How To Make Money From Inflation

Inflation is a phenomenon that occurs when extra money is created - either printed or blipped into existence. When the supply of money is inflated, the price of everything rises. It's hard to see how this kind of phenomenon can be taken advantage of, but there are many ways. One way that I know of is called the debtor's method.

It begins by taking out a loan from a company. Many credit card companies will offer you at least one year at zero percent interest. But even if you have an interest term stated, so long as the inflation rate is higher than your interest rate, you can still make money. After a year goes by, the effects of last year's inflation have struck, which means all products in the supermarket isles are more expensive. So the amount that you have to pay back, which is numerically equal to the amount you had borrowed, will only buy, for example, 70 cups of coffee instead of 100 cups.

Suppose that hyperinflation strikes your currency, and that your creditor just loaned you $1,000 at 7% interest. Suppose that your government then prints up 50% more money than was in existence last year, inflating the currency by 50%. A year later you will have to pay back $1,070, but the value of your original $1,000 has shot up to $1,500 just because of the hyperinflation that occurred. And you only paid back $1,070 of that $1,500, scoring you $430 worth of purchasing power to spend during that year of the loan.

If the $1,000 lent to you would buy you 1,000 cups of coffee, but a year later will only buy 800 cups of coffee, then by the time you pay back the principle, you will have had 200 free cups of coffee bought for you. Your creditor would have bought them for you. To make this work you should hold onto your money in gold instead of fiat bills. That way, your ounce of gold will go from $1,000 to $1,500, and when you sell the gold you will get $430 actual dollar bills into your pocket before you pay back the $1,070.

The more a government inflates its currency, the better this method will work for you. Don't be on the ass-end of inflation - be on the top of the pyramid. Hold your money in gold to protect your purchasing power from being siphoned over to the printers of fiat currency, and use the debtor's method to actually make free money whenever your currency is inflated. If we all did this, there would be no point to printing more money, and inflation would end - a much brighter future for everyone.

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