Inflation poses a significant threat to your financial well-being. While this isn’t news to most people, the truth often gets muddled by propaganda.

Economist John Maynard Keynes understood this, stating:
“Lenin was certainly right: There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”
This process unleashes destructive economic forces in ways that few can recognize.

In this article, we will explore what inflation truly is, how it is measured, and what steps you can take to protect yourself.

What is Inflation?

Inflation is one of the most misunderstood terms in economics. Originally, it meant an increase in the money supply. Over time, however, governments and their allied economists in academia and the media redefined it.

For over 175 years, Webster’s Dictionary defined inflation as “an increase in the money supply.” But in 2003, this changed to “an increase in the general price level.” While this may seem like a subtle shift, it is not. It deliberately confuses the cause (money supply expansion) with the effect (rising prices). This redefinition leads to widespread misunderstanding of inflation’s true nature and origins.

Price increases are not inflation itself; they are a result of inflation. By framing inflation as rising prices, people fail to understand the real cause: the government’s control over the money supply.

Inflation as a Political Tool

Inflation is not a random event. It is a direct consequence of government policies, particularly when they expand the money supply. This gives governments more purchasing power than they could achieve through taxation or debt. In essence, inflation acts as a hidden tax, levied without the public’s consent.

Neither businesses nor foreign scapegoats are to blame. The government, with its monopoly on currency, is the sole cause of inflation.

Measuring Inflation: Two Methods

There are two main ways to measure inflation:

  1. Using the government’s definition (rising prices).
  2. Using the correct definition (money supply growth).

The first method is highly susceptible to political manipulation, often underreporting the reality. The second offers a clearer, more accurate picture.

Government and mainstream media typically measure inflation using the Consumer Price Index (CPI). The CPI tracks price changes in a basket of goods and services. However, this method has several significant flaws.

The Flaws of the Consumer Price Index (CPI)

The CPI assumes that a “rise in the general price level” can be expressed as a single number. But prices do not rise evenly across all sectors. Essential items like healthcare, education, and housing typically see far greater price increases than other goods.

Moreover, different people consume different baskets of goods. Someone living in Los Angeles may need very different items than someone in rural Montana. Therefore, it’s unrealistic to measure inflation for an entire population of over 334 million people using one metric.

Another problem is the government’s ability to choose which items to include and how to weight them in the CPI. They can easily skew the results to make inflation appear lower than it actually is. This manipulation makes the CPI an unreliable and misleading statistic. It serves more as a tool for hiding the government’s hidden inflation tax than providing an accurate economic picture.

The True Measure of Inflation

To understand inflation more clearly, you don’t need complicated formulas or an economics degree. The key lies in tracking changes in the money supply. By focusing on this, you avoid the distortions caused by CPI manipulation and political spin. This approach reveals the real extent of the inflationary issue.

Money Supply Growth: A Looming Crisis

The government prefers that people focus on vague metrics like the CPI rather than the growth of the money supply. This is because observing the money supply makes the inflation issue—and the government’s role in it—painfully obvious.

Since 2020, the U.S. money supply has increased by a staggering 36%. If your post-tax wealth hasn’t grown by that same percentage, you’re falling behind. This decline in purchasing power represents a direct loss of wealth due to inflation.

While this recent inflation surge is alarming, it pales in comparison to what might lie ahead. The scale of money printing in the future could dwarf what we have seen so far.

What Can You Do?

Unfortunately, individual actions have limited impact on these macroeconomic trends. The best thing you can do is educate yourself about inflation and its effects. Armed with the right knowledge, you can better protect your assets and, in some cases, even profit from the situation.

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