Heykali on Nostr: The growth rate of the monetary base (such as M2) can be seen as a proxy for monetary ...

The growth rate of the monetary base (such as M2) can be seen as a proxy for monetary inflation, which can erode the real value of money. If the currency issuance rate was 19% last year, to preserve the purchasing power of your money you would need to earn a return greater than that rate. Why Does the Return Need to Outperform Currency Issuance? Inflation: A Rise significant increase in currency issuance can lead to an increase in inflation. If annual inflation is high, the prices of goods and services increase, decreasing the purchasing power of your money. Real Purchasing Power: To maintain or increase your real purchasing power, your investment needs to yield more than inflation or the growth rate of the monetary base.Example:If you had a 19% return on an investment, but inflation or currency issuance was also 19%, the real gain would be practically zero.