Friday, March 11, 2011

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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37 comments:

  1. Interesting read. I always find the monetary system fascinating....

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  2. Will require more pics of the last girl. Love em thick!

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  3. Wow, smart thinking. Sucks if money deflates tho.

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  4. Great read! I'll definitely look into this stuff.

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  5. I watched this video recently and I think it's what you are trying to say, my friend: http://www.youtube.com/watch?v=ExBE651_vOY

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  6. BTW I don't know if you guys noticed but this was not posted by me, I added a real life friend of mine as a guest writer on here, so be sure to check out his blog as well.

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  7. I'm a debt collector. Good thing none of my clients know about this.

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  8. hyper inflation is some germany after world war 1 stuff

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  9. great inside. i also love the background of your blog (the girl) is that from kill bill 1 the comic scene?

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  10. Yeah also Hyper inflation was in africa and still is today! 3 trillion zimbabwe dollars = around $4 US dollars.... Its crazy!

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  11. awesome article, Inflation could hit us all soon

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  12. excellent stuff, enjoyed the read.

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  13. Guess we could have made a shitload of money in Zimbabwe. Their inflation was at 230,000,000% when they decided to just abolish their currency.

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  14. Interesting tip. I've been thinking about gold or silver, both seem attractive.

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  15. interesting idea that if everyone used these methods, inflation would end. interesting, indeed

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  16. thanks man. Good pic at the end too. very helpful

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  17. @TheHarvester,
    I don't think so, I found it on a blog about wallpapers.

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  18. yep it's time to tie up as much money/debt as possible in property on a fixed term loan bases...and then watch how inflation erodes the debt

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  19. Nice read,

    have anyone ever seen the docu 'Zeitgeist'?
    If not, please do so.

    It's a very interesting watch.

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  20. Hmm that is pretty smart thinking.

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  21. Man your blog always has great stuff, keep it up!

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  22. Great article, I'll check out your friends blog too.

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  23. Oh, cool guest blog. still trying to figure out what's with the last picture...inflated ass? haha

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  24. who says its the government's currency? Last time I checked the Federal Reserve was a private corporation.

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  25. Interesting read, following now!!

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  26. @tasos Yes, I love that cartoon you posted. Just finished watching it. I've read about the history and evolution of money in different articles too. Seen badnarik's constitution classes.

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  27. Thanks for the praise. And G said it well in that comment, the article condensed into one sentence.

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