Inflation is about the value your money, not prices. Prices are rising only because the value of your money is falling. To avoid inflation, limit your exposure to money that loses value.

Individuals | Companies | Nation-states | Financial Institutions

Individuals

When Zimbabwe had hyperinflation, tourists and expatriates didn’t mind because they didn’t own Zimbabwe dollars. The average tourist kept their wealth in another currency and each week or day converted some of their wealth into the local, depreciating currency. Even easier, some used credit cards to buy everything, so they exchanged their money at the time of the transaction, no earlier.

To avoid inflation in your home country, act like a tourist. Convert your savings into a product or commodity that is not losing value as fast as your home currency. Some people choose oil, gold, copper, or a combination of these and other items.  Learn more.

For your salary: You are likely paid with a currency that is losing value each year. If that currency declines five percent during a year, then your salary declined five percent, and unless you negotiate a five percent raise, you will earn less the next year. The solution is to base your contract on something that is not declining in value at all or as much, such as another currency, a commodity, or a basket of commodities that holds value. This is called indexing and is common with cross-border employment that involves two national currencies.

1. If you negotiate a $1,000 monthly salary, calculate the worth in your preferred money commodity. If you think wheat is not losing value (because people still like bread), then calculate the value of $1,000 in wheat. Let’s say one dollar buys one bushel of wheat. Then your contract would be for 1,000 bushels of wheat, though you’d still be paid in dollars.
2. When it’s time to get paid each month or every two weeks, you and your employer would calculate the cost of 1,000 bushels in dollars. If one dollar buys only 0.5 bushels of wheat, then $1,000 is worth 500 bushels of wheat. Since your salary is 1,000 bushels of wheat, your payment would be $2,000, the amount required to purchase 1,000 bushels of wheat. Your salary is the same in terms of what you can actually buy. Only the dollar amount changed. You are no richer and the company is not poorer. You didn’t get a higher salary in terms of wealth. Through indexing, you only maintained the value of your salary. Learn more.

For your freedom: Promote laws that give you more monetary freedom:

• Free Competition in Currency Act 2011 (PDF), HR1098
• Federal Reserve Transparency Act of 2011 (PDF), HR 459

For everyday expenses:

• Once or twice a month convert some of your wealth back into the local currency.
• Go one step further by charging everything to a credit card, and a few days before you need to pay the credit card bill, convert your commodity money into the local currency, thereby limiting your exposure to your local currency by only a few days.  Note you will pay taxes on any capital gains on the commodities and (usually small) fees to convert from commodity to currency. Learn more.

Companies

Salaries: Allow employees to tie or index their pay to the cost of a basket of items. We can help create the basket  and explain to employees the pros and cons of this pay arrangement.

Product & Service Pricing: Avoid signing a long-term contract in money that’s losing value. Tie the cost of your products and services to basket of precious and base metals. This can be done with leases as well.

Nation-States

Multiple Currencies: Allow citizens to use any product as money. Remove or change sales taxes and capital gains taxes so people are not taxed more when using a product for indirect exchange or a store of value, compared with using fiat tokens. Then watch as millions of market transactions reveal what people prefer in your area to use as media of exchange.

• An Iceland Monetary Solution: Monetary Choice

Financial Institutions

Valuation: Allow customers to value their government currencies in other products. It’s common to let people value stocks in government money such as the dollar. A person with 10 shares of stock might see those 10 shares are worth 100 dollars. Make the reverse possible. Let people value a dollar account in gold, silver, a basket of commodities, or even movie tickets. When your customers see the declining value of government money, they will be more likely to exchange the government money for gold, silver, ETFs, stocks, etc.

Monetary Choice can help with all of these suggested actions. Contact us.

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Note: All information is for informational purposes only. Speak to your financial adviser or accountant for personalized advice.

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