The Ultimate Inflation and Financial Literacy Quiz Based on Peter Schiff's Insig...

Peter Schiff on Inflation, Fiat Currency, and Financial Literacy

• Inflation is the biggest threat now than it has ever been, and it's a significant factor in determining savings and investment decisions.

• Politicians care about their own political careers and re-election, and they promise voters something for nothing to buy their re-election.

• Politicians cater to donors who provide a lot of money, and they sacrifice the national interest to do what's right for themselves.

• Inflation is an expansion of the money supply, and deflation is a contraction of the money supply.

• Governments create inflation, and it's a tax on the people.

• Inflation is the value of money going down, not prices going up.

• Rising prices are not necessary for prosperity, and politicians try to sell the lie that they are.

• In the past, gold was keeping politicians in check, and it worked much better when we had honest money when we were on a gold standard.

• Fiat currency is not backed by anything permanent, and politicians can create money by printing it.

• Inflation poses the cardinal danger to long-term financial security and prosperity for people because it defers expenses into the future.

• Financial literacy is crucial, and people need to understand inflation and its impact on savings and investment decisions.

• The free market drives quality up and price down, while government drives quality down and price up.The Problem with Inflation: Explained

• Inflation occurs when there is an expansion of the money supply, which causes the value of money to decrease and prices to go up.

• Governments have run enormous deficits and inflated housing bubbles, leading to massive quantitative easing programs, which is essentially printing money and buying government bonds.

• Central bankers have been telling us that inflation is too low for years, and now there is double-digit inflation or high single-digit inflation in most developed economies.

• No government is willing to do what it takes to reduce inflation because accepting responsibility for creating it and reducing government spending or raising taxes on middle-class voters is politically unfeasible.

• Politicians are under pressure to continue financing their spending through inflation, making the inflation tax bigger every year.

• Inflation is the worst possible tax because it impacts the people who can afford it the least, such as the middle class, working poor, and retirees living off fixed incomes.

• Inflation is particularly hard on non-entrepreneurial savers who have put away a certain store of value, and it devastates them.

• The Consumer Price Index (CPI) is used to calculate inflation, which is the average cost of a standard basket of goods, but the basket changes, and the politicians decide what to put in and take out, leading to a rigged CPI.

• Governments have changed the methodology for measuring price increases, and hedonics is used to subjectively decide if a product got better or worse, leading to inaccurate CPI calculations.

• The CPI used to include housing prices and rents, but now it uses owner's equivalent rent, a fiction that is made up by asking people who don't own homes how much they think they could rent it for.

• A proper CPI that includes the cost of shelter should be calculated based on those who want to buy rather than those who already own.

• The government always underestimates the deflator, which adjusts the GDP for prices, to make the number lower and not report high inflation.Inflation, Debt, and the Illusion of Economic Growth

• GDP can appear to be growing due to inflation rather than actual growth.

• Politicians have incentives to create inflation and lie about its effects on the economy.

• Inflation benefits debtors, particularly governments, which are the biggest debtors in the world.

• The US government has $32 trillion of funded debt and over $100 trillion in unfunded liabilities.

• Independent sources of inflation data are necessary as government statistics are biased.

• The US is running over $2 trillion in deficits annually, which is being financed by inflation.

• Technological progress can make things cheaper in the future, but inflation reduces the value of money.

• Borrowing from the future is only justifiable if it creates something that will benefit future generations.

• Social Security is an intergenerational Ponzi scheme, and the US government has spent all the money collected for it.

• The US has managed to maintain the status of the world's reserve currency due to its financial and industrial might.

• The dollar only appears clean because of its reserve currency status, which is in jeopardy.

• America is the world's biggest debtor nation, owing more money than all other debtor nations combined.The Role of the US Dollar and the Potential for Gold and Cryptocurrency as Alternatives

• The US dollar became the reserve currency due to America's production of consumer electronics and the dollar's convertibility to gold.

• The dollar's reserve currency status is expensive for the rest of the world and allows Americans to live beyond their means.

• The world is starting to move away from the dollar due to economic costs and political risks, but there is no clear alternative.

• Gold is seen as an alternative to fiat currencies as it is a real asset with intrinsic value that central banks are increasingly buying.

• Gold has unique properties that make it qualified to be money and has proved itself as a storehouse of value over centuries.

• Gold satisfies the three primary conditions of money: unit of account, medium of exchange, and store of value.

• Cryptocurrencies, like Bitcoin, have been compared to gold as a storehouse of value that is uncorruptable and easily distributable.

• Bitcoin is obtained through mining and is distributed digitally, making it out of the hands of governments.

• The cryptocurrency argument for being a storehouse of value is compelling, but it lacks the historical track record of gold.

• Cryptocurrencies are not backed by a real asset like gold and are subject to market volatility and hacking risks.

• The US dollar's reserve currency status is at risk due to its financial position and political risks, but gold and cryptocurrencies are not yet clear alternatives.

• The world may increasingly turn to gold as a monetary anchor and reserve asset as central banks buy more and more of it.