You've heard sayings like "those with the gold make the rules." Even in the Bible it says that "the borrower is slave to the lender."
What do phrases like this teach us? They remind us that those with the money retain the power and those who are in need of money are without the power.
Well, then if you're a government, it's easier to control people if they are poorer. The more money they have, the harder they are to control. So how do you make them poor and yet remain in power? You do it in an incognito way.
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You see, if they were to go into your bank accounts and take money out, there would be riots in the streets. Yet they are able to essentially accomplish this same type of "wealth transfer" from you to them by diluting the value of your dollars.
How do they do it? They simply print more dollars. The more abundant anything is, the less it is worth, and the rarer something is, the more it's generally worth.
By printing more dollars, your dollars in your bank account now don't go as far as they used to when making purchases. The purchasing power of the dollar is weakened and inflation is stoked. How so?
When more dollars chase a finite amount of goods, the price of those goods goes up. Also, since the goods are priced in dollars, when the dollar goes down in value, it takes more of those dollars to purchase the same things.
Now, if your pay raises don't keep up with the "real" rate of inflation, you get poorer. In other words, your paychecks won't buy as much as they used to.
Real world inflation tends to run anywhere from 4 to 6 percent typically. Yet the government will play with the figures until they get a formula they like that shows you inflation is far less than that.
Now why would they do that? 1) If people really realized that inflation was as high as it is, politicians might be more likely to get voted out of office. 2) If they keep inflation growing at a faster rate than your pay raises, then they keep you poorer and gain even more control over you. 3) If they report that inflation is lower, then anything they index to inflation doesn't go up as much.
In other words, let's take Social Security as an example. If real-world inflation is at 5 percent and your government formulas say that it's only at 1 percent, then you only have to raise people's Social Security payments by 1 percent and not by 5 percent, which allows the government to retain the other 4 percent.
Now, 4 percent may not sound like much. But when you think of the billions of dollars paid out each year, 4 percent of that is a chunk of change saved and retained by the government.
Remember, all the money they siphon off of you and me, the more powerful they become. The more money you have, the more powerful you become and the more choices in life you have.
For instance, wealthier people can easily expatriate from the country if things get bad enough and they can actually purchase a citizenship in a country that is more favorable to them. Those who are poorer cannot do this even if things were to get really bad. They just have to sit there and take whatever the government doles out on them.
Is there a way to combat the decline of the dollar and the rise of inflation? Yes, that's the main purpose of the Ultimate Wealth Report
monthly newsletter that I write.
I recommend stocks in that newsletter that actually benefit from the dollar's fall and inflation's rise. So while many people are losing their purchasing power, you can actually be retaining yours and even gaining more purchasing power as your investments go up relative to inflation's rise.
Most of the masses don't know what to do and sit there helplessly on the wrong side of the government's agenda. Instead, know the rules of the game and put them in your favor. That's what 80,000 subscribers are now doing in the Ultimate Wealth Report.
About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Ultimate Wealth Report. Discover more by Clicking Here Now.
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