Monday, 16 October 2017

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“Inflation: The Silent Tax”

Posted by
January 13, 2010
in Blog

“Inflation is a tax on financial assets. This tax is paid by those unlucky investors, corporations, and foreign central banks that hold financial assets denominated in the currency that is inflating. A simple way of thinking about inflation as a tax is to consider investing in a mutual fund. The fund manager might charge 1 percent for the service and privilege of providing the investments in fund form. If the fund returns 5 percent, the investor would obviously receive a net 4 percent. However, if the inflation rate was 4 percent, the real return to the investor would actually be nothing. In this case, the Fund manager gets his 1%, the U.S. Treasury – with the help of the Federal Reserve – takes 4% because of inflation, and the investor is left with nothing, except, of course, a tax bill for his 4%. After taxes, the investor actually lost money! Inflation is a silent, and extremely efficient, robber of value.” Read more.

 
Via Gold-Eagle, June 18, 2004.

One Comment

  1. Gold Investing Expert November 10, 2010 5:06 PM

    Interesting post

    I know how profitable gold investing can be. My brother made really good money doing just that, and myself I am making good money investing in gold.

    I recommend to anyone who’s thinking of starting to invest in gold to read a book or two on this topic, as there so many mistakes and blunders that are possible to make when you first start in this industry.

    Thank you very much for sharing this with your us.