the course of our natural lifetimes (as well as those of our grandchildren, most likely), we cannot expect to pay this debt back. We can expect however in the course of those lifetimes, that more and more debt will accumulate: making the rich richer, and the rest of us, more-than-broke.
Beyond scrabbling for titbits from the State right now, if you’ve always got by from pay-cheque-to-pay-cheque, (despite suggestions over the years to save, add to an emergency fund, put away a stash somewhere, get some gold, silver or other precious metals, learn about Bitcoin and crypto…) now is the moment to take action and do things differently.
Don’t leave your future pegged to #fakenews promises and governmental whims. Sort it now.
Get Paid In Bitcoin was formed to ensure all Australians had an easy way to use Bitcoin and to protect a portion of their savings and wealth from inflation.
Get your wages part paid in Bitcoin now!
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