Sunday, March 31, 2013

Reflationary Monetary policy

Hard working, frugal men who save by purchasing bonds and holding cash are doomed by central bank's reflationary monetary policy. Inflation will rise and the purchasing power of his saving from frugality will be eroded significantly. It is a sacrifice wasted. Wealth is transferred to the borrower who spend and invest.

Government policy favors investors and consumers. It is especially true with countries that run a big deficit. As an investor you need to watch out for inflation.

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