My Stock Investing – Started with Conspiracy Theories

I love conspiracy theories. They provoke my thoughts. But I don’t own any conspiracy theory. I am just a fan.

        " I discovered the very reason why the price of goods rises more constantly than it drops."

Among conspiracy theories, the one that really caught my attention is the idea that this world and its entire people is under the control of few elites, the same individuals who control the world finance, most of them bankers. These elites control the global financial system by regulating all central banks and making them comply how money is to be made. These elites, according to conspiracy theorists, wield the greatest power of money control, so powerful that any form of government or whatever law does a country has is irrelevant.

          "....the production of money runs in the manner that allows the inflation of prices of goods and the devaluation of the purchasing power of money...."

This intrigued me to study about how money is made. I found out that money is no longer minted in the classical sense. Modern money is already printed by central banks. Or in more truthful case, money is already produced electronically. That paper bill in my wallet is only one of the trillions of paper bills flooding the society which were printed by central banks. Credit is at the same time is supported by merely strokes on computer keyboards.

There is an implication I later on found out. I discovered the very reason why the price of goods rises more constantly than it drops. The reason is that the production of money causes inflation. The value of goods does rise not that the intrinsic value of it increases but mainly because the price of money (the purchasing power of it) devalues everytime central banks floods the society with more of printed money. The machine of money-making is pegged onto the idea that central banks must produce monies to maintain liquidity, meaning to make it sure that society must not run out of money. This is to ensure economic growth.

What the central bank is doing can be understood by one simple example. Every December, during the Christmas season, the movement and demand of money is never been greater. December is the time of bonuses. Meaning, people have lots of money to spend. What the central bank is doing is to make sure banks have enough cash in their ATMs to meet the massive cash withdrawals of their clients. The central bank wants to be sure that there is enough liquidity.

Having seen that the production of money runs in the manner that allows the inflation of prices of goods and the devaluation of the purchasing power of money, I later came to understand, albeit in a generalized understanding how stock market prices behave. Historically, the price of stock shares rises in noticeable magnitude if seen in multi-year basis, eg 5 or or more years. This is so mainly because the behavior of stock prices is of the same trend as that of the production of money by the central bank. Historically both goods and stock prices rise constantly. And this is due to the constant drive by the central bank to make more money in order to keep the society liquid.

This made me appreciate stock investing so much. I see that there is a great opportunity to earn in stocks basing on the historically proven trend that stock prices rise in magnitude over years. So if I buy stocks now, there is a great chance to rake profits after several years.