Five Myths About Inflation

Written by William Cate

Five Myths About Inflation By William Cate

A classic definition of inflation is any increase inrepparttar money supply. Understanding inflation is vital to anyone seeking investment profits or attempting to build a successful company. As with most basic issues ofrepparttar 148537 global economy, inflation is surrounded by myths and misinformation.

Myth #1 Inflation is bad for everyone.

Inflation is bad for lenders. It's good for borrowers. To break even on a loan, a lender must charge sufficient interest to offset inflation and taxes onrepparttar 148538 resulting interest income. Forrepparttar 148539 past decade, inflation has hovered around 6%/year inrepparttar 148540 USA. If you assume that State and Federal taxes on interest income are 40%,repparttar 148541 lender needs a 10% interest rate to breakeven. There haven't been any relatively safe U.S. Investments paying anything near 10%/year, for over two decades. If you have a 30-year fixed mortgage at less than 6%, you are benefiting from inflation. Assumingrepparttar 148542 inflation rate remains at 6%, (which is very optimistic) you are making more money onrepparttar 148543 borrowed mortgage money than you would earn having depositedrepparttar 148544 same amount of money into a bank savings account. America's biggest borrower isrepparttar 148545 U.S. Government. The Government's plan has always been to ensure thatrepparttar 148546 inflation rate offsetsrepparttar 148547 Government's interest payments. Follow Washington's lead and be a borrower inrepparttar 148548 United States. However, borrow to create income and assets, not to liverepparttar 148549 good life. When people no longer accept their currency, lenders usually go bankrupt andrepparttar 148550 borrowers will pay their debts with worthless paper. There are two examples in American history ofrepparttar 148551 loss of confidence inrepparttar 148552 U.S. Dollar. Afterrepparttar 148553 Revolutionary War,repparttar 148554 Continental Dollar was no longer accepted as currency. Afterrepparttar 148555 Civil War,repparttar 148556 Greenback Dollar was no longer accepted as currency. Both were printed byrepparttar 148557 Government to pay for a war. In both cases,repparttar 148558 dollars where bought by speculators andrepparttar 148559 Government eventually redeemed them at face value. The reason thatrepparttar 148560 U.S. Constitution has a provision limiting currency to gold and silver is directly related torepparttar 148561 failure ofrepparttar 148562 Continental Dollar. The strategy that benefits from this inflation paradox is to be an American borrower of dollars to buy hard assets and a foreign investor (lender) of your investment funds.

Myth #2 A gold standard would end inflation and result in a better life for all.

You can't eat gold. You can't wear gold. It takes too much gold to build a house. As Art Hoppe suggested twenty years ago, chicken eggs would make a better hard currency than gold. At least you could eat your nestegg whenrepparttar 148563 Government scrambledrepparttar 148564 economy. Western Europe had eight centuries ofrepparttar 148565 gold standard. From roughlyrepparttar 148566 4th Century torepparttar 148567 12th Century, everyone was onrepparttar 148568 gold standard. Usury was outlawed everywhere, It was againstrepparttar 148569 teachings ofrepparttar 148570 Catholic Church. It's still againstrepparttar 148571 teachings of Islam. Money was limited to gold, silver and land. This period in Western History is called "the Dark Ages" for good reason. After WWI, Winston Churchill tried to move Great Britain back onto a modified gold standard. Not only did his effort fail; it was amongrepparttar 148572 secondary causes ofrepparttar 148573 Great Depression in England. Fiat money is intrinsically worthless. Gold is intrinsically worthless. The advantage to paper currency and credit is that it can be expanded at any rate and thus create perceived wealth. This perceived wealth could be used to create products that create more jobs and more perceived wealth. The goal is to ensure that those hurt byrepparttar 148574 expanding money supply aren't aware of their lending mistakes. As long as everyone agrees that paper money has value,repparttar 148575 system works better than people agreeing that gold has value.

Pay Off Debt - Get Out Of Debt And Lower Your Monthly Payments

Written by Carrie Reeder

Debt consolidation can be confusing, especially if you have never considered contacting a debt consolidation company before. A debt consolidation company can give you free advice on reducing your monthly payments and show yourepparttar path to becoming debt free. High interest rates andrepparttar 148536 various fees charged by creditors can leaverepparttar 148537 average consumer unable to meet their monthly financial obligations. If you have found yourself overwhelmed by credit card debt and unsecured loan payments, debt consolidation may berepparttar 148538 answer you have been looking for.

The services offered by debt consolidation companies will not eliminate your debt overnight, but they will assist you in lowering your interest rates and monthly payment amounts. Debt consolidation is not an instant cure for your financial problems, but rather a tool that is available to consumers who can no longer affordrepparttar 148539 high payments and high interest rates charged by creditors. Instead of making high monthly payments to your creditors, you can drastically lowerrepparttar 148540 interest rates on your accounts and lower your monthly payments.

If you are currently makingrepparttar 148541 minimum payments on your credit cards and struggling to pay off loans, medical bills, and other unsecured debts, a debt consolidation company can give you a free evaluation of your financial situation and contact your creditors on your behalf to make new arrangements forrepparttar 148542 repayment of your debts. Debt consolidation is not a new loan; it is a re-negotiation ofrepparttar 148543 terms of your original accounts. In utilizingrepparttar 148544 services of a debt consolidation company you can pay off your debts in a much shorter time and pay less money each month.

Cont'd on page 2 ==> © 2005
Terms of Use