Kerby Anderson
Yesterday I talked about apples and inflation. There is another way to think about the inflation that has been part of our economy for the past 100 years.
The supply of U.S. dollars has been expanding on average about 7 percent each year for the last century. That means the value of dollars is cut in half about every 10 years. Just use the “rule of 72.” Divide 7 percent into 72. That means the half-life of the US dollar has been about 10 years.
We may not notice the decreasing value of dollars until we get even higher inflation. But think of what a 10-year-half-life for the dollar means to you. For me, it means that money I put into a Wells Fargo savings account when I was in grade school has been cut in half six times.
The U.S. dollar is still the reserve currency of the world. And yet this is what happens with the best fiat currency in the world. If you hold your savings in cash, you are losing value every year. If you hold some of your savings in assets, the value of the asset usually goes up simply because it takes more dollars to purchase it. But for it to appreciate, your asset has to be both scarce and desirable.
Now, imagine if you lived in Venezuela or Argentina or Lebanon or Turkey. If your country increases the currency each year by 18 percent, your currency’s half-life is 4 years. If your country increases the currency by 30 percent, it has a 2.5-year-half-life. That is why citizens in these countries can never get ahead.
When I hear people tell me that financially they are just “treading water,” I am tempted to tell them that they are really sinking. Printing more U.S. dollars makes everyone poorer unless they have assets appreciating faster than the money printer.

Kerby Anderson
Today the U.S. is getting a new president. Soon, Canada will be getting a new prime minister. The new prime minister may be Pierre Poilievre. He was recently asked what steps he would take to fix the damages done from inflation. Here is his answer:
“First and foremost, stop the overspending. Inflation, high taxes, deficits, high interest rates, are all symptoms. The disease is overspending. When governments spend too much money there’s only three ways to get it. One is to raise your taxes. The other is to borrow, which means that they’ll tax you more later on. And the third way is to print money. Now printing money seems like a painless way to pay for things.”
He then explained, “If you have 10 apples and $10 in the economy, it’s a buck an apple. If you double the number of dollars in the economy to 20, you still only have 10 apples, You’re not twice as rich. It’s just that each apple costs twice as much. And that is a tax on the working people because it chews up the purchasing power of your paycheck only to pay for government’s excessive government spending. And it balloons the asset values of the billionaires so it’s a real transfer from the have-nots to those who have yachts. Inflation is the worst and most immoral tax. It always results from government creating cash.”
His answer was both clear and correct. When government spends more than it takes in, the usual answer is to print more money. It really isn’t that complicated. We just need more people in leadership like him.
We need more politicians who understand why we have inflation and can explain the problem to the citizens. I must applaud his clear explanation and common-sense solution. We need more Canadian and American leaders like him.