I do not remember when it was exactly but it was probably about 10 years ago. One morning I woke up and realized that the world was poor because of inflation. Yes there are other reasons, of course. But the main reason the world is still largely poor is inflation. The vast majority of human animals around the world still suffer in varying degrees of poverty – their earnings and income are not really sufficient to pay the bills or even save some portion of their earnings – and yet the wealthy Western nations have sent vast amounts of their own wealth to the poor regions of the world. And it has had negligible effect! This is the history of the world, particularly since WWII. It is pretty shocking

I seem to recall I was talking to my friend Mr Jim O'Neill [former Goldman Sachs and famous for the BRIC acronym] or maybe it was someone else. I was just explaining my thinking about currency movements, and then I realized inflation is the big destroyer of wealth and wealth creation. Obvious, right? If we can remove the inflationary pressures, the world will be much wealthier, in fact poverty might be very much diminished, and it might even be eradicated.

I am an “economist” and that means obviously that I have devoted much of my time trying to understand how wealth is created. You could say I am a development economist, maybe. The emerging markets around the world – where wealth is being rapidly created – always intrigued me. I have traveled to most of this world, since I was a young man. Again my memory is failing me, but I think it was about 30 years ago I noted what Mr Mark Mobius was doing. I will not go into his CV here [you can refer to my interview with him: September 28, 2023 published at worldaffairsmonthly.com also at destructivecapital.com]. He can be found on the net at markmobius.com also mobiuscapitalpartners.com. Mr Mobius does not shy away from describing his travels and experiences. He is a great guy, a formidable intellect, and an intrepid world traveler. He invests in the world, in the capacity of the world – to do more and more and better and better.

He likes the truth, which can get you into trouble. He has written a number of books but the most recent one caught my attention. The Inflation Myth and the Wonderful World of Deflation. Published January 2021 by Wiley. I asked Wiley for a review copy and they promptly sent me one.

Mobius has tried to put all the pertinent facts about inflation into this brief text. I am not sure his thesis is very popular, probably it is not. The reason for this? What Mobius is doing is calling out the inflation racket. It is not an easy task. He's got some nerve. Economists almost universally condemn deflation – it is contrary to their beliefs about how wealth is created – and so that is all you really hear when economists talk to the public. Ben Bernanke was always talking about it, when he was in the White House and also when he was at the Federal Reserve. Alan Greenspan also. Hey, I can appreciate their argument, but in fact they draw attention to the deflation threat because they are always looking for a justification to drop interest rates.

Everyone around the world is toiling away at their work. Their earnings are typically pretty miserable. And what happens each month is these earnings are eroded by inflation. They are at a loss to prevent this. Central bankers and also of course heads of state and finance ministers let the printing presses rip and send money into the economy – to pay the bills. That way everyone has the cash to keep up with their obligations.

It may sound excessive when I say this, but everyone in the world – young people – should read the inflation book by Mr Mobius and they should listen to the interview I did with him. Mobius and I are very optimistic but you will not see The Wall Street Journal or The New York Times or even economic journals or even The Economist discuss the realities of inflation. It is a conspiracy!

Mobius asserts that it is a complex topic – he's right. Yet he is being polite. The elite is not really opposed to some inflation – they can hedge against it while the rest of the world cannot. So they come out ahead. This is the inflation weapon. Yes we can call it that.

Several years ago I came up with a way to define inflation. I identified two types of inflation: debt-induced inflation and growth-induced inflation. Published below are two of my articles explaining what this is exactly. Mobius agrees that I got it right.

Mobius is superb. He's even got a PhD in economics from MIT. 1964. So we can really argue that government policy is designed to create inflation. How much is in the design and how much is not is a matter for debate. You can argue that a little is tolerated but when it is elevated then people really get angry. Obvious, right? But there are 2 different types of inflation. Growth-induced can be managed by the central bank, with interest rates. The other, well that is a problem, a serious problem.

There is a way to battle inflation. It is a nasty battle but it is possible to vanquish it, and both Mobius and I predict that it will be largely vanquished. I will say in the next 20 years this will happen. And what we can expect is the stock markets around the world will rocket, doubling, even tripling. Inflation, the destroyer of wealth. Deflation, the creator of wealth.