2%, the only mandate of the ECB
The European Central Bank exists thanks to the European treaties which have entrusted it with a single and unique mission: ” maintain price stability “
The BCE constantly recalls that its objective is to maintain the overall inflation rate of the Eurozone close but below 2%. Why 2%? Why not 1%, or 4%? Good question…
It doesn’t seem like much, but an inflation of 2% per year means that the currency loses 50% of its value in 21 years.
Likewise, if the annual inflation rate is 3%, the currency loses 50% of its purchasing power in just 14 years. The prices are multiplied by 5 after 55 years. By 20 after 100 years. By 84 after 150 years. In other words, the dynamic is exponential and it is for this reason that debt systems always end up collapsing in a great jubilee.
2% is a compromise allowing the pill to be swallowed smoothly. If you suddenly plunge a frog into boiling water, it jumps out; whereas if we immerse it in cold water while gradually bringing the water to a boil, the frog ends up scalding …
Now that we have said all that, we absolutely have to hammer home that the real inflation is actually well above 2%! TheINSEE disguises reality by not including property prices, not to mention the famous “innovation” and “quality” effects. Realize that for theINSEE, computers only cost around fifty euros on the pretext that their power is increasing regularly.
” I only believe in statistics when I have falsified them myself. “
” There are three kinds of lies: little lies, big lies, and statistics. “
Concretely, if inflation is 5% per year, the purchasing power of the money you have set aside decreases by 5% each year.
If inflation is 5% per year and your salary increases only 2% at the same time, your purchasing power decreases by 3% each year.
The same goes for a retiree receiving a pension not indexed to inflation. Each year he will be poorer.
Inflation is currently 4.6% in the United States. In other words, at this rate, prices will double after 17 years. And we are obviously not spared in Europe. The BCE already announces that inflation will climb above 3%.
Bitcoin to protect against inflation
We wrote at the beginning of the year about the FED:
” As announced in September in Jackson Hole, the FED “will aim for inflation moderately above 2% for a while in order to reach an average of 2% per year over the long term” … “
Olli rehn did not say anything else this Tuesday, May 11:
” The ECB should study the merits of offsetting periods of inflation below the target (by 2%) by periods of overinflation, in other words an average inflation target, as to decide the Fed. “
Reuters reports that ” the ECB is committed, under the presidency of Christine Lagarde, to a review of its strategy which will lead to a reformulation of its objectives within a year “, And that it could be decided” to set a fixed inflation target that can be exceeded temporarily, and therefore to abandon the current formula which defines the inflation target as having to be “less than but close to 2% per year “.
The BCE will therefore sit on the treaties which nevertheless instruct him to ” maintain price stability “. Article 127 of the Treaty on the Functioning of the European Union.
Thus, in the minds of bankers, “price stability” rhymes with an increase of more than 2% each year …
But again, inflation is much higher, especially when it comes to the most important purchase of a lifetime: a roof! In France, real estate prices are currently climbing by 7% per year! At this rate, prices are doubling every 10 years …
See real estate prices in the United States:
Was there anything else to be expected given the speed at which bankers are spinning the printing press? Do you realize that the FED has increased the money supply by 25% in the past 12 months… And it’s even worse for the BCE which increased it at the same time by 38%.
The system works exactly as expected, i.e. like an inflationary ponzi scheme. There is only one way out of creating money from interest-bearing debt: exponential growth. Rushing ahead…
Illustration of exponential growth: if you have 0.01 euro and double your capital every day, it will take you 27 days to become a millionaire and 37 days to become a billionaire …
Inflation is slower, but the end result is the same. Ultimately, we are heading for the collapse of the currency. Truth be told, inflation and negative rates are nothing more than a controlled collapse of the currency.
Like gold, Bitcoin helps protect against inflation for the simple reason that these currencies exist in limited quantities. And until proven guilty, we have yet to find the Philosopher’s Stone. Except the alchemist Satoshi Nakamoto and his digital gold… There will never be more than 21 million bitcoins, which makes it an anti-inflation “store of value”.
Don’t be a frog. Be a bitcoiner.