You Are Being Lied to About Inflation. It Hasn’t Been 2% for 30 Years (Here’s Proof).
I am going to hang this tweet on my wall for the rest of my life. It sends chills down your spine when you understand it and go “wow, I get it.”
The calculation of inflation is the greatest thing keeping you poor or just over broke. It’s harsh. But it’s obvious when you trawl through the public data.
Inflation just means the decline of your purchasing power over time. Simplified: What does $20 in 2015 buy you compared to $20 in 2021?
I see people obsess over how much money they earn from their job. Even more ridiculous, I see people beg for menial pay rises.
Purchasing power leaves pay rises and bonuses for dead when you understand it. Instead of asking yourself “how can I make more money?” ask yourself “how can I protect my purchasing power?”
Wealthy people who have their own bankers have known this secret for years. I met many of them while working in finance. They spent a lot of time understanding different asset classes. They varied their allocation of money to an asset based on whether the global economy was growing, had stalled, was in a recession, or had fallen into a deep depression.
I was fascinated because they looked at money differently. Until that point, my number one goal with my 9-5 job was to save money.
Their number one goal was to improve their purchasing power relative to the time in history they were living through.
How much you earn is not as important as your purchasing power.
This Idea Blew My Mind
Think of purchasing power as level one of the money game. I had no idea until two months ago that there was a level two to the money game.
Are you ready?
Michal Saylor, CEO of US publicly listed company MicroStrategy, wrote this tweet: