THE DIRTY SECRET OF INFLATION

The dirty secret of inflation is that it never goes down.   It is cumulative.  

Inflation is the erosion of the buying power of a currency.  And all that erosion that has occured over time will never be reversed.  It continues to erode at faster and slower rates.

Look at the chart above.  It is accurate.  That is inflation: the dollar buys less and less every day.  And over decades that adds up to the destruction of the purchasing power of the dollar. 

Of course it you extend the chart out to current day, the erosion has accelerated terribly.  

The RATE OF INFLATION changes.  It is meaningless to people living in the world.  It only has meaning to traders who make a living off minute rates of change.  And of course to corrupt lying politicians who make a living off convincing their miserable constituents that things are getting better.  

Unfortunately, the financial press that serves the trading community and kowtows to the political elite will also talk endlessly about changes in the RATE OF INFLATION.  In other words minute changes in the RATE at which inflation is accelerating or deccelerating in the very short term.  But this has no meaning at all to average citizen living and shopping in the world.

All the inflation that has ever occured continues to destroy the purchasing power of the dollar.

The only thing that brings inflation down is a true deflation which brings about a depression.

That's the other dirty secret about inflation.

It takes political suicide to reverse inflation.

Because such a  reversal into deflationary depression wipes out the wealthy class along with the middle class.  Because all assets deflate in a deflationary depression.   

The poor suffer too.  But they are already suffering.

The only class that suvives a deflationary depression is the class that owns the only curency that holds its value during a deflation: THE GOLD OWNING CLASS.  Because the gold is then used to purchase real assets that have finally derpreciated in value.

But the politcal class will never again allow deflation to take place.  Their only ammunition against this defation (that is the natural result of massive debt) : is to create helicopter money - infinite quantities of electronic chits: Hyperinflation, or at best: vicious stagflation.

Ironically the only class that survives a hyperinlflation or a vicious stagflation (which is where we are currently headed) is the class that holds the only currency that holds its value against hyperinflation: the Gold owning class.  Because gold inflates in value as the electronic/paper currency erodes.

If you are a trader, you can keep focusing on the Inflation Rate.  And trade off minute changes in that rate.  And if you're really sharp (like Drukenmiller sharp) you can do well.

If you're just a normal  person arming yourself agaisnt the evolving DEFLATION V INFLATION wars, you'd be better off just owning gold.