Real wages are stagnant or falling for the past 5 decades. A typical household of two income earners is barely staying afloat. Not news to anyone here, I'm sure. But many people are missing why our fiat currency is screwing them.
There's a very simple reason why the hours we work buy less and less wealth every year. Sure, the costs of Pizza Hut, Netflix, and iPhones stay relatively constant (A mere 8% annual inflation now), but when it comes to buying the REAL things that improve your life and build health and wealth for a family, you're falling behind if you can't make 20-30% more money every year. I'm talking about real estate, education, stocks, and medical care, which take up more than 50% of your budget but are conveniently minimized or ignored by consumer price indices.
Across the world, whether you're in the US, Europe, or Africa, central banks are subsidizing the wealthy and collecting a stealth tax on the poor and middle class. Then they lie about it so government's don't have to increase welfare and pension benefits.
So here's how the grift works, it's very simple: The rich can borrow money at rates that are lower than inflation.
How does it work?
Imagine for a second you're rich as fuck. You've got $10M in real estate or stocks.
You can quickly borrow against those assets, usually up to 50% of the value or more.
Since you've got $10M, you can borrow $5M in freshly created dollars against that $10M account at cheap rates, these days as low as 2-3%
You know what the wealthy do with that money? They invest it. They buy real estate with it. They bid against you for homes, equities, gasoline, anything and everything. They use it cover living expenses (no tax paid, of course).
Perhaps, after one year, your fictional $5M loan has produced an unrealized gain of 10%. If you invested in the last 2 years, it's probably more like 20%.
So after one year, that borrowed $5M? It's now worth $6M, a gain of $1M. The interest paid? $200K. And, because it went up in value in the interim, you can now borrow another $500K to rinse and repeat or just service the interest. The interest rate was based on the Federal Funds Rate which banks can borrow at, plus a little more for the bank itself, so they get their cut too, of course.
Easy Peasy.
So where did that money come from? Well, the wire came to their account from their bank, but it was created out of thin air. The bank added numbers to their balance sheet on a server in some data center.
Fiat money isn't gold, it's mostly not even paper.
Nearly every dollar that's passed through your bank account is a digital liability that someone owes someone else, and almost all of it is debt the rich owe from buying real wealth. The rich get to borrow money and pay back less than the original balance in real terms. They get paid to take the money.
But here is the question you really need to ask. Where did that value come from that allowed a $1M gain against $200K in interest?
It came from you. It came right out your paycheck, and I bet you didn't even notice. Well, maybe now you're noticing.
It's not deducted from your paycheck like a normal tax. It's deducted when the things you buy every day increase in price just a little bit. A little bit here, a little bit here. Maybe you're saving for a home. But that home went up in price 20% since last year because someone had a lot borrowed cash that they wanted to put into a real asset. Your deposit needs to go up another 20%.
But the system is in real trouble now. Something has happened. The inflation is so obvious, the theft so clear, that everyone is waking up to it.
As a wage earner, you worked to deliver value that the shareholders in your company are counting on to stay well ahead of interest rates. Congratulations!
But you're on a treadmill, and unless you can invest some of your paycheck into real assets, it's slipping through your fingers, like sand through a hourglass. In the meantime you're 2 weeks older with little to show for it.
It's as bad as it seems: wtfhappenedin1971.com