Renowned financial expert Lark Davis digs deep into the concept of monetary debasement in his recent video. The CoinSpeech team has collected the most important takeaways from his enlightening discussion. You can find Davis’s new video below.
The Sinister Hidden Tax
“Why do you think that ninjas from ancient Japan or modern stealth Fighters are feared by their opponents? Well because you cannot see them up until it’s too damn late.” According to Lark Davis, we are all subjected to a more sinister and invisible tax: monetary debasement.
Monetary debasement is likened to an “illusion” where the government can “debase or lower the value of money whenever it wants” just by clicking a few buttons. Davis argues that inflation is a form of this hidden tax that reduces the purchasing power of your money over time.
A Historical Perspective
This concept is not new. Davis points out, “during the peak of the Roman Empire, it was the Daenerys.” Initially containing 4.5 grams of silver, the coin’s purity decreased over time to just 5%, contributing to the empire’s decline.
He also mentioned post-World War I Germany, where hyperinflation made the Mark almost worthless: “it eventually collapsed and it reached 4.2 trillion marks per US dollar.”
The Modern Implication
In current times, monetary debasement still plagues economies. The U.S. dollar, despite being the most important currency today, is not immune. Davis emphasizes, “Increasing the money supply creates an illusion of wealth and an illusion of abundance while in fact the prices of goods are also increasing.”
A Fight Against Inflation and Taxes
Lark Davis highlights the multiple layers of taxation, both visible and invisible, that chip away at individuals’ financial well-being. From direct taxes on income to sales taxes on goods, and then the “stealthy Thief” of inflation stealing purchasing power, he outlines the ways governments continuously dip into citizens’ pockets.
“Long-term capital gains can be taxed at a lower rate,” yet, according to Davis, “the real issue is the 8% annual debasement of the currency via money printing.” This trend pushes the effective ‘break-even rate’ for investments to 12% when factoring in both inflation and monetary debasement.
Investing Wisely
To counteract this hidden tax, Davis advocates for smart investments: “You have to invest in stocks, you have to invest in Bitcoin”. While traditional avenues like the S&P 500 offer historical returns, “there are ways to get ahead” through savvy investments in high-performing sectors such as tech stocks and alternative assets like Bitcoin.
“In 2023 alone Bitcoin rose 156%,” making it a favorable option along with gold, which has “always been considered as a hedge against inflation.”
Take Control of Your Financial Future
Ultimately, Davis urges viewers to protect themselves using available tools: “The hidden tax is not going away, it’s very prevalent and it’s pernicious in your life.” Smart, well-researched investments can help mitigate the effects of this unavoidable tax.