Cash in its element is a decreasing form of wealth even an ISA or bank account will not provide protection.
A simple comparison with petrol prices will illustrate this. On January2009 the Diesel price per litre was 100p, in January 2011 the price was 125p this shows an increase of 12.5% per annum. Currently the highest ISA is ffering 2.9% p.a. so roughly if you’ve stuck your money in the highest paying ISA your money would be able to buy 20% less petrol than two years ago.
Therefore to keep wealth in the form of cash is clearly not a good idea. The cash should be exchanged for a real form of wealth such as property or gold. These have been considered to be forms of wealth by most civilisations for mil-
lennia, long before the concept of creating money from thin air came into play. This is the origin of money. It is simply created into a system and then it exists, it has no reserves to back it.
Many clever economists talk about the implication of this and use clever words like quantitive easing. But the fundamentals of by whose authority and how this amount of money can come into existence are not clear and shrouded in secrecy.
Clearly if the UK was a family it would be on the street, if it were a company it would be bankrupt. Because this is the UK, money is created into existence by the Bank of England and loaned to the government and the people of the UK, we are told this is to ease the economy. What this does is enslave the population and simply transfers the liabilities from the bankers to the taxpayers of the UK. The origin of the word mortgage is illustrated well by this transfer. The word comes from the Old French words mort, “dead,” and gage, “pledge.” Perhaps not an instantaneous death but certainly a slow one.
China who in 2003 were holding $403bn almost 25% of their GDP naturally were very worried, when nearly $404bn is spent on the US military and the US is in $3.9 trillion of debt, they figured it’s time to dump this dollar. Hence China done what any sane investor would do they dumped the dollar and moved into a real form of wealth and started buying gold. They bought 1000 tonnes. Their gold reserves have increased by 75% over the last six years.
The principle is very simple. If something can be created unlimitedly and something else cannot be created, what will retain its value? The thing that can be created unlimitedly is money. The things that cannot are finite forms of wealth such property and gold.
How else can the Bank of England create £200bn. The UK will be in debt by £1.1 trillion in 2011 and the interest payments will be £48bn per annum.
Now more than ever your wealth should be transferred from paper to a real form. Purchasing a property is like having your own mini Bank of England or Federal reserve, it will print money for you month after month. Most of the properties we recommend are highly income producing and in strong locations. Call us now, rather than later to see how we can help you. Tel 0207 706 0187
Suresh Vagjiani
MD Sow & Reap
