Inflation Explained: Your Role As A Milk Cow

Authored by Jeff Thomas via,

Traditionally, inflation has been defined as “an increase in the amount of currency in circulation.Such an increase almost always causes an increase in the cost of goods and services, since, more plentiful currency units lowers their rarity, as compared to the supply of goods and services, which remains roughly the same. Therefore, it shouldn’t be surprising if a 20% increase in the amount of currency units translates into a 20% increase in the price of goods and services.

Unfortunately, in recent decades, even dictionaries have been offering a revised definition of inflation, as “an increase in the price of goods and services.” This is a pity, as it makes an already confusing subject even more difficult to understand.

This is especially true for the average guy who has a minimal understanding of economics, but does realise that, even if his wages increase (which he regards as a good thing), he never seems to get ahead. In the end, he always seems to be worse off.

So, let’s see how simply we can break this down. And, let’s do it from the layman’s personal point of view.

Let’s say that you’re paid $4000 per month. You budget for housing, food, clothing, transportation, etc. Let’s say that that adds up to $3800 per month, and you’re hoping to put $200 per month into savings. Often that doesn’t happen, as unplanned expenses “pop up,” and must be paid for. So, in the end, you save little or nothing.

In the meantime, you’re daydreaming about buying a new car, but it can’t be bought, because you don’t have any money to allocate to it.

Then, your boss says that the recent prosperity has resulted in a big new contract for the company that allows him to give you a raise of $200 a month.

This is your big chance. You go to the car dealership, buy the car, and arrange for time payments of $200 per month to pay for it.

However, what’s rarely understood is that the theoretical “prosperity” is the result of governmentally induced inflation. What appears to be prosperity is merely a rise in costs and, along with it, a rise in your wages.

You appear to be “getting ahead,” but here’s what really happens…

The inflation that resulted in your pay rise also raises the prices on most or all other goods and services. So, instead of spending $3800 on expenses every month, your costs have risen to, say, $4200.

So, only months after your pay rise, you become aware that, not only are all your expenses higher (which you didn’t figure on when you bought the car), you now have the extra monthly obligation of the $200 car payment.

A year later, you look back and say to yourself, “Just when I was finally getting ahead, just when I was realizing my dream to have a new car, all those greedy businesspeople raised their prices because they just want to be rich, and I ended up a loser.”

Not so. The businesspeople raised their prices for the same reason everyone does during inflation—because their costs are also higher and they must either raise prices or go out of business.

So, in effect… no one got ahead.

But, worse, you got behind. Because, now, in addition to your monthly expenses, you have debt obligations, and buying on time is alwaysmore costly than paying as you go.

As time goes on, you run into emergencies of one type or another that dip into your meagre savings. You must renegotiate your debt with the bank in order to keep your car and, of course, the bank demands a greater percentage than before, assuring that your economic situation will only get worse.

Ergo, inflation has not been a boon, but a curse.

And that, in fact, is exactly the idea. Banks figured out ages ago that, although people will only tolerate so much taxation, they’ll not only tolerate, but welcome the hidden tax of inflation. The illusion that they’re “getting ahead” gives them the false confidence to take on debt, which will, over time, cripple them.

The purpose of bank-created inflation is to extract wealth from the populace.

By regularly increasing the amount of currency in circulation, banks create an environment in which the concept of debt appears to be beneficial. As a result, virtually everyone in today’s society not only has debt; he actually believes that he couldn’t improve his life except through debt.

So, that’s essentially how inflation works. However, there’s a further knock-on effect from inflation that comes with retirement.

When retirement arrives, almost no one who is caught up in the system described above has found a way to get out of debt. Inflation always gobbles up whatever advances he feels he’s made, because inflation itself created those imagined advances.

Just before retirement, most people have their most expensive houses, cars, etc., and appear to have prospered, but they also have the greatest level of debt that they’ve ever carried.

If they’ve been careful, they may have savings and/or investments that they hope will carry them through their twilight years. But they quickly find that inflation continues after they retire. Savings in banks no longer earn money. In fact, they do the opposite. Inflation takes more than the paltry interest savings received, resulting in an annual loss on any money held in banks.

But, inflation continues to march on, assuring that the retiree’s costs will continue to rise, even as his savings decline.

In essence, the inflation concept was invented by banks as an invisible tax—a means by which they could extract wealth from the populace.

And, here we get back to the original complaint of the individual. As he tries to balance his chequebook or to plan for his retirement, he scratches his head and wonders, “How is it that no matter how much more money I make, I never seem to get ahead?”

In effect, the individual is used by the banking system as a milk cow. For his entire working life, inflation is carefully adjusted to extract as much monetary value from his labours as possible, whilst still leaving him capable of continued production.

Pretty grim… So, is that it, or is there a way out?

Well, to begin, it would be very helpful to exit any country where the dual monetary drains of taxation and inflation are prominent. (By leaving, you may take an initial step down, but, over the long haul, you’re more likely to prosper.)

An additional move would be to refuse to borrow money for anysituation. Yes, it will mean that, as your friends show off their new cars, you’ll be driving an older model. They’ll also live in nicer houses than you and they’ll “own” their own house before you do. But, at some point, since you’re free from debt, you’ll pass them by and eventually retire well.

By understanding inflation, and acting on that understanding, the odds of living your life as a milk cow can be greatly diminished.


Zhaupka Mon, 06/11/2018 - 21:46 Permalink

PSYOPS: A Russian Writer Wrote From Whence Wealth Comes - the answer: The Earth.

Humans are of the Earth, physically adapted to its range of climates, gravity, radiation, electro-magnetic field and composition of the atmosphere.

--- Sent from mygs650

ImGumbydmmt anarchitect Tue, 06/12/2018 - 04:00 Permalink

an architect?

did you quit the AIA after they named Bill Clinton as the keynote speaker to the Atlanta annual AIA convention in 2015?

Did you write to the AIA multiple times and protest the use of your dues for the $250,000 royalty the Clinton Foundation received for Wild Bills speech.

I Effing did to no avail.

The AIA send me snarky letters in reply. 

Eff the AIA and eff most other architects. 

Join the ALA, its under $100 per year instead of $600.

and if you haven't already  quit your W-2 gig at some effed up AIA firm and hang out your own shingle.


In reply to by anarchitect

ImGumbydmmt Trader200K Tue, 06/12/2018 - 16:49 Permalink

Yup, good anaolgy,

but even worse, LEAVE the state of California entirely but keep your license active, and what happens?

I kid you not. we were renters near San Francisco, and when we left we did not work in CA for years. two years later the put a $2600 tax lien on my house in Oregon?

Why, because we never filed any taxes in Ca and they assumed we were skipping out on paying so they taxed us what we assumed was what we owed.

They said they sent tax notices to our old address in the SF bay area, but never to Oregon because they did not have that address on file, but somehow they could find our property in Oregon to put a lien on it?

and that action is within their jurisdiction?

Effing Incredible.

We'll $1,200 to a Sacramento attorney a and 90 days later and we received an formal letter stating the State of CA did this in error.

The Attorney said

"They do this all the time"

But despite the formal reversal, removal of the lien, two years later and they still will not remove the lien from our credit reports.

So now, every year, we pay to file CA taxes every year just to prove we kept our CA income below the tax threshold. and dont take on new projects once we are about to exceed the threshold.



In reply to by Trader200K

107cicero Mon, 06/11/2018 - 21:52 Permalink

I have a problem with his you make $4,000 a month but he allows for no taxation.

If one is to do a theoretical calculation, let's be accurate.


ImGumbydmmt 107cicero Tue, 06/12/2018 - 04:06 Permalink

not to mention; $4,000 a month blows even in 1999 dollars, let alone after 2018 plus taxes .

 Get out of paying taxes,  start your own business and get an IRS Section 179 truck every year, on three year rotation.

yea, I know worst case you'll end up with three truck payments forever, but do you want to give the money to uncle Sam? and you have to drive something anyway.


In reply to by 107cicero

TRM Mon, 06/11/2018 - 21:55 Permalink

Pre-payments must be hit! If your mortgage lets you pay 10% - 15% yearly then save up like Scrooge McDuck and hit those pre-payments. 

They go directly to PRINCIPAL not interest. The snowball effect works in your favour if you do it in the first 2 years of taking out a mortgage.

So it all depends what is more important to you. Having that vacation, keeping up with the Jones or getting the hell out of debt fast. I highly recommend the last option!

Compounding interest. Your friend. Your enemy. Your choice!

Lt. Frank Drebin Mon, 06/11/2018 - 21:59 Permalink

I find myself working diligently to remove the burden of debt from my life.

Currently debt free minus the house. In 5 years, I will <lease my house via taxation from the corporation of the United States of America> BUT I will be 100% debt free. Not too shabby for a 31 year old. I have a 25 year old bottle of Pappy waiting for that glorious day.

And I will toast to all my brothers and sisters fighting the same fight. God speed hedgers.

wisehiney Mon, 06/11/2018 - 22:03 Permalink

Inflation is backward looking.

There is always a huge deflation scare first.

To justify the QE Infinity.

They won't be able to pump her up next time.

Precious metal not for sale.

adr Mon, 06/11/2018 - 22:13 Permalink

What happened was publicly traded companies needed to pad their books with fake sales to make it look like comps grew, so they expanded their margins to book "future" revenue now.

A 5% growth in booked margin can be enough to grow market cap 70% even if real sales fall.

That is the way the scam works. Anyone that does actually buy end product pays more, but the company that produces the product makes less. Best case wholesale stays the same, retail goes up, but input costs go up as well. Producers see deflation while consumers see inflation. An absolute horror of an economic condition.

In the past six years the retail price of one of my company's products has increased from $35 to $49. The wholesale price has remained $15.85. That seems like a victory, but our cost has increased from $9.75 to $10.45. If we wanted to keep the $35 retail price, wholesale would need to drop to $12.25 to account for the increased retail margin. $1.80 gross doesn't keep the lights on. What exactly does the consumer get for paying an extra $15? Absolutely nothing. The product is the same. The extra $15 in margin practically pays for the product.

What did the filth that runs the publicly traded company get over six years? Oh shares that went from $15 to $40.



rejected Mon, 06/11/2018 - 22:30 Permalink

Instead of telling people how to live with inflation we need to eliminate it.

When the FRB was passed the initial mandate was to maintain the value of the money. 

That's long gone,,, now they have bullshit mandates like full employment. 

Worse is the lies whether it's about inflation or employment,,, nothing but lies spew from them. 

Inflation is 10% or more,,, Each budget deficit the Fed funds is inflation, pure and simple. 

The central banks are the axis of evil and they need eliminated. 

conraddobler Mon, 06/11/2018 - 22:54 Permalink

It's a good primer on inflation but the actual nature of things is that of a pyramid and exponetial growth based intergenerational enslavement.

The entire thing is a big ponzi scheme and people stopped having as many children.

Which means they have to ass ramp the shit out of debt and inflation on the remaining suckers.

Which means it will blow up on them as eventually it'll do so much damage that the real economy will collpase and either reboot the entire system or flip the entire earth to a AI command economy.

It's obvious to me they think with AI they can finally pull off a command economy but more than likely disguise it as something like a hybrid market economy.

The awe inspiring nature of biblical prophecy should now be comming into sharper focus.



css1971 buffed Tue, 06/12/2018 - 02:52 Permalink

Yes. Taxation runs at around 60% - 70% in German when all is factored in.

Then you can add ~7% inflation. Which is the bone thrown to private asset holders.

Living with inflation = getting your value out of the currency and into assets of some kind. If possible, something that isn't taxable and this is where you need good accountants.

In reply to by buffed

conraddobler Tue, 06/12/2018 - 00:07 Permalink

We're busy creating the tower of babel 2.0 in terms of AI.  Even the elites have to be pissing themselves at this point and if they aren't then they have not sufficiently thought this through.

No matter what we do short of a lights out event that resets mankind to the stone age we WILL build computers that are so powerul that coupled with even rudimentary improvements in interface technoloiges with out own concious brains will render those new uber users so far above us as to render us utterly impotent to do anything about anything.

The reason the elites should be terrified is this WILL result in the greatest shift of power in the history of mankind.

Old elites need to recognize this danger now because as bad as any of their systems might be, what's comming will be infnitely worse to the point of existential danger.

The elites don't control the software, or even understand it, they understand politics, they understand money, banking, they understand life and how to control masses of people but in terms of technology they are as helpless as the rest of us in the face of this.

Why would they assume their money or power which emenates from the world 1.0 will have ANY importance in world 2.0?

Hubris is the only answer I can find and I'm not insulting anyone I'm making a point.  

The entire earth is their power structure but ulitmately information is power an if someone invents an AI system that can aggregate information on a truly global scale then that PERSON has just usurped all the power and the old money means nothing INSTANTLY.

It's extremely sobering and this is going to make very odd bedfellows indeed.

dbsbunker Tue, 06/12/2018 - 00:45 Permalink

Sorry, but the banks don't cause inflation, the government does that when it buys stuff with money it just printed.


Also, if you don't want to be a debt cow, buy yourself some real estate (which can include a personal residence).  It is likely one of your largest assets, and it is very likely to rise at least as fast as inflation. 

If you want to pay that thing off faster than 30 years, add an extra $60 a month for the first year, which will eliminate year 30 as you pay for year one.  Next year, add an extra $80 a month, and that will take care of year 29, as you pay for year two.  Two years in, and you are already down to a 26 years on your 30 year mortgage.  Keep this going and you will pay for your house in only 15 years.  Think that's tough to do?  Remember, anyone in an apartment is going to be paying more in rent every year.  At least this way, the money ends up coming back to you in the form of equity.

Flibbertigibbet Tue, 06/12/2018 - 01:41 Permalink

"But, at some point, since you’re free from debt, you’ll pass them by and eventually retire well."

By then you'll be too old to fully enjoy your "wealth".

Live miserably so you can deteriorate, and die, gracefully? Nah! You're trippin' ballz cuz.

K_BX Tue, 06/12/2018 - 01:51 Permalink

Well with inflation you have to pay back less in real terms in the future - if you bought some good investment for the borrowed money, you let the loan work in your favor. Leveraged investments have worked quite well for the past decades....