February 8, 2009
What is Inflation?
Inflation is a hidden tax imposed on citizens and too hard for many ordinary people to understand.
Inflation could either be referring to Monetary Inflation or Price Inflation.
Monetary Inflation means there is an increase in the supply of money. This has historically been the favorite form of taxation by governments since ancient times and leads to Price Inflation.
Price Inflation means prices of goods rise and it takes more money to buy the same items.
When there is an increase in the amount of a currency in circulation, the currency loses its purchasing power and prices of goods and services rise.
We believe that the U.S. government will soon be printing trillions of Dollars to fund its stimulus plans and bailouts and it will lead to massive inflation in the U.S. and ultimately hyperinflation.
Right now in the U.S. forced liquidations of hedge funds that own commodities along with companies going out of business and liquidating their inventories have created the short-term appearance of deflation, which has given Federal Reserve Chairman Ben Bernanke the cover to lower interest rates down to 0%. We believe Bernanke's actions were a major mistake and will cause the next major inflationary crisis in our country.
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