Inflation is a tax. Debasement is a transfer.

A president bullying the central bank into easy money to win an election? Outrageous. Unthinkable. We all agree Nixon was a terrible president because of it.

History remembers Nixon for a burglary. The bigger crime was the money.

In 1971 Nixon wanted a hot economy for the 1972 election, and his Fed chair, Arthur Burns, wanted to fight inflation. So the White House went to work. It planted a story that Burns was angling for a pay raise while telling everyone else to tighten their belts, and floated adding seats to the Fed board to outvote him. Burns got the message, and money flowed. That August, Nixon froze wages and prices and cut the dollar’s last tie to gold, in a Sunday-night address that preempted Bonanza. Literal debasement, live on network TV. That same year his administration raised milk price supports shortly after the dairy industry pledged about $2 million to his campaign.

He won 49 states. Inflation hit double digits by 1974 and came back worse at the end of the decade. Savers spent ten years losing, and it took Volcker pushing rates to 20% to stop it.

Nixon did his leaning in private, on tapes he never expected anyone to hear. Today the demands for 1% rates and the complaints about a “hostile” Fed board are posted in public. Nixon would blush.

Which brings us to now

Treasury wants lower rates. The Fed owns the printing press and won’t lend it out.

In August, Treasury doubled how much of its own long-term debt it buys back, paid for by borrowing more short-term. The goal is to hold long-term interest rates below where the market would set them. A Deutsche Bank strategist called it a soft form of financial repression. A month later the Fed went the other way and raised rates to fight inflation.

So far the Fed is winning. Long-term yields kept climbing right through the buybacks, and the 30-year Treasury now pays over 5.5%. I track the whole fight, with eight warning lights, on its own page: the debasement tracker.

Your bank statement says you have more money than last year. Your grocery bill, your insurance renewal and your kid’s tuition say you have less. Whoever wins in Washington, the question at home is the same: am I falling behind, why, and what can I do about it?

A tax and a transfer

Inflation and debasement get used interchangeably. They aren’t the same thing.

Inflation is prices going up. It’s a tax on everyone whose money doesn’t keep up.

Debasement is the dollar itself being worn down by policy: government borrowing, the Fed creating money, or interest rates held below inflation on purpose. It’s a transfer from people who hold dollars to people who owe them and own real things.

Oh, you didn’t know the government had more than one way to screw you? That’s 5D chess, baby.

They often show up together, but not always. An oil spike or tariffs can push prices up while the Fed keeps money tight. And debasement can skip the grocery store entirely. In the 2010s the Fed bought trillions in bonds, consumer inflation stayed low, and stocks, homes and gold soared. Owners got richer, savers fell behind, and CPI looked fine the whole time.

Today looks most like the top-left box: core inflation around 3%, partly from an oil shock, and a Fed raising rates against it. The box to fear is the one next door. If the Fed backs off while prices are still rising, we get stagflation. Nixon’s decade.

How badly am I losing?

A word on privilege first. This is written by someone with savings to protect. If you’re skipping meals because groceries cost too much, you don’t need a calculator to tell you inflation is winning. You already know, and it isn’t fair. My job is to keep my family ahead of inflation, even if only by a hair, because if I’m behind, my kids are behind. This is for people who have some room to make choices, written by one of them.

So, am I winning or am I losing? Unfortunately, that’s the wrong question. A more accurate question is “how badly am I losing?” A lot of that is determined by your personal circumstances.

The test itself is simple. Is my personal P&L growing by more than the true rate of inflation? If so, I’m winning. If not, I’m losing.

What decides it is less how much you have and more what you hold and what you owe. Money in a savings account, CD or bond shrinks whenever it earns less than prices rise. Debts shrink the same way. Things that can’t be printed, like a house or a business, tend to rise with prices. A renter with savings in the bank loses on both ends: rent goes up and the savings buy less. A homeowner with a fixed-rate mortgage is partly protected, because the mortgage payment stays the same while everything else rises.

The government’s inflation number is an average. Yours is what your household actually pays, and school, housing and healthcare tend to rise faster than the average. You don’t need receipts to estimate it. This asks how things feel and turns the answers into rough numbers:

Want to come back to it later? The calculator also lives on its own page.

Is it inflation, or is it debasement?

If the calculator says you’re losing, here’s how to tell what’s doing it, using its tiles plus one number from the tracker, the real Fed rate (the Fed’s rate minus inflation):

• Your personal inflation rate is well above the official one. That’s inflation in your own basket: rent, healthcare, school or insurance rising faster than average.
• Your pay is behind your costs. That’s an income problem, debasement or not.
• Your savings trail your costs while the real Fed rate is positive. That’s where your money sits. Safe places to park cash are paying more than inflation right now; a big-bank savings account usually isn’t one of them.
• Your savings trail your costs and the real Fed rate is below zero. That’s debasement. Even safe savings can’t keep up, by design.

Right now the real Fed rate is about +0.9 points, so for most people falling behind today, the cause is inflation, lifestyle creep, or cash in the wrong place. Debasement is the risk to watch, not yet the cause. The tracker is how you’ll see it coming.

How do I go from losing to debasement to riding it to a winning hand?

The transfer runs from people who are owed dollars to people who owe dollars and own real things. Getting to the receiving side means moving your family from the first group toward the second, one step at a time:

1. Shrink what’s sitting still. Keep a real emergency fund in cash. Past that, money earning less than inflation is the asset being debased.
2. Hold the right kind of debt. Fixed-rate debt on things that hold their value gets lighter every year prices rise. Floating-rate debt does the opposite.
3. Own things that reprice. Rentals, businesses that can raise prices, and producers of things people have to buy. Their income rises with prices; a bond’s doesn’t.
4. Go gradually and keep a cushion. A leveraged real asset only wins if you can carry it through a bad stretch. Getting forced to sell at the wrong time turns the receiving side into the paying side.

What I’ll actually do

(My plan for my money, not advice for yours.)

If the warning lights come on (inflation expectations rising, long rates held flat, a couple of soft auctions in a row):

• Speed up putting idle cash to work. Cash is the thing being debased, so waiting gets more expensive.
• Favor real assets that pay me: rentals, energy producers, businesses that can raise prices.
• Keep fixed-rate debt and don’t rush to pay it down. Inflation shrinks it for me.
• Stay out of long-term fixed-rate bonds. In that world they’re the side of the trade that loses.

If they don’t:

• Stick with the slow plan: put cash in gradually over about two years, faster when my froth reading says the market is cheaper.
• Don’t chase the “debasement trade,” the popular bet that the dollar will lose value: gold, bitcoin and hard assets, no cash or bonds. It’s crowded, it only pays if the Fed loses, and gold is already down for the year.

Either way: don’t go all-in on gold or bitcoin. Being early looks exactly like being wrong.

The real-estate angle

This isn’t a bet against the Fed. A rental financed with a fixed-rate mortgage works in more than one box of the grid. If the Fed wins, prices still rise on the way back down to 2%, rents follow, and the mortgage payment stays the same. If the Fed loses and we slide toward stagflation, the same property becomes the best seat in the house: long a real asset and short the dollar, the same trade the government is making on its own $40 trillion.

The catch is the Fed’s own weapon. Higher rates make new mortgages expensive and can push property values down. So this works best on debt locked in before rates rose, and only if rents actually rise and you can carry the property until they do. Buying new property at today’s rates as a debasement play is betting against the Fed.

Beyond rentals, the same logic points to energy producers, businesses with pricing power, infrastructure with inflation-linked contracts, and some money outside the dollar. TIPS track inflation directly, with one catch: you pay tax on the adjustment every year.

Who to listen to

I’ve worked in digital assets for over a decade, so I’m not saying this as a skeptic. Debasement attracts a lot of loud voices, and some of them are worth tuning out. Don’t take economic advice from Bitcoin maximalists, from anyone predicting the fall of America like the fall of Rome, from anyone who turns it into a culture war, or from anyone who treats economics as a team sport, with Hayek as the hero and Keynes as the villain. Doom sells, and it usually comes with a product to buy.

The fundamentals here are boring on purpose: what your money earns, what your costs do, what you own and what you owe. Nixon had a whole decade to prove that the boring stuff is what decides who pays the tax and who gets the transfer.