How Monetary Policies have made Small People Poorer and how to save yourself from them?

 12^th June 2022

How Monetary Policies have made Small People Poorer and how to save yourself from them?

Dear Fellow Investors,

Namaste! Today, we are dealing with really serious stuff from investors' point of view and from a normal person’s point of view. Whether you are investing or not, Inflation is affecting all of us. The popular mechanism to deal with inflation is Monetary Policies. You will be surprised to know that each monetary policy is making you poorer and poorer. Read this – you will have some food for thought to deal with it effectively. Let us start with the monetary policy first.

Monetary Policy: -

When there is a DEBT / DEPRESSION or Liquidity Crisis, the easiest way to deal with them is through Monetary policy. The easiest example is you need money and you borrow it from a friend and pay it later. What you have done is used a monetary policy to meet your goals. In the same way government deals with the economic problems of DEBT / DEPRESSION and Liquidity crises in the following steps.

1.   Interest Rates: - This is making money available to all the sectors needing the money at lower rates. In the USA they went to ZERO rates to make it viable to take a loan and invest in a business or pay back. This was the easiest way to make life easy for the people with DEBT.

2.   Buying Financial Assets: - Say you have taken a housing loan and are unable to pay to the bank. Now banks are in a problem. So, the Central bank can buy your loans from the banks and give liquidity to the banks so banks have new capital to lend and revive the economy and earn a new income. In 2008 – FED bought the financial assets from the lenders and gave them the money to revive the USA economy. These were called QE programs.

3.   Printing of CASH: - Currently, we are in this phase. The USA / EUOPRE printed tons of NEW cash and provided liquidity to the lower class and the banks. The idea was that with this cash there will be shopping and the economy will review. In COVID times, most countries resorted to this technique.

These three are the major tools and all the central banks are resorting to the same from time to time.

Two effects are there due to the above steps: -

1.   Easy money will lead to a revival in the economy to an extent only. It will give a sense of coming out of the problem temporarily but in the end, it will destroy you in more than one way. The sheer volume of new money will make things difficult for the Central Bankers to manage the economy and money. So, in the past, they have taken some drastic steps which affected the people at that time.

 

A. Severing Dollar from the Gold in 1933: -

At that time, it was too much for the USA economy to give the GOLD against the dollar. So, they abruptly stopped it. Now think about all the guys who sold the GOLD and kept the dollar in their bank or home. They lost the Gold overnight.

B. Nixon in 1971: -

He removed the connection with the Gold and Dollar printing. He went into print to first FIAT currency in the World. Fiat men’s just a paper not backed up by Gold. It just carried a promise to pay the value to the bearer of the currency. Those who had dollars had value only because the government allowed them to accept, otherwise, it was just paper. Thanks to Modi Ji, we have seen how a currency can change to paper with just one announcement on 8^th November 2016.

Mario Draghi did the same thing in 2012 in Europe. US FED bought tons of losses in terms of papers and financed it with new cash to the banks in 2008.

The point is, in the last 100 years only – we have seen drastic changes in the way we use the money and the way we see our money thanks to the central banks.

If you see the above measures have not helped the world economy to revive and come out scratch-free in the end.

You would have seen a person taking a loan from A to Pay to the B and a loan from C to pay to the A. They temporarily solve the problem but in the end, they have a mountain of the DEBT. So, they kill themselves or the lenders get killed because this guy can’t pay. Our central banker’s monetary policy is something like this example.

2.   Your money-losing Value: -

Whether the economy moved up or not – the people in 1933 lost GOLD as they believed in DOLLAR. People in 1971 were left with the CASH with just a promise that they will get their money value. In 2008 – we got tons of money in the economy so money also lost value.

If you understand the total phenomenon – we were robbed with the value-able asset in the first instance. Then we were handed over the paper currency. Now paper currency is worth less than toilet paper. 

What is I am trying to educate?

The day before yesterday, we dealt with Russian Roulette with 1000 chambers. Somebody made us relax that all the chambers are empty and took away all our assets since 1933 slowly and gradually.

How to gain back control of your wealth?

All your paper money is nothing less than toilet paper. So, if you are hoarding cash, you are doing wrong to yourself and your generations.

You need to sincerely learn the fine art of investing and investing. The goals should be as under.

1.   Keep the value of money the same in the first step. Say inflation is 7% and you are getting 7% in your post-tax return – all you have done is to keep the value of your money the same. Earning 7% post-tax is difficult for 80% of the Investors who are investing in FDs.

2.   Generate incremental return over and above inflation. Once you stabilize the value of money, now try to earn an incremental return over and above inflation. This incremental return will add to your capital. Say you are generating 10% post-tax, then you are generating 3% extra over the inflation of 7%. It means your capital is increasing by 3% per annum.

3.   Wealth Generation stage. Once you have mastered the 2^nd step the time to take a leap comes. Here you multiply your wealth at a faster pace of 15% to 100% or more. It all depends on your vision, dreams, skill sets, and your guts. The sky is the limit in this step.  

 

Those who want to directly go to the 3^rd stage will lose their shirt in the coming period for sure.

What NEXT?

If you have read till now – you know what is our situation now. You can decide what you should do now.

If you are not consciously taking steps to invest your money, you are unconsciously taking a step to live the life of the poor in the future.

We can help you in two ways – guiding you based on the science of astrology and preparing you for investments. Do this consciously when things are good for you now. In the BAD times, the money will not be there to take any action.

Take your own call.

Follow me on Twitter @hiteshmparikh / WhatsApp - +91-9869425399.

Learn a Lesson. Live with Passion & Invest with Reason.

Hitesh Parikh.