Today we recieved the inflation numbers of the Central Bureau of Statistics for our country. I live in a Caribbean island where the fiat currency is pegged to the dollar!
This post will help you wherever you live. In Europe, Portugal, Argentina.
Our inflation numbers were 7% in may!! 7% compared to one year earlier.
Say Cheese
What does this mean?
It means that we are living in a world of stinky dirty inflation mice and rats. And they love cheese. And the cheese is your purchasing power. Inflation is just some dirty fiat rats who love to eat away your purchasing power cheese.
And that number of 7% is just telling you how big their teeth are. And at what rate they are eating.
Rule of 72
There is a rule of 72 that experienced investors know. It basically says that if you hold an asset and inflation is say 7% you divide the 72 by the inflation number and you get the number of years that the purchasing power of your asset gets cut in half.
In our case if I had 10.000 of my currency and I turn it into dollars and I get say 5000 dollars it means that in 10.2 years the stinky inflation rats would have eaten my purchasing power of my cheese into half. I now only got 2500 dollars of purchasing power or 5000 of my currency.
So I quickly calculated the number of sats and about 19 million sats is another way to storing my purchasing power.
Sat is like digital steel. Stinky fiat rats bite their teeth in steel and the can’t eat away my purchasing power cheese.
Where do you store your purchasing power?
Ask the people of Argentina or Venezuela or Zimbabwe. In Argentina they got some really aggressive stinky fiat rats eating away your purchasing power agressively at a rate of 90% per year!!!
Yeah you read it right 90%. Here the rule of 72 is turned on its head. Because if you divide 72 by 90 you got 0.8 year. If you mutiply that by 12 you got 9.6 months.
So imagine this: your Argentinian wife is pregnant. You are happy!! Your first child. You saved 5000 dollars of your blood and sweat in the fiat thing called Argentinian pesos. Just to save for the house or buying baby stuff and redecorate the pink room. Congrats your wife is expecting a baby girl.
Just after your Argentinian girl Barbara is born, the dirty argentinian fiat rats would have eaten half of the purchasing power of her money. Barbara has to now live with 2500 dollars worth of fist argentinian pesos!!
I guess Barbara won’t love that. The mice and rats ate her baby lunch. Her college grant.
Argentina is just an example. There are many countries where this is happening. This is also happening in the USA. All countries in the world have stinky dirty fiat rats!
In these economic environments with 90% inflation people turn crazy.
The don’t save. No matter how hard you work you cannot esrn more fiat money faster enough to cope with what the stinky rats are eating.
People and businesses become crazy.They spend like crazy. They buy everything double. Two bags of rice instead of one. Two cans of paint instead of one. Two toilet papers instead of one. Because they know that fiat money is actually the same as toilet paper.
The only difference between toilet paper and fiat money is the trust in the central bank and the government of that nation.
And when that trust disappears because the central bank turns on the printer like bbrrrr the trust disappears and fiat money’s value goes to 0. Like toilet paper.
Toilet paper and stinky dirty hungry rats. Remember that combination!!
So what now?
- I guess watch your Central Bureau of Statistics. Subscribe to their newsletter about inflation. So you get the news as first about at wat rate the stinky fiat rats are eaten away this month. And at what rate compared to last year.
If you see numbers like 7% as I saw today you now know how to use rule of 72 to know the number of years. The Central Bureau of Statistics is your best friend. They are like the pest control department. They tell you about the rats so you can protect your cheese.
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Sats cannot be eaten. You also saw why it might be good to stack sats. The rats do not like sats. And because sats are scarce they can better hold your value on the long run. Especially when the people holding fiat realize what I just decribed and they all run to the door to the room called bitcoin. 99% of the world is still putting their cheese ourside and letting the rats enjoy their meal. Only 1% of the world has currently decided to store part of their cheese in sats.
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Finally after you got subscribed to the newsletter of your Central Bureau of Statistics educate yourself about how the rats are breeded.
I mean what is money? I mean what does debt of a country has to do with inflation? How does the global economic system work and the system of your country? Those are the main topics I write about.
I don’t know everything but I try to understand.
Have a great lunch. Protect your cheese! Stack sats.