The Original Definition of Inflation

Almost two centuries ago, the word inflation meant an increase in the money supply. Increasing the supply of any commodity (including money) causes its economic value to go down, but this effect comes only later when the market adjusts. The original definition of inflation therefore focused on the cause of price increases, namely the increase in money supply. It was convenient for nineteenth century politicians to redefine inflation to focus on the effect rather than the cause: dissociating the word “inflation” from the increase in money supply allowed them to increase the money supply without political consequences. And so today we have arrived at this confused state of economic language in which, after having increased the money supply by trillions of dollars, the Fed has the temerity to declare that “inflation” is not an immediate concern and can be controlled when it does arrive.

 Gold Will Go Up

By its original definition, inflation has already arrived, and therefore the price of everything will have to go up. By how much, when, and for which commodities we can’t tell precisely. The question is not whether they will go up, the question is when. Therefore the price of gold will go up, if only because the value of all fiat money will go down. The Chinese government knows this and has acted accordingly (although, of course, they claim that they have been doing it for some time, even before the current crisis).

Gold is not only safe, but investing in it now will also be profitable. Protect your family from financial ruin by getting into gold now.

How to Invest

I do not buy gold directly because it’s difficult to put in a safe place. Instead, I buy exchange traded funds (ETFs) like COMEX Gold Trust (IAU) and SPDR Gold Shares (GLD).