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Unreal and Real Forms of Wealth

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

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