The Magazine for Asian Investors
After the Chinese economic data from the month of October show anything but an upswing, questions are beginning to arise as to how far the economic downturn in China could affect other countries. The data showed that the Manufacturing Purchasing Managers Index (PMI) had fallen for the second month in a row. At 49.2, the index fell even further below the 50 mark, marking the cut between growth and contraction. More cause for concern is the increase in output prices to 61.1, which was the highest level since the introduction of the index in 2016.
Signs of Stagflation?
Indeed, consumer prices in China have also risen. It is also a fact that the economic activity data has clearly slowed down. In addition, China is currently struggling with a new COVID wave, which certainly does not help the economy.
Rising Prices Across the Globe
Just yesterday, the Producer Price Index (PPI) data from Spain was published. The PPI has risen to an incredible 31.9, which will probably have surprised even the best analysts. Most recently, PPI data from Germany was also released, showing a PPI increase to 18.4.
A reason to be Concerned?
In fact, the citizens of the nations should slowly think about whether this is a sustainable path that is being taken here. Sinking purchasing power is now everywhere to see and only too stupid if the salary from the job can not keep up with the same step.
Hyperinflation follows inflation. Who has studied the history of the currencies of our time will find an important point: All currencies are heading towards their intrinsic value which is 0.
From the empire of the Greeks to the ancient Romans, all empires have failed because of the counterfeiting of their monetary system. The Greeks, for example, melted down the tax money they collected in gold coins and mixed it with copper. Thus, from an assumed 1000 gold coins, 2000 coins were created. If this sounds familiar to you that a government spends more than it takes in, alarm bells should start ringing.
And whenever a currency is near its end and people lose their confidence in it, they lean towards what is most familiar to them: gold and silver.
J.P. Morgan once said, “Gold is money everything else is credit.”
Have you ever thought why nowadays all currencies issue coins are gold or silver colors?
Time to panic? Not so fast!
Even though we are certainly facing hard times, we can still protect ourselves by following what has worked for 5000 years: real money. Even if the hard times are still a long way off, it is better to have protection and not need it than to need it but not have it.