WHAT IS INFLATION?

If you're wondering what's happening, you've just scanned a QR code from a street art poster—and yes, you've come to the right place!

You’ve probably noticed how everything seems to be getting more expensive everywhere.
We’re here to explain why this is happening and to offer hope by sharing a solution to the problem!

Inflation occurs when money is printed without backing—meaning that money is injected into the economy without an increase in 'value' (goods and/or services) being produced. This causes the same amount of money to buy fewer things over time.

The general increase in prices is a reflection of inflation. When the value of money decreases, you need more of it to buy the same things you could previously afford with less.

Inflation - A Hidden Tax : This subtle decrease in what money can buy acts as a tax on savings and purchasing power, affecting people’s finances and standard of living without the direct clarity of a traditional tax.

Why Does Inflation Happen? How Is Money Created Today?

These are the main ways money is added to the economy:

When banks issue loans (such as a mortgage or consumer credit), they are creating new money. This money is not physical cash; it’s just numbers in your account.

How does it affect us?
When many loans are issued, more money enters the economy. However, this new money is not tied to an increase in goods or services.

Banks keep only a small portion of the money people deposit and lend out the rest.

How does it affect us?
This process can multiply the amount of money in the economy because the same money is loaned and spent repeatedly.

Central banks print and inject more money into the economy arbitrarily.

How does it affect us?
If there’s more money but the same amount of things to buy, prices rise, leading to inflation. It’s like adding more water to a soup: it might fill more bowls, but the soup becomes watered down.

Central banks can make borrowing money cheaper by lowering interest rates.

How does it affect us?
When borrowing is inexpensive, individuals and businesses are more likely to take loans. This introduces more money into the economy, contributing to inflation.

How Can Bitcoin Help Protect You Against Inflation?

Bitcoin is ideal for protecting against inflation. Here’s why:

It has a fixed supply of 21 million coins (no government, bank, or company can create more coins). It operates on a decentralized network, so no authority can manipulate it. While there are only 21 million bitcoins, they are introduced into the market gradually through a predictable process called "mining," which controls the supply rate. Furthermore, Bitcoin's decentralized and transparent system makes it resistant to manipulation, and its global nature means it is not affected by the economic policies of any single country or political trend, helping to preserve its value over time.

Let’s Dive Deeper into These Features That Make Bitcoin a Powerful Tool Against Inflation:

Bitcoin has a maximum supply limit of 21 million coins. Unlike the currencies we use today, which can be printed in unlimited quantities, this limited supply means no more Bitcoin can be created once the cap is reached. This scarcity helps prevent Bitcoin’s devaluation through overproduction.

Bitcoin operates on a decentralized network without a central authority that can manipulate its supply. This decentralization prevents a single entity from altering Bitcoin's monetary policy or flooding the market with additional coins.
This also makes it Resistant to Manipulation, as changes to Bitcoin’s protocol require broad consensus from the network, reducing the risk of arbitrary alterations.

The issuance of Bitcoin into circulation is controlled through a process called "mining," where the creation rate of new Bitcoin is halved approximately every four years. This predictable program ensures a steady and controlled supply.

Bitcoin operates globally, unaffected by the economic policies of a single country. This global reach means Bitcoin’s value is not directly impacted by inflationary policies of individual governments, making it a more stable store of value compared to currencies that may devalue due to local economic decisions.

And something very important: Bitcoin is "rules without rulers."

The code can be reviewed by anyone, and it is a set of rules that are followed strictly without exceptions.

What About Volatility?

While Bitcoin’s price may be volatile in the short term, its fixed supply, global reach, and transparent system can offer protection against inflation in the long term. It’s important to keep this in mind and consider longer timeframes for saving in Bitcoin. Buying with money you won’t need in the short term is key.

A common recommendation is to acquire Bitcoin with a "DCA" (Dollar-Cost Averaging) approach and then hold it through market fluctuations:

Dollar-Cost Averaging (DCA): Dollar-Cost Averaging in Bitcoin involves buying a fixed amount of Bitcoin at regular intervals, such as weekly or monthly, regardless of its price. This approach helps spread out investments and reduce the impact of price fluctuations over time. Instead of trying to buy Bitcoin all at once, you purchase small amounts consistently, which can help average out costs and lower the risk of buying at a high price

I Want to Learn More About Bitcoin & Inflation

There are many places to find resources about Bitcoin; the list is extensive. To simplify, here are some recommended starting points:

RESOURCES:

Books:

- The Bitcoin Standard, Saifedean Ammous
- The Fiat Standard, Saifedean Ammous
- The Little Bitcoin Book: Why Bitcoin Matters for Your Freedom, Finances, and Future, by
- La Filosofía de Bitcoin, Alvaro D. María
- The Hidden Cost of Money, Seb Bunney
- Grokking Bitcoin,
- Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies
- The Bullish Case for Bitcoin, Vijay

Websites:

Videos and Podcasts:

Movies:

- No More Inflation, Maiku Tsukai (Bitcoin Shooter)

Keep reading a little bit more about Inflation here:

Inflation does not affect everyone equally

Changes in the money supply can create winners and losers. Those who receive the new money first benefit from lower prices, while those who receive it later face higher prices and are disadvantaged.

This is called the CANTILLON EFFECT:

Imagine a central bank decides to print more money and distribute it, perhaps through government spending or loans.

The first recipients are often banks, government officials, or large corporations. They can spend this money before prices increase.

As these early recipients spend the new money, they push prices up. They benefit because they buy goods and services at lower prices before inflation spreads.

As the money circulates, prices rise. Late recipients (such as ordinary consumers or fixed-income earners) pay higher prices for the same goods and services.
They never experience the benefits of the newly created money.

Did You Know the Definition of "Inflation" Has Changed Over Time?

Definitions, especially in economics, can shift due to politics and the desire to shape public perception.

Here’s how the concept of inflation evolved:

19th Century:
Original Definition

Focus: Growth in the money supply.

Explanation: Early economic usage referred specifically to an increase in money supply, which was believed to lead to price increases.

Early to Mid-20th Century:

Shift to Price Inflation

Focus: Price increases.

Explanation: The term began to emphasize the result (price increases) rather than the cause (money supply growth).

Key Change: The definition broadened to include the general increase in the price level of goods and services in an economy over a period of time

Late 20th Century to Present:
Refined Understanding

Focus: Sustained price rises.

Explanation: generally understood today as a sustained increase in the general price level of goods and services in an economy over a period of time, leading to a decrease in the purchasing power of money.

Key change: Modern definitions incorporate the measurement of inflation via price indices like the Consumer Price Index (CPI) or Producer Price Index (PPI). Including a metric for measurement in a definition is problematic: definitions explain the concept, metrics on the other hand, are tools, not explanations.

How Changes in Definition Affect Society:

Perception Control: Governments and central banks may prefer certain definitions or explanations of inflation because they help manage public perception and expectations.

Economic Policy: Definitions can also influence policy decisions. By narrowing the definition of inflation to focus on price levels, governments can justify monetary policies such as quantitative easing (increasing the money supply) without alarming the public, as long as prices remain stable.

Public Confidence: Redefining terms can help maintain public confidence. If inflation is defined narrowly, it can give the impression that the economy is stable, even if the money supply is increasing significantly—something that might otherwise raise concerns about future price increases.

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