It was none other than former Federal Reserve chairman Alan Greenspan who in 1966 wrote, “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”
Put another way, the government admits, by spendthrift printing of money, to have taxed you 32.42% of whatever money you were foolish enough to keep in U.S. dollars during the past 17 years (1996 through 2013). In reality inflation has probably been closer to 65%.
As economist Milton Friedman said, “Inflation is the one form of taxation that can be imposed without legislation.”
John Maynard Keynes agreed. He commented, “The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
And none other than Vladimir Lenin wrote, “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”
Lenin may have intended to grind just the upper class. But recently in America, everyone ends has ended up as grist for the mill.
As I wrote recently in “Better to Bank with Cyprus Than the United States?” Inflation and especially The underreporting of inflation hurts the poorest Americans who rely on Social Security for their retirement.
Finally it was Friedrich von Hayek who wrote, “I do not think it is an exaggeration to say history is largely a history of inflation, usualy inflations engineered by governments for the gain of governments.”
Inflation may be a greater threat to securing your retirement than market volatility. Talk to a fee-only financial planner today to learn how to protect the buying power of your investments.